Facing frustration from Democrats, Obama defends tax cuts deal

By Scott Wilson, Felicia Sonmez and David A. Fahrenthold
Washington Post Staff Writers
Tuesday, December 7, 2010; 5:00 PM

A defensive President Obama cast himself Tuesday as the guardian of middle-class Americans and the unemployed, saying sharply that he had to strike a deal with Senate Republicans over the Bush-era tax cuts for the wealthy in order to protect the fragile economic recovery.

Facing broad frustration from his party's liberal base and many Democrats on the Hill, Obama emphasized the portions of the compromise he reached the previous day that benefit middle class families and the jobless, whose government insurance would have expired without the deal.

Obama said he had little choice but to compromise because he has been unable to persuade Senate Republicans to maintain middle-class tax cuts without also extending the top-tier tax rates for another two years - even though a majority of Americans agree tax cuts on high incomes should end.

"A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy and it would be a bad deal for the American people," Obama said during an afternoon news conference.

He also sharply criticized his party, accusing Democratic critics of failing to reasonably assess what he has achieved during a difficult political time. And he compared complaints that he has ceded too much ground on the tax debate to the objections from liberals during the health-care debate.

"This is a big, diverse country. Not everybody agrees with us," he said. "I know that shocks people. You know, the New York Times editorial page does not permeate across all of America. Neither does The Wall Street Journal editorial page.

"Most Americans, they're just trying to figure out how to - how to go about their lives and - and how can we make sure that our elected officials are looking out for us."

Obama spoke as Vice President Biden urged Senate Democrats to support the tax compromise, a $700 billion package that will be paid for through additional borrowing even as public concern mounts over the country's fiscal condition. Liberal Democrats, in particular, are furious over Obama's decision to extend the top-tier tax cuts. Obama campaigned in 2008 and again during the midterm season to end them.

Democrats emerged from their luncheon with Biden divided on the proposal.

"I'm not talking, I'm not talking," said Sen. Charles E. Schumer (D-N.Y.), whose proposal to let the cuts lapse for income over $1 million was defeated Saturday on a 53 to 37 vote. Schumer has said some Senate Democrats favor allowing the entire Bush tax package to expire on schedule Dec. 31, forcing the next Congress to resolve the issue.

Sen. Kent Conrad (D-N.D.), who is chairman of the Budget Committee and also a member of Obama's bipartisan deficit commission, told reporters that he was prepared to support the plan.

"There are parts of it that I dislike very much, but look, we've got to deal with reality here," Conrad said, adding that deficit reduction has "got to be the next shoe that drops here."

Sen. Tom Harkin (D-Iowa), however, said he remained opposed to the plan in its current form, citing the extension of tax cuts for higher earners and the extension of unemployment insurance for only 13 months.

"Why didn't they get unemployment for two years if they wanted to do that?" he added.

Sen. Dianne Feinstein (D-Calif.) was one of several members still on the fence. "I'm not convinced or unconvinced at this stage," she said. "I'm just staggered by the enormity of this package."

Feinstein added that she and other members want to know the consequences of the package. "If we don't vote for this, what happens? Not politically, but economically. If we do vote for it, how sure can we be that it will in fact spawn jobs, pump the economy?" she asked.

Senate Majority Leader Harry M. Reid (D-Nev.) said that the tax-cut package could still be revised. "We'll work with the president and Congressional Republicans over the next many hours" on the package, he said.

Will Democrats approve the bill?

"Um," Reid paused. "I'm going to do what I think is right."

Republicans emerged from their own luncheon huddle vastly supportive of the package. "I think the vast majority of my members will be supportive," Senate Minority Leader Mitch McConnell (R-Ky.) said, calling the legislation "essentially final."

Obama used the news conference to present himself as above a political fight that his core constituency is eager to have with an emboldened Republican Party after a bitter midterm campaign, which culminated with Republicans taking the House and narrowing the Democratic majority in the Senate.

Speaking angrily at times, Obama said his "No. 1 priority is to do what's right for the American people" and protect what remains a halting economic recovery. He raised the threat of shrinking paychecks and millions of unemployed without government insurance benefits to carry them through, saying several times that "this is not an abstract fight."

In a nod to the sentiments of his base, Obama said "I understand the desire to fight" and committed to "fight" again in two years to end the top-tier tax cuts when they would be set to expire. He said tax cuts for the wealthy "remain the Republicans' Holy Grail."

But Obama, whose approval rating remains relatively high despite the midterm setback, also expressed deep frustration with his own party. He criticized congressional Democrats for not holding a vote on the Bush tax cuts before the midterm elections, which he said would have "crystallized the positions of the two parties." And he rejected the idea that he has ceded too much ground.

"You know, so this notion that somehow, you know, we are willing to compromise too much, reminds me of the debate that we had during health care. This is the public option debate all over again," he said, referring to liberal criticism over his inability to secure a government-run insurance option in his health-care overhaul.

Before the luncheon, many Senate Democrats were mum on whether they would support the deal, which would include the temporary extension of the George W. Bush administration tax cuts for all income levels, the extension of unemployment benefits for 13 months and a 2 percent cut in payroll taxes. Several said they were taken back by the scale of the proposal, which would also reenact the inheritance tax and extend college-tuition tax credits among other changes.

"It's very difficult to be for anything until you've seen everything," Sen. Ben Nelson (D-Neb.) told reporters as he headed into the luncheon. "Right now it looks to me like it's going in the right direction, and I reserve my judgment until I've seen everything."

Sen. Max Baucus (D-Mont.) stopped short of endorsing the package but signaled that he would support the reduction in the payroll tax, which he said would help stimulate the economy.

"The vice president is going to speak to us today, and I just want to keep my options open," Baucus said before the luncheon. "Whatever we can do to get the bulk of the American middle class working and companies hiring people and so forth, that's what I care about most."

Sen. Byron Dorgan (D-N.D.), meanwhile, said that he was "disappointed" to learn of the deal by reading about it in the newspaper and sounded an initial note of skepticism on it.

"We have a $13 trillion debt. We don't need to add another trillion dollars to it," Dorgan said. He then paused and added, "Well, let me look at the details and understand what they're doing."

Sen. Mary Landrieu (D-La.) said she had been one of a few Democrats to vote for the tax cuts under President George W. Bush. She said, however, that the cuts were funded by a large federal surplus at the time.

"Those tax cuts were paid for," Landrieu said. "We're now being asked to vote for a package that's not paid for."

Some liberal Democrats have lambasted the White House for the deal, with Sen. Bernard Sanders (I-Vt.) going so far as to suggest that he would filibuster the bill should it reach the Senate.

Sen. Frank Lautenberg (D-N.J.) on Tuesday added his voice to the chorus of Democrats dissatisfied with the deal.

"I think it's 'Let 'em eat cake,' that kind of attitude," he said, meaning giving benefits to the wealthy at the expense of the country. He said the cuts would give him a smaller tax bill, but "I don't need it."

wilsons@washpost.com sonmezf@washpost.com fahrenthold@washpost.com Washington Post staff writer Paul Kane contributed to this report.

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