Democrats in Senate warming to tax deal

Washington Post Staff Writers
Thursday, December 9, 2010

Senate leaders are planning to begin debate on a far-reaching tax package as soon as Thursday as rank-and-file Democrats warm to an agreement between the White House and Republicans to extend a host of expiring tax cuts and pump fresh cash into the economy.

Democrats were still angry Wednesday about what they viewed as President Obama's capitulation to GOP demands to preserve tax cuts for the wealthiest Americans, particularly a deal to exempt estates worth as much as $10 million from a revived inheritance tax. But lawmakers said the magnitude of the concessions Obama won came into sharper focus Wednesday as the White House highlighted independent forecasts predicting that the package could create as many as 2.2 million jobs next year.

For a second day in a row, White House officials made the rounds on Capitol Hill, stressing the economic significance of their deal with Republican leaders to preserve tax cuts that are set to expire on New Year's Eve, extend long-term unemployment benefits through next year, and create major new tax breaks for businesses and individuals aimed at spurring investment and consumer spending.

While Vice President Biden and House Democrats met into the evening, White House budget director Jacob Lew and senior Treasury adviser Gene Sperling held an afternoon session to field questions from Senate Democrats, who were more accepting of the package than they were a day earlier in a meeting with Biden, participants said.

"Members are more open today as they read the analyses of this package," said Sen. Richard J. Durbin (Ill.), the chamber's No. 2 Democrat. Citing prominent liberals such as John Podesta, head of the Center for American Progress, and Robert Greenstein, executive director of the Center on Budget and Policy Priorities, who endorsed the White House plan, Durbin said, "These are people that progressives respect and go to, and they've said positive things."

Durbin added that "I just loathe" parts of the deal, such as the provision on the estate tax. But he said: "I understand the predicament that we're in."

Biden faced a far tougher crowd in the House, where a fractious caucus dominated by angry liberals is emerging as the bigger legislative obstacle to the tax plan. During a two-hour meeting, dozens of lawmakers lined up to interrogate the vice president about the deal - almost all of them speaking in opposition, participants said.

"There remain very serious reservations on the House side. I think that there's still a very serious question whether this package can pass in the form it's in now," Rep. Chris Van Hollen (Md.) said afterward. Van Hollen represented House Democrats in bipartisan talks about the tax cuts that were rendered moot when the White House began dealing directly with Republican leaders, a slight that rankled nearly as much as Obama's decision to abandon the long-held Democratic position of opposing tax breaks for the wealthy.

Many Democrats, including Rep. James E. Clyburn (S.C.), the third-ranking House leader, emerged from the meeting saying they could not support the package unless major elements were changed, particularly the estate tax provision.

Most Democrats would prefer to renew the tax, which lapsed last year, with a 45 percent rate on estates worth more than $3.5 million for individuals and $7 million for couples. The Obama-GOP deal would impose a 35 percent tax on estates larger than $5 million for individuals and $10 million for couples for the next two years. If that change were made permanent, it would add $100 billion to deficits over the next decade, Democrats said.

In a forceful presentation, however, Biden made it clear that big changes are not in the cards. "The vice president said: 'This is the deal. Take it or leave it,' " an irritated Rep. Henry A. Waxman (Calif.) said, paraphrasing Biden.

The tax debate is a central piece of a broader strategy to wrap up the legislative session by Dec. 17. The House and the Senate are scrambling to complete unfinished business. This includes a major resolution to continue funding the federal government through Sept. 30, 2011, approved by the House on Wednesday, as well as smaller measures, such as a plan to protect doctors from a sharp cut in Medicare payments, which cleared the Senate by voice vote Wednesday night.

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