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Obama Defends Tax Deal While Reid Seeks Changes

Tuesday, 07 December 2010 03:46 PM

Firing back at his Democratic critics, President Barack Obama on Tuesday crisply defended concessions he made to Republicans as part of a tax cut compromise, saying, "I'm not here to play games with the American people or the health of the economy."

At a news conference called on short notice, the president said that if approved by Congress, the agreement "would mean real money, it will make a real difference in the lives of the people who sent us here."

Top Democrats in Congress signaled they will seek changes in the agreement.

"It's something that's not done yet," said Senate Majority Leader Harry Reid, D-Nev. "We're going to have to do some more work," Reid said after a closed-door meeting with Vice President Joe Biden and members of the Democratic rank-and-file.

Across the Capitol, House Speaker Nancy Pelosi, normally one of Obama's staunchest allies, made plain her unhappiness, issuing a statement that contained no commitment to help pass the plan. "We will continue discussions with the president and our caucus in the days ahead."

The deal, which officials said would add approximately $900 billion to the deficits over two years, includes an extension of expiring income tax cuts at all income levels, a renewal of jobless benefits and a one-year cut in Social Security taxes paid by workers.

Democratic opposition focused chiefly on two parts of the deal that marked concessions to Republicans — the decision to let expiring income tax cuts remain in effect for the upper income, and a change in the estate tax that the GOP has long sought.

Obama readily conceded he had bowed to Republican demands to extend tax cuts to those with the highest incomes as well as to the middle class, one of the principal criticisms leveled by Democrats in Congress and those in organized labor who normally stand should to shoulder with him on economic issues.

But the president said his only alternative was gridlock in Congress.

After the meeting with Biden, Sen. Ben Nelson of Nebraska quoted him as saying, "It's a bad situation and a good deal." House Democrats arranged a similar closed-door meeting for late in the day, but it was not known if Biden would attend.

Senate Republican leader Mitch McConnell, R-Ky., said he thinks the "vast majority" of GOP senators will support the plan.

The administration mounted a full-scale defense of the agreement, saying it would pump billions into the economy at a time the economy is recovering from the worst recession in eight decades and unemployment stands at 9.8 percent.

Sen. Joe Lieberman of Connecticut, a Democrat-turned-independent, urged support for the plan. "This tentative agreement is an example of Washington working across party lines to confront the challenges facing our nation," he said.

But in public and private, Democrats expressed anger that Obama had bowed to Republican demands to extend the expiring tax cuts on the upper income and make additional concessions to the GOP on estate tax relief.

Republican officials said Biden had played a key role in negotiations on the deal, and had spoken often in recent days with McConnell.

Biden also fielded complaints from Pelosi and other Democrats in a meeting Saturday night, and again on Monday at the White House before the president announced publicly he had agreed on a framework agreement with the GOP.

The liberal group MoveOn, which claims 5 million members, came out against the plan, saying the wealthiest Americans don't need tax cuts that were scheduled to expire this month. "The president's commitment to bipartisanship should not mean leaving principles behind," MoveOn said.

But Biden urged congressional Democrats to quickly embrace the plan, saying Congress needs to move on to other issues before the Democrats lose control of the House in January. The president has made ratification of a new arms control treaty with Russia a top year-end priority.

Both houses must approve any tax bill.

In her statement, Pelosi said the compromise plan shows that Democrats want to help low- and middle-income workers while the GOP's chief concern is the wealthiest Americans.

But others noted that Obama had abandoned a long-held position in fashioning the compromise.

Obama promised in his 2008 campaign — and many times since — that these breaks would be continued only for the middle-class. But some in his own party and liberal groups attacked the new tax plan, and even the Democratic leadership in Congress gave it a cool, noncommittal reception.

Besides holding current tax rates in place for all, the proposal would extend unemployment benefits and reduce payroll taxes for a year, which would help many lower-income Americans.

Obama has said that he still prefers to let the tax cuts expire for households earning more than $250,000 a year. Obama, while acknowledging Democratic unrest, agreed to extend all the tax breaks for two years, noting that Republicans wanted a permanent extension.

The emerging agreement includes tax breaks for businesses that the president said would contribute to the economy's recovery from the worst recession in eight decades.

The proposed Social Security tax cut would apply to virtually every working American. For one year they would pay 4.2 percent of their income, instead of 6.2 percent, to the government retirement program, fattening U.S. paychecks by $120 billion in 2011.

Someone earning $40,000 a year would receive a $800 benefit, and a $70,000 earner would save $1,400, officials said. More than three-fourths of all Americans pay more in these so-called payroll taxes than in federal income taxes.

The White House said money from other sources would be shifted so the Social Security trust fund loses no revenue.

Obama said he reluctantly made another concession to Republicans, concerning the estate tax. It would tax estates worth more than $5 million at a rate of 35 percent, a GOP goal. Democrats favored a $3.5 million threshold, with a 45 percent tax on anything higher.

Obama's willingness to compromise with Republicans comes a month after the GOP won resounding victories in congressional, gubernatorial and state legislative elections.

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Firing back at his Democratic critics, President Barack Obama on Tuesday crisply defended concessions he made to Republicans as part of a tax cut compromise, saying, I'm not here to play games with the American people or the health of the economy. At a news conference...
Tuesday, 07 December 2010 03:46 PM
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