Dems seek to stop tax cut plan
WASHINGTON – Angry House Democrats staged a noisy revolt Thursday against President Obama’s year-end tax cut agreement with Republicans, pledging to block a vote unless there are changes to scale back billions ticketed to help the rich. The White House still predicted quick passage.
“If it’s take it or leave it, we’ll leave it,” said Rep. Lloyd Doggett, D-Texas, after a closed-door meeting in which rank-and-file Democrats chanted, “Just say no.”
Despite the flare-up, the White House expressed confidence the measure would be approved before Congress goes home for the year, and Senate Democratic officials said talks were under way to add tax breaks for the alternative energy industry as a way of building support in the party.
“The deal will get passed,” presidential press secretary Robert Gibbs said. There were no predictions to the contrary among senior Democrats on either side of the Capitol.
Congressman-elect Joe Walsh, R-McHenry, said he hoped Democratic House Speaker Nancy Pelosi would brings the tax cuts agreed upon between Obama and the Republican Party up for a vote.
“It’s important right now that there is some tax certainty for businesses and folks,” Walsh said.
Walsh, who defeated U.S. Rep. Melissa Bean, D-Barrington, in November for the 8th District seat, said he supported a permanent extension of the tax cuts that will be scheduled to expire in two years if the plan is passed by Congress.
The two-year tax cut extension “is better than what was going to happen,” Walsh said.
As announced by Obama on Monday, the deal would extend tax breaks at all income levels that are due to expire on Jan. 1, renew a program of jobless benefits for the long-term unemployed that is due to lapse within days, and implement a one-year cut in Social Security taxes.
The two-year cost of the plan, estimated at as much as $900 billion, would further swell record federal deficits.
Despite the additional red ink, the president said the plan was essential to add strength to an economy recovering slowly from the worst recession in eight decades. Joblessness stands at 9.8 percent, and a top White House official bluntly warned Democrats earlier in the week that they would bear responsibility for a return to recession if they blocked the measure.
The deal between Obama and GOP leadership showed that Obama’s stimulus plan approach to improving the economy was wrong, Walsh said.
When government cuts taxes it leads to greater economic growth and higher government revenues, Walsh said.
“You have to put more money into businesses’ pockets and people’s pockets,” Walsh said.
Phone calls to Bean were not returned Thursday.
Senate Republican Leader Mitch McConnell has said he expected most of his rank and file to support the bill. Prominent House Republicans backed it, too, although they generally refrained from speaking out at a time when doing so would divert attention from the spectacle of Obama at odds with lawmakers of his own party.
Rep. John Boehner of Ohio, in line to become House speaker when Republicans take power in January, “supports the framework as agreed to by” Obama and McConnell and spoke with the president about it over the weekend, a spokesman said Thursday.
Rep. Paul Ryan, of Wisconsin, whose views on economic issues are influential among House Republicans, also swung behind it. “While I have concerns with some specific aspects of the plan, I support the proposed framework to avert further economic hardship and provide a first step to restore the foundations for sustained growth and job creation,” he said in an interview.
It was not clear precisely what changes House Democrats would seek, but much of the criticism focused on a provision that would cut taxes on large estates.
Speaker Nancy Pelosi, D-Calif., said, “That was a bridge too far for many of our members” already upset about Obama’s decision to bow to Republican demands for extending tax cuts on individuals making over $200,000 and couples earning more than $250,000.
Under the estate tax provision, the first $5 million of a couple’s estate could pass to heirs without taxation, and an additional $5 million for the spouse. The balance would be subject to a 35 percent tax rate.
According to a Tax Policy Center estimate based on census data, that would mean only about 3,500 estates would be liable for taxes in 2011, out of more than 2.5 million forecast to be filed. Barring legislation, about 44,000 estates would be subjected to taxation in 2011, the groups said.
Some Democratic officials suggested a relatively minor change to the estate tax portion of the Obama-GOP deal might assuage critics of the plan. If accepted, however, it could come at a price in the form of additional concessions to Republicans, several officials said.
Vice President Joe Biden told Democrats in closed-door meetings this week that they were free to oppose the agreement but that it might unravel if they did, according to officials familiar with the discussions.
Whatever the disagreement over the economic wisdom of renewing tax cuts for the wealthy, the legislation also marked the emergence of a new era of divided government after midterm elections in which the Republicans won power in the House and gained seats in the Senate.
Privately, several House Democrats complained that the White House had not consulted them while negotiating a deal with McConnell.
The House passed a measure last week that would have let the tax cuts lapse at higher incomes, but Senate Republicans blocked it Saturday – with the knowledge the president had already agreed he was ready to sign a measure that was more to their liking.
Democrats and Republicans have spent two years gridlocked over the question of extending the expiring tax cuts, and Obama characterized his compromise with Republicans as a temporary, two-year concession on a policy he opposed.
House and Senate Democrats debated privately in the weeks before the elections whether to hold votes on the issue. They decided not to at that time after lawmakers who were seeking re-election said they would prefer not to go on record if it meant Republicans would attack them for raising taxes on small businesses.
• Northwest Herald reporter Joe Bustos contributed to this story.
