Democrats Down on Tax Deal Hope There’s Time for Tweaks

Republicans, White House Want Package to Stand

Posted December 8, 2010 at 6:44pm

Updated: 9:37 p.m.

House Democrats outraged by the $900 billion tax cut deal President Barack Obama negotiated with Senate Minority Leader Mitch McConnell (R-Ky.) are trying to build momentum to amend it, but they appear to lack the leverage they need to get very far.

The clock is working against liberals — in a few weeks, House Minority Leader John Boehner (R-Ohio) will be Speaker and have the power to set the agenda. And Majority Leader Harry Reid (D-Nev.) appears to be moving toward a vote in the Senate, saying Wednesday that he hoped to have the tax package on the floor in the next several days. If the Senate approves the deal by the end of the week, Members could send it to the House for consideration sometime next week.

The odds aren’t discouraging the Democrats’ liberal base, which hopes at the very least to send Obama a message to fight harder for their priorities before agreeing to a compromise.

“Everyone’s really up in arms here,” Rules Chairwoman Louise Slaughter (D-N.Y.) said.

Education and Labor Chairman George Miller (D-Calif.), a top ally of outgoing Speaker Nancy Pelosi (D-Calif.), said Members were “scouring the bill” to see what they could add or subtract to allay Democrats’ concerns. Miller outlined several items the Caucus hopes to change, including a $10 million estate tax exemption, the lack of investment in items such as clean energy tax credits and the bill’s skewing of tax breaks to the top end of the income scale.

“When you are giving a tax increase to people under $40,000 a year and giving tax breaks to the top 1 percent, there is something wrong with that,” Miller argued.

Under the plan, lower-income families would lose out on Obama’s “Making Work Pay” tax credit. Sources say that was cut to make way for a 2 percent payroll tax break for all wage earners.

A Republican source said the White House wanted to keep the credit but McConnell refused.

Financial Services Chairman Barney Frank (D-Mass.) said he didn’t see much of an opportunity to change the deal now. And when he asked whether he thought the administration had the votes to pass it as it stands, Frank said, “I’m afraid they do.”

Neither Obama nor Republicans seem willing to make any changes to the framework, which the president announced at a press conference Monday night. Congressional Democrats have complained that the deal was hatched without their input.

“The agreement is essentially final,” McConnell said Tuesday.

“What we agreed to is what we agreed to,” a senior GOP Senate aide added.

Liberals don’t appear to be listening.

“I still haven’t seen what the president has agreed to with Republicans,” Sen. Tom Harkin (D-Iowa) complained. “The president has seen it. Republicans have seen it. But we haven’t seen it.”

Harkin said that during a Senate Democratic caucus meeting Wednesday afternoon, there was “a lot of determination to make amendments” to the package; he said his support for the deal hinges on what changes are made.

Even though Reid said he’s planning to bring the bill to the floor, he has so far refused to say whether he is in favor of the plan. “There are some things I think would make the bill much better,” Reid said.

Sen. Jeff Merkley is shopping around a proposed amendment that would rescind tax cuts for those making more than $1 million a year and use the savings to shore up Social Security, one Democratic aide said. The Oregon Democrat is trying to build enough support from his fellow Democrats to get a vote on the proposal during Senators’ debate on the measure.

But Senate Democrats are beginning to concede that any tweaks to the package would have to be made before legislation is brought to the floor.

“It will not be an amendable bill, so the reasonable changes we talk about would be the kind you do before,” a Democratic Senate aide said.

Accepting an all-or-nothing deal has been an easier sell for most Republicans. So far just two Senators, Jim DeMint (S.C.) and George Voinovich (Ohio), have objected. McConnell briefed his Conference on his talks with the White House throughout the process, giving updates on where the negotiations were and providing Members with details.

Reid knew of the negotiations, but he was not directly involved. Democrats have said they were surprised by the final agreement that Obama presented.

The lack of participation by Congressional Democrats combined with a sense that Obama gave up too much to Republicans is helping drive the Democratic demand for changes, aides said.

Among those leading the rebellion in the House is Rep. Peter DeFazio, who is pushing for the Democratic Caucus to take an intraparty vote opposing it. The Oregon Democrat ripped the payroll tax cut as a “very bad idea,” arguing it would undermine Social Security.

A visit from Vice President Joseph Biden to the House Democratic Caucus on Wednesday afternoon helped thaw the chill between House Democrats and the White House, several Members said, although Biden made it clear that the deal wasn’t going to change.

“He made that very clear, they are where they are,” Miller said. But Miller still held out hope that amendments could pass in both chambers.

Speaker Nancy Pelosi (D-Calif.) also said they are still talking about possible change. “We’re going to see what the Senate’s going to do,” she said.

Several Members said Biden got an earful from some Members over the lack of communication from the White House before the deal was done, and he patiently listened as he heard a litany of complaints.

Rep. Phil Hare (D-Ill.) said he was leaning toward a “yes” vote after listening to Biden. “He made a pretty compelling case that we ought to get something done here,” Hare said. “He stayed and answered every question. I don’t think you could ask for more.”

Rep. Chris Van Hollen, meanwhile, criticized the White House for negotiating poorly by agreeing to an extra cut in the estate tax. Pelosi previously tapped the incoming Budget Committee ranking member to lead House Democrats in negotiations with the White House and Republicans on tax cut extensions.

“That did not have to be part of the deal,” the Maryland Democrat said in an MSNBC interview Wednesday.

“It was made very clear to the administration at every step of this process this was just a bridge too far,” Van Hollen said, adding that he had personally warned the White House against it. “There was no reason this had to be part of the deal.”

Asked whether the bill could pass in its current form this Congress, Van Hollen said, “I think the jury’s out.

“I’m not sure this bill can pass in this form in the House of Representatives.”