One of President Obama’s top economic advisers warned on Wednesday that the nation could slip back into recession if Congress did not pass the administration’s tax cut deal with Republicans, as the White House sought to press Democrats into backing the plan.
But Democrats in the House and Senate were still seething with anger — both about the substance of the deal, which includes keeping the Bush-era rates even on the highest incomes, and the way they were iced out of the negotiations. It was unclear that the ominous economic forecast would help. Senate Democrats said they were still pressing for changes to the plan, but Republicans and the White House showed no signs of flexibility.
Vice President Joseph R. Biden Jr., who failed on Tuesday to persuade many of his old Senate colleagues to get behind the plan, met with House Democrats for more than an hour on Wednesday. Dozens of lawmakers lined up to voice their displeasure, and to ask if there was any chance of reworking the plan, especially a provision setting a generous tax emption for wealthy estates.
“There is a substantial amount of dissatisfaction with the deal that was cut,” Representative Jim McDermott, Democrat of Washington, said after the meeting. “The Democratic caucus put itself on notice that it would not vote for tax cuts for the wealthy because we can’t afford them and because they are not needed, and that’s the point one Democrat after another is making.”
The continuing anger in Congress raised the likelihood that the tax deal would be approved largely with Republican votes. Enough Senate Democrats were expected to support the plan to surmount any filibuster. And in the House, given Republican support, it seemed possible for the tax plan to be adopted even with two-thirds or more of Democrats voting against it.
The deal would extend for two years the Bush-era tax cuts at all income levels, not just on income up to $250,000 per couple as President Obama had sought. In exchange, Republicans agreed to the administration’s demands for a 13-month continuation of jobless benefits for the long-term unemployed, a one-year reduction in the payroll tax for nearly all workers, and other steps aimed at lifting the economy.
The plan also includes an agreement to reduce the estate tax, which lapsed completely this year but is set to return on Jan. 1 with an exemption of $1 million per person and a maximum rate of 55 percent. The deal will set the exemption, or unified credit, at $5 million per estate, and the maximum rate at 35 percent — a higher exemption and lower tax than many Democrats want.
The Senate Republican leader, Mitch McConnell of Kentucky, excoriated Democrats for trying to bring up several other issues, including an immigration bill and a Pentagon policy measure that includes authorization to repeal the military’s “don’t ask, don’t tell” ban on open service by gay men and lesbians. Mr. McConnell urged the Democrats to bring the tax plan to the floor.
“Are we here to perform or to legislate?” Mr. McConnell asked, accusing the Democrats of forcing show votes on liberal ideals.
The majority leader, Harry Reid of Nevada, struggled on Wednesday to chart a path on several major items, including the tax proposal. Votes were tentatively scheduled for Thursday morning on the immigration measure, which would create a path to citizenship for certain illegal immigrants brought to the United States as young children, and on the military bill.
As attention focused mainly on the tax issue, House Democrats muscled through a stripped-down spending bill that would finance the federal government through Sept. 30 of next year, freezing the budgets of most agencies but including money for the war in Afghanistan.
The bill cuts nearly $46 billion from the president’s requested budget, and includes provisions for a two-year pay freeze for non-military federal employees.
The vote was 212 to 206, with 35 Democrats and all 171 Republicans in opposition.
With the president on the defensive with his own party, the White House marshaled an offensive that included circulating dozens of private-sector economic analyzes and endorsements from public officials.
But the big gun was the economic warning from Lawrence H. Summers, the soon-departing director of the White House National Economic Council.
“Failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip” recession, Mr. Summers told reporters at a briefing.
Mr. Obama, in a brief appearance with the president of Poland, rebutted a reporter’s question alluding to Congressional Democrats’ sense of betrayal.
“It is inaccurate to characterize Democrats writ large as feeling ‘betrayed,’ ” Mr. Obama said. “I think Democrats are looking at this bill, and you’ve already had a whole bunch of them who said this makes sense. And I think the more they look at it, the more of them are going to say this makes sense.”
The fight over the Bush-era rates would resume in the coming two years, Mr. Obama said, adding that he would make the case for “tax reform, that we’ve got to simplify the system.”
