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House Democrats Reject Obama's Tax-Cut Deal; Senate Set to Debate

3 years ago
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The Senate Thursday evening started a round of procedural votes in preparation for debate on a compromise package that includes an extension of the Bush-era tax cuts for all earners as well as benefits for the long-term unemployed. A vote could come as early as Saturday.

Despite a rejection of the deal by House Democrats, President Obama predicted the "framework" of the compromise would get through Congress. "Nobody – Democrat or Republican – wants to see people's paychecks smaller on January 1 because Congress didn't act," he said in an interview with NPR to be aired on Friday.

Meanwhile, the tax-cut debate is expected to be high on the agenda Friday afternoon when the president and Bill Clinton meet at the White House for a one-on-one discussion covering a range of issues, including the midterm elections and the Democrats' way forward in 2011.

Still furious over the compromise that Obama struck with Senate Republicans on the expiring Bush tax cuts, House Democrats voted Thursday not to take up the negotiated package and instead work to find a measure that they could support.

Although it was a nonbinding voice vote cast in a closed Democratic caucus meeting, the gesture was nonetheless designed to send a message to the president that House Democrats remain unhappy with the concessions he made in his efforts to avoid the expiration of the tax cuts at the end of the year.

"Democrats think the White House mismanaged this thing and gave away too much," said a senior Democratic aide familiar with the vote.

The caucus met Thursday morning away from the House floor to discuss its options in the face of a package that many Democrats are still against. Although many had hoped to modify the proposal before a House vote, Vice President Biden told the Democrats in a meeting Wednesday that the deal that had been struck with Republican leaders would not be changed.

Rep. Chris Van Hollen (D-Md.)But House Speaker Nancy Pelosi said Thursday that she and her caucus are still working to modify the deal and indicated that no vote has been scheduled. "We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote," she said after the caucus.

The tentative agreement that Obama announced Monday night would extend for two years the Bush tax cuts for all earners, while also continuing current tax rates on dividends and capital gains. In addition, the estate tax, which expired in 2009, would be temporarily set at 35 percent with a $5 million exemption, and extended unemployment benefits would continue for 13 months. Obama also said negotiators agreed to a one-year, 2-percentage point cut in the payroll tax for all workers.

Of all of the details in the package, the most galling to liberals seemed to be the compromise to extend the tax cuts for the highest earners, which many Democrats fought when the tax relief passed Congress in 2001 and 2003. They have railed against those reductions ever since. Democrats had also wanted to make permanent the tax cuts for middle- and lower-income workers. That was not included in the deal.

After the vote, Rep. Chris Van Hollen (D-Md.) spoke to reporters and explained the thinking. "This message today is very simple: That in the form that it was negotiated, it is not acceptable to the House Democratic caucus. It's as simple as that," said Van Hollen, a member of Pelosi's leadership team.

In another sign of unrest Thursday morning, Rep. Peter Welch (D-Vt.) announced that he had secured 53 signatures on a letter to Pelosi urging her not to bring the compromise up for a vote.

In the letter, Welch and his colleagues called the proposal "fiscally irresponsible" and "grossly unfair."

"America is wading into fiscal quicksand. Borrowing nearly a trillion dollars to finance tax cuts that disproportionately favor millionaires and billionaires threatens our ability to create jobs, grow the middle class and protect seniors," Welch said. "Digging the country deeper into debt to pay for misguided tax policy is irresponsible and simply doesn't make sense."
Tagged: Bush tax cuts

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