WASHINGTON (AP) — In a role reversal, President Barack Obama now has to lobby fellow Democrats to vote for a bill he considers crucial — legislation that would retain existing tax rates for the middle class and stretch the safety net for the jobless.
House Democratic leaders say the package is tilted
too much in favor of the wealthy, putting Obama on the defensive for striking a
deal that is picking up support among GOP lawmakers and business groups.
Obama is sending Vice President Joe Biden to
Capitol Hill Wednesday afternoon to lobby House Democrats. Biden met with
Senate Democrats on Tuesday to rally support for the tax package.
Some Democrats are unhappy that Obama agreed to
extend expiring tax cuts to all Americans, including high earners, and that he
agreed to impose a lower estate tax on wealthy heirs. Both provisions are seen
by many Democrats as giveaways to the rich that will do little to help the
economy.
In return, Democrats would get extended jobless
benefits for people who have been unemployed for long stretches. Workers would
also see their share of Social Security payroll taxes cut by nearly a third for
the coming year.
"So far, the response has not been very
good," House Speaker Nancy Pelosi said. She called the estate tax
provision "a bridge too far."
If Democrats kill the package, it would mark a
stunning defeat for Obama and a huge political bet that voters will blame
Republicans as much as Democrats for an impasse that would lead to higher taxes
starting Jan. 1. Many congressional insiders doubt that Democrats will take
that gamble. But liberal lawmakers' discontent is hard to measure in the wake
of last month's big election setbacks.
Senior White House adviser David Axelrod said
Wednesday he believes disenchanted Democrats will decide to vote for the
package when they realize how angry voters will be "if they wake up on
Jan. 1" with a substantial tax increase, roughly $3,000 a year for a typical
family.
He said Obama had no choice but to accede to
Republican demands for continuing existing rates for the wealthy in order to
spare higher rates for the middle-class. He also said the president was forced
to make concessions to protect the jobless.
"We're not going to play Russian roulette with
the lives of the American people, with all the millions of people that are
going to lose their unemployment insurance right n ow without this bill going
forward," Axelrod said in an interview on ABC's "Good Morning America."
In an interview on NBC's "Today" show, he
said it would be "borderline immoral" to allow taxes to go up in the
midst of economic hard times.
Obama went on national television Tuesday to say
that compromise is necessary to prevent a massive tax increase that would hit
taxpayers at every income level and to prevent millions of unemployed workers
from losing jobless benefits.
"This country was founded on compromise,"
the president said.
Despite their minority status, Senate Republicans
last week blocked Obama's long-promised bid to end Bush-era tax cuts for
households earning more than $250,000. Republicans insisted that all the tax
cuts be extended, for rich and poor alike.
"I have not been able to budge them,"
Obama said at the televised news conference. Without a compromise, he said, 2
million unemployed people "may not be able to pay their bills, and tens of
millions of people who are struggling right now are suddenly going to see their
paychecks smaller" because of income tax increases.
"I'm not here to play games with the American
people or the health of the economy," he said.
Under the proposal cutting back Social Security
payroll taxes, workers would pay a 4.2 percent tax rate instead of 6.2 percent
— a $120 billion tax cut for workers, starting on Jan. 1.
Households making between $40,000 and $50,000 would
get an average tax cut of $810 next year, according to an analysis by the Tax
Policy Center, a Washington research group. Households making between $100,000
and $200,000 would get an average tax cut of $2,162.
The package would continue other programs such as
enhanced tuition tax credits and tax breaks for businesses that hire new
workers. It would impose a 35 percent federal estate tax, but each spouse could
exempt up to $5 million from taxation.
Under current law, the estate tax, which was
repealed for 2010, is scheduled to return next year with a top rate of 55
percent.
Officials said that, overