Tax deal opens Democratic rift
Wednesday, December 8, 2010
President Obama on Tuesday faced an uprising among angry Democrats who strongly opposed his deal with Republicans on tax cuts, opening a public rift that could prevent the White House from ending the year with a fresh dose of stimulus for the economy.
The Obama-GOP compromise would extend all the tax cuts that are set to expire Dec. 31, including for the wealthiest households; continue long-term unemployment benefits through the end of next year; give businesses a major tax break to encourage capital investment; and provide working couples as much as $4,200 in extra cash in 2011 through a one-year payroll tax holiday.
The far-reaching package - which would add more than $900 billion to the deficit over the next two years, economists said - contains numerous other provisions, including extensions of smaller individual and business tax breaks that had been widely expected to lapse. Democrats expressed astonishment at the plan's scope and price tag, though they reluctantly conceded its potential to create jobs and boost consumer spending.
But they were furious that Obama capitulated to Republicans over the main provisions - an array of individual tax breaks signed by President George W. Bush nearly 10 years ago that have remained controversial.
Vice President Biden, who helped negotiate the accord, received a stony response when he pitched the package to Senate Democrats at a private luncheon Tuesday. Sen. Dianne Feinstein (Calif.) was among those who emerged unconvinced. "I'm just staggered by the enormity of this package," she said.
Others were in full revolt. Sen. Bernard Sanders (I-Vt.) was one of three senators who interrupted Biden's presentation. Afterward, he vowed to "do everything I can to defeat this proposal," including staging a filibuster.
"The president's heart is in the right place," Sanders said. But "I think he has not fully understood that the American people are prepared for a fight. The American people do not want to give tax cuts to billionaires."
Biden will return to the Hill on Wednesday to talk to House Democrats, according to several lawmakers.
The center of the debate
Set to expire on New Year's Eve, the Bush tax cuts are at the heart of a post-election drama: Obama and most Democrats have sought to end benefits for the wealthiest households as a down payment on deficit reduction. But Republicans oppose any form of tax increase and blocked two attempts by Senate Democrats to preserve only the provisions that benefit the middle class.
At a news conference Tuesday, Obama said he had weighed the alternative to a GOP deal - allowing all the tax cuts to expire - and concluded the price was too high.
"I understand the desire for a fight. I'm sympathetic to that. I'm as opposed to the high-end tax cuts today as I've been for years," he said. "But in the meantime, I'm not here to play games with the American people or the health of our economy."
For the first time in his presidency, Obama is pursuing a legislative path that does not cut exclusively through Democratic territory. Republicans, who opposed the president virtually unanimously on all of his major initiatives over the past two years, warmly embraced the tax deal. Senate Minority Leader Mitch McConnell (Ky.) called the plan "essentially final" and predicted that a "vast majority" of Senate Republicans will back it.