Dems in re­volt over Obama tax com­pro­mise

The Washington Times Weekly - - Politics - BY KARA ROW­LAND AND STEPHEN DINAN

Fac­ing a back­lash from Democrats over the tax-cut deal he struck with the GOP, a fiery Pres­i­dent Obama lashed out at mem­bers of his own party on Dec. 7, telling them not to let a par­ti­san fight scut­tle the chance to keep taxes low for mid­dle-class Amer­i­cans.

Many Democrats have re­volted against the deal — which would com­bine a two-year ex­ten­sion of the Bush-era in­come-tax cuts and a re­newed es­tate-tax cut with a pay­roll-tax hol­i­day and an ex­ten­sion of un­em­ploy­ment ben­e­fits for the long-term job­less — say­ing it marks a re­treat from Mr. Obama’s cam­paign prom­ise to let the tax cuts for the wealth­i­est Amer­i­cans ex­pire. They had pressed for the pres­i­dent to fight down to the wire.

But with grid­lock threat­en­ing to ex­tend through the end of the year, Mr. Obama said, he’s not will­ing to risk a tax in­crease on the mid­dle class just to score par­ti­san points.

“I’m not here to play games with the Amer­i­can peo­ple or the health of our econ­omy,” Mr. Obama said at a sur­prise news con­fer­ence in the White House press brief­ing room, called to try to build sup­port for the deal.

It was un­clear, though, whether he can se­cure the votes to pass it.

The nearly $1 tril­lion agree­ment has opened a deep di­vide with the left wing of his own party, which for years has de­cried the 2001 and 2003 Bush tax cuts as skewed to the wealthy, and has ea­gerly awaited their sun­set­ted ex­pi­ra­tion at the end of this month. Demo­cratic lead­ers said they will try to al­ter the pack­age, while Sen. Bernard San­ders, a Ver­mont in­de­pen­dent who cau­cuses with Democrats, vowed to lead a fil­i­buster.

“I think we have a winnable fight here,” Mr. San­ders said. “I in­tend to do ev­ery­thing I can to de­feat this pro­posal and bring back some­thing that pro­tects the mid­dle class and un­em­ployed work­ers and not the wealth­i­est peo­ple in the coun­try.”

Some Repub­li­cans also ob­jected to the agree­ment, ar­gu­ing that the mix of tax cuts and more spend­ing will only worsen the govern­ment’s al­ready deep fis­cal hole.

Sen. Ge­orge V. Voinovich, Ohio Repub­li­can and fre­quent bud­get hawk, said he’ll “stick to my guns” and vote against the deal. Some other Repub­li­cans said they weren’t sure how they would vote, call­ing them­selves “con­flicted” over hav­ing to ac­cept higher spend­ing in ex­change for their sought-af­ter tax cuts.

But cen­trist Repub­li­cans and Democrats praised the bi­par­ti­san deal, say­ing it would put an end to long-brew­ing un­cer­tainty over the cuts, which are set to ex­pire at the end of this year.

“If we don’t come to an agree­ment on taxes, ev­ery­body’s taxes are go­ing to go up,” said Sen. Joe Lieber­man, a Con­necti­cut in­de­pen­dent who also cau­cuses with Democrats, and who said Mr. Obama showed lead­er­ship in strik­ing the deal af­ter his pre­ferred op­tion of in­creased taxes for wealth­ier tax­pay­ers was blocked in the Se­nate over the Dec. 4-5 week­end.

“It’s not go­ing to pass, so it be­comes a fu­tile fight, and not just fu­tile, but dam­ag­ing to all the peo­ple who would pay higher taxes in Jan­uary,” Mr. Lieber­man said.

The deal Mr. Obama struck with Repub­li­cans would ex­tend all of the Bush-era in­come-tax cuts, would ex­tend un­em­ploy­ment ben­e­fits for 13 months, would set the es­tate-tax rate at 35 per­cent for es­tates val­ued at more than $5 mil­lion, and would give a one-year pay­roll-tax re­duc­tion, which amounts to a $120 bil­lion tax cut.

Democrats had sought both a higher es­tate tax and had wanted to see the in­come-tax cuts ex­tended only for in­di­vid­u­als with in­comes lower than $200,000, or cou­ples with in­comes lower than $250,000.

In pointed com­ments that seemed more aimed at his own party than the Amer­i­can pub­lic, Mr. Obama em­pha­sized that he had agreed only to a tem­po­rary ex­ten­sion of tax cuts for the wealthy, which vir­tu­ally guar­an­tees that this same fight will break out again in 2012, in the heat of a pres­i­den­tial cam­paign.

The pres­i­dent said he wel­comes that fight, but that his pri­or­ity now is to make sure tens of mil­lions of Amer­i­cans don’t see a tax in­crease at the end of this month.

“This is the ‘pub­lic op­tion’ de­bate all over again,” the frus­trated pres­i­dent told re­porters, re­fer­ring to his ad­min­is­tra­tion’s de­ci­sion to yield on a govern­ment-run in­surance op­tion fa­vored by lib­er­als in or­der to se­cure pas­sage of his sweep­ing health care bill ear­lier this year. “If that’s the stan­dard by which we are mea­sur­ing suc­cess or core prin­ci­ples, then, let’s face it, we will never get any­thing done.”

In a bid to win over Se­nate Democrats, the White House sent Vice Pres­i­dent Joseph R. Bi­den Jr. to the cau­cus’s lunch on Dec. 7, but judg­ing by subse- quent state­ment to the press from Se­nate Ma­jor­ity Leader Harry Reid, Ne­vada Demo­crat, Mr. Bi­den failed to sell his for­mer col­leagues on the plan.

“I think we’re go­ing to have to do some more work,” Mr. Reid said when asked if his party would back the agree­ment.

Try­ing to win over wa­ver­ing Democrats, the Demo­cratic Na­tional Com­mit­tee, con­trolled by Mr. Obama’s al­lies, sent re­porters copies of ar­ti­cles from lib­eral pun­dits who ar­gued the deal was “im­per­fect, but not that bad” or “mak­ing the best of a bad sit­u­a­tion.”

In his news con­fer­ence, Mr. Obama ar­gued that the loom­ing shift in power — in Jan­uary, Repub­li­cans will take con­trol of the House and gain six seats in the Se­nate — meant the deal he struck was the best Democrats could hope for. He said Repub­li­cans have turned ex­tend­ing the tax cuts for the wealth­i­est Amer­i­cans into their “holy grail.”

Per­haps sig­nal­ing his dis­dain for the deal, at one point the pres­i­dent likened the GOP to hostage­tak­ers, hear­ken­ing back to his ac­cu­sa­tions that they were hold­ing the mid­dle-class tax cuts “hostage.”

“I think it’s tempt­ing not to ne­go­ti­ate with hostage-tak­ers, un­less the hostage gets harmed,” he said. “Then peo­ple will ques­tion the wis­dom of that strat­egy. In this case, the hostage was the Amer­i­can peo­ple, and I was not will­ing to see them get harmed.”

Seth McLaugh­lin trib­uted to this re­port.

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AS­SO­CI­ATED PRESS

Pointed re­marks: At a news conference on Dec. 7, Pres­i­dent Obama likened the GOP to hostage-tak­ers, hear­ken­ing back to his ac­cu­sa­tions that Repub­li­cans were hold­ing mid­dle-class tax cuts “hostage.”

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