House Democrats Reject Tax Plan Unless Changed

Thursday, 09 Dec 2010 12:24 PM

By David A. Patten

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In a stunning rebuke to President Barack Obama, House Democrats revolted Thursday morning by voting to block the extension of the Bush tax cuts in the lame-duck session of Congress.

Democrats took the nonbinding voice vote behind closed doors, agreeing not to approve the compromise that the president negotiated with GOP leaders this week.

obama,tax,cut,rejection,house,democrats,pelosiThe voice vote appeared to be nearly unanimous. The Democratic resolution declared: “The Democratic Caucus resolves that in its present form, the tax package should not come to the floor of the House.”

The vote means House Speaker Nancy Pelosi and other Democratic leaders will have to negotiate changes in the bill to make it more palatable to House Democrats before they can bring it to the House floor for a vote. The Obama administration has insisted that the compromise must be approved as is and cannot be modified.

Unless both the House and Senate approve the tax deal, the tax breaks of 2001 and 2003 will be repealed automatically as of Jan. 1. That would result in one of the largest tax increases in history, in the middle of an economic slowdown. Forbes magazine CEO Steven Forbes has described the impact of the tax cuts expiring as “a train wreck” on the economy.

Opinions differ on whether the caucus vote was merely symbolic or spells real trouble for the Obama presidency. Liberals have been increasingly outspoken against the tax-cut deal since the president announced it late Tuesday.

“It’s a bluff,” Democratic pollster and Fox News commentator Douglas Schoen tells Newsmax of the vote by House Democrats. “I believe he will get the 40-odd Democratic votes or more he needs for passage, assuming there is near unanimous Republican support.”

But Schoen also adds, “If for some reason the legislation is not passed, and the deal collapses, it would serve as a very serious, and potentially mortal, wound to the Obama presidency.”

At the very least, the Democratic caucus' vote shows that Obama will have to rely on Republicans and moderate Democrats to have any chance of getting the Bush tax extensions through Congress.

House Democrats say they oppose the bipartisan deal worked out in the Senate because it would lower the estate or “death” tax to 35 percent. They also want the continuation of tax breaks for middle-class families “de-coupled” from the Bush tax breaks for families earning $250,000 or more per year.

Rep. Peter DeFazio, D-Ore., said the vote was intended to force the White House to return to the negotiating table, to forge a better deal for progressives, according to The Hill.com.

“We have tremendous concerns about what was given away by the White House to Mitch McConnell in the Senate,” DeFazio said.

DeFazio told the press he spoke with House Speaker Nancy Pelosi before the resolution was offered. He said she did not express any objections or ask that it not be submitted.

A spokesman for incoming House Speaker John Boehner, R-Ohio, pointed out after the Democratic vote that President Obama and Republicans agree on the need for extension of the tax breaks for all Americans.

“President 0bama has said failing to stop all of the tax hikes scheduled for January 1 will have serious consequences on the economy. House Republicans agree,” said spokesman Michael Steel.

Obama warned Thursday that, unless Congress approves the tax breaks, the economy will take a major step backwards and the unemployment situation will only get worse. Administration officials have even suggested it could propel the economy into a double-dip recession.

A poll released Thursday by Rasmussen Reports suggests House Democrats are seriously out-of-step on the issue as far as voters are concerned. By a 56 to 29 percent margin, voters say the GOP-Obama compromise to extend the tax breaks is a good idea and should be approved by Congress.

“House Democrats are angry about both the substance and the procedures,” University of Virginia Center for Politics director Larry J. Sabato tells Newsmax. “They hate the tax cut extension for the top 2 percent, and despise even more the estate tax provisions.

“But I also suspect they are miffed at being left out of the negotiations. House Democrats have not adjusted to the new post-November reality that they don’t matter very much, going forward. They’re in Siberia starting Jan.5, and they’re cursing the inevitable coming of the cold night.”

Sabato suspects the vote may simply represent another attempt to win favor with the liberal base of the Democratic Party.

“This was a nonbinding voice vote in caucus,” he said. “It might change by the time we get to the real vote on the House floor. In other words, this could have been a message-sending, let-the-steam-out shout.”

If Congress fails to enact the tax extension, the new tea-party oriented Congress of 2011 would probably revisit the issue and pass it anyway — possibly on terms even less favorable to Democrats. But economists and pundits have warned that will add to the uncertain business climate and would cause a significant delay until the revised withholding of tax dollars from U.S. taxpayers’ paychecks could be adjusted.

Democratic mayors and governors, meanwhile, are urging congressional Democrats to go along with the tax-break extension. Speaking Thursday on MSNBC, Michigan Gov. Jennifer Granholm urged her fellow Democrats:

“It’s good to have a fight, but at the end of the day, before you leave for the Christmas break, get this done please,” she said. “Because the ramifications of not getting this done on people here and throughout the nation is devastating.”





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