House Democrats Oppose Tax Cut Deal
In a closed-door caucus meeting on Thursday morning, House Democrats voted to reject the tax cut deal between the White House and Congressional Republicans “as currently written.”
The House speaker, Nancy Pelosi, in a statement after the vote, said changes would need to be made before she would allow the bill to come to the floor for a vote.
“In the caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written,” Ms. Pelosi said. “We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.”
The caucus vote, which is not necessarily binding, nonetheless put Ms. Pelosi in a rare direct conflict with the White House, which is pressing Congress to approve the tax cut proposal.
“House Democrats share the president’s commitment to providing the middle class with a tax cut to grow the economy and create jobs,” Ms. Pelosi said. “The House passed a bill last week to provide tax cuts for all Americans but not a bonus tax cut to millionaires and billionaires. The extra tax cut for the top 3 percent does not create jobs and increases the deficit. Unfortunately, Senate Republicans blocked the bill from being approved by the Senate.”
Ms. Pelosi added, “Democratic priorities remain clear: to provide a tax cut for working families, to create jobs and economic growth, to assist millions of our fellow Americans who have lost their jobs through no fault of their own, and to do this in a fiscally sound way.”
The broad opposition to the tax cut plan among most House Democrats is no surprise, but the potential unwillingness of Ms. Pelosi to bring it to the floor could pose a serious problem. With strong Republican support, the tax plan could easily pass the House with two-thirds or more of Democrats opposing it, but it needs to reach the floor first.
While Ms. Pelosi signaled a willingness to allow a vote if the proposal was modified, it was not clear what changes would need to be made, or if Republicans would go along.
The Democratic caucus vote against the deal, which would extend the Bush-era tax rates at all income levels, was the latest expression of dismay by Democratic lawmakers furious over how the White House handled the tax negotiations, effectively icing out them out.
The proposed tax cut plan includes a 13-month continuation of extended jobless benefits for the long-term unemployed, a one-year payroll tax for nearly all workers and other steps intended to help lift the economy.
President Obama is lobbying aggressively on behalf of those provisions, saying that Republicans gave him no choice but to continue the lower tax rates for high-earners or face a tax increase for everyone.
The motion to oppose bringing the bill to the floor was made by Representative Peter A. DeFazio of Oregon, who is known as combative liberal voice. The vote among House Democrats was conducted by voice, aides said.
House Democrats are particularly angry over provisions related to the estate tax, which would set a generous $5 million exemption for wealthy estates and a maximum rate of 35 percent for two years – a lower rate and higher exemption than many Democrats wanted.
The House Democrats, however, have little leverage. If they were actually able to muster opposition and defeat the tax plan, the White House would presumably work with the incoming Republican majority to get it approved in early January, but perhaps only after Republicans extract even further concessions.
In the Senate, enough Democrats are expected to join Republicans in support of the plan to provide the 60 votes needed to surmount any filibuster.
Some economists have praised the payroll tax cut, which would reduce to 4.2 percent the 6.2 percent levy on all income up to about $106,800, saying it would provide a much-needed jolt to the weak economy. For a family with $50,000 in income, the cut would save $1,000.
The economy could benefit even more from the continuing jobless aid, because that money is virtually certain to be spent. The accord between the White House and Congressional Republicans would maintain the 99-week limit on unemployment benefits for people in states with the worst jobless rates. In many states, unemployment insurance is typically available for up to 26 weeks.
The tax cut deal would keep benefits flowing to anyone who has not hit the limit in their home states, but it would not extend benefits beyond the maximum, which now ranges from 60 weeks in states with less than 6 percent unemployment to 99 weeks in states where the jobless rate is more than 8.5 percent.
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