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Obama, GOP Reach Tax Cuts Deal

Bowing to Republican demands for a two-year extension of all the Bush-era tax cuts, President Barack Obama on Monday night dismissed Democratic complaints about his deal with the GOP, calling the prospect of a protracted political battle a mistake.

Obama cut the deal with Republicans after several days of behind-the-scenes negotiations that involved no House or Senate Democrats. In exchange for a 13-month extension of unemployment insurance and a handful of other Democratic tax proposals, Obama agreed to the two-year extension of the tax cuts — as well as a GOP demand to include a two-year exemption from the estate tax for estates worth $5 million or less.

In a speech Monday evening broadcast on all news channels, Obama brushed aside Democratic complaints, saying, “I am not willing to let working families in this country become collateral damage in political warfare here in Washington.”

But the scope of the deal received a cool response from Democrats — even those like Senate Majority Leader Harry Reid (Nev.) who had long warned a short-term extension of all the cuts was likely necessary.

“Now that the president has outlined his proposal, Senator Reid plans on discussing it with his caucus tomorrow,” Reid spokesman Jim Manley said simply in a statement following Obama’s address.

In his statement, Obama sought to characterize the agreement as a necessary evil to break the partisan logjam over taxes.

Pointing to two failed votes on extensions of only the middle-class tax cuts, Obama argued that “Republicans will block a permanent tax cut for the middle class unless they also get a permanent tax cut for the wealthiest Americans. … Without a willingness to give on both sides, there’s no reason to believe that this stalemate won’t continue well into next year.”

Obama said that while he would prefer to continue fighting Republicans, he sees no value in waging a symbolic war.

“Sympathetic as I am to those who prefer a fight over compromise, as much as the political wisdom may dictate fighting over solving problems, it would be the wrong thing to do. The American people didn’t send us here to wage symbolic battles or win symbolic victories,” he said.

But convincing Democrats in the House and Senate will likely be more difficult.

In the Senate, while most Democrats had come to terms with the reality that they could not pass middle-class tax cuts alone, numerous Democratic aides said the agreement went far beyond what had been expected, particularly the inclusion of the estate tax language.

Senate Democratic Conference Vice Chairman Charles Schumer (N.Y.), who has been a vocal leader of Democratic opposition to a deal, said Saturday he was not ruling out fighting back, even if it means letting the tax cuts lapse at the beginning of next year.

“There’s lots of people in our caucus who have that appetite,” he said.

However, Vice President Joseph Biden is scheduled to attend Senate Democrats’ luncheon Tuesday, and several aides said that despite complaints there is at least a theoretical path to passage in the Senate with a majority of the party backing the bill.

If the Senate poses its own difficulties, Obama could run into even more problems in the House.

“This may well be rougher in the House than Senate. It may not be easy in either Democratic caucus, but the Senate road map may be a little easier,” a senior Senate Democratic aide said.

Liberal Democrats wasted no time in slamming the proposal.

In a letter to Speaker Nancy Pelosi (D-Calif.) Monday night, Rep. Peter Welch (Vt.) called the proposal “fiscally irresponsible” and “grossly unfair,” and he called on both Pelosi and Obama to reject the deal.

“We support extending tax cuts in full to 98 percent of American taxpayers, as the president initially proposed. He should not back down. Nor should we,” Welch said in the letter.

Republicans greeted Obama’s speech with praise.

Senate Minority Leader Mitch McConnell (Ky.) said he appreciated Obama and Biden for their “determined efforts” to work with the GOP “on a bipartisan plan to prevent a tax hike on any American and in creating incentives for economic growth.” 

“Their efforts reflect a growing bipartisan belief that a new direction is needed if we are to revive the economy and help put millions of Americans back to work,” McConnell said.

“Tonight’s announcement marks an important first step in giving all American families and businesses the certainty that their taxes will not increase on January 1,” Senate Minority Whip Jon Kyl (Ariz.) said in a statement. “While I wanted the rates to be made permanent, the current political makeup of this lame-duck Congress would not allow that.” 

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