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http://www.nytimes.com/2010/12/09/us/politics/09cong.html
But Democrats in the House and Senate were still seething with anger — both about the substance of the deal, which includes keeping the Bush-era rates even on the highest incomes, and the way they were iced out of the negotiations. It was unclear that the ominous economic forecast would help. Senate Democrats said they were still pressing for changes to the plan, but Republicans and the White House showed no signs of flexibility.
Vice President Joseph R. Biden Jr., who failed on Tuesday to persuade many of his old Senate colleagues to get behind the plan, met with House Democrats for more than an hour on Wednesday. Dozens of lawmakers lined up to voice their displeasure, and to ask if there was any chance of reworking the plan, especially a provision setting a generous tax emption for wealthy estates.
“There is a substantial amount of dissatisfaction with the deal that was cut,” Representative Jim McDermott, Democrat of Washington, said after the meeting. “The Democratic caucus put itself on notice that it would not vote for tax cuts for the wealthy because we can’t afford them and because they are not needed, and that’s the point one Democrat after another is making.”
The continuing anger in Congress raised the likelihood that the tax deal would be approved largely with Republican votes. Enough Senate Democrats were expected to support the plan to surmount any filibuster. And in the House, given Republican support, it seemed possible for the tax plan to be adopted even with two-thirds or more of Democrats voting against it.
The deal would extend for two years the Bush-era tax cuts at all income levels, not just on income up to $250,000 per couple as President Obama had sought. In exchange, Republicans agreed to the administration’s demands for a 13-month continuation of jobless benefits for the long-term unemployed, a one-year reduction in the payroll tax for nearly all workers, and other steps aimed at lifting the economy.
The plan also includes an agreement to reduce the estate tax, which lapsed completely this year but is set to return on Jan. 1 with an exemption of $1 million per person and a maximum rate of 55 percent. The deal will set the exemption, or unified credit, at $5 million per estate, and the maximum rate at 35 percent — a higher exemption and lower tax than many Democrats want.
The Senate Republican leader, Mitch McConnell of Kentucky, excoriated Democrats for trying to bring up several other issues, including an immigration bill and a Pentagon policy measure that includes authorization to repeal the military’s “don’t ask, don’t tell” ban on open service by gay men and lesbians. Mr. McConnell urged the Democrats to bring the tax plan to the floor.
“Are we here to perform or to legislate?” Mr. McConnell asked, accusing the Democrats of forcing show votes on liberal ideals.
The majority leader, Harry Reid of Nevada, struggled on Wednesday to chart a path on several major items, including the tax proposal. Votes were tentatively scheduled for Thursday morning on the immigration measure, which would create a path to citizenship for certain illegal immigrants brought to the United States as young children, and on the military bill.
As attention focused mainly on the tax issue, House Democrats muscled through a stripped-down spending bill that would finance the federal government through Sept. 30 of next year, freezing the budgets of most agencies but including money for the war in Afghanistan.
The bill cuts nearly $46 billion from the president’s requested budget, and includes provisions for a two-year pay freeze for non-military federal employees.
The vote was 212 to 206, with 35 Democrats and all 171 Republicans in opposition.
With the president on the defensive with his own party, the White House marshaled an offensive that included circulating dozens of private-sector economic analyzes and endorsements from public officials.
But the big gun was the economic warning from Lawrence H. Summers, the soon-departing director of the White House National Economic Council.
“Failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip” recession, Mr. Summers told reporters at a briefing.
Mr. Obama, in a brief appearance with the president of Poland, rebutted a reporter’s question alluding to Congressional Democrats’ sense of betrayal.
“It is inaccurate to characterize Democrats writ large as feeling ‘betrayed,’ ” Mr. Obama said. “I think Democrats are looking at this bill, and you’ve already had a whole bunch of them who said this makes sense. And I think the more they look at it, the more of them are going to say this makes sense.”
The fight over the Bush-era rates would resume in the coming two years, Mr. Obama said, adding that he would make the case for “tax reform, that we’ve got to simplify the system.”
Read More
http://www.nytimes.com/2010/12/09/us/politics/09cong.html
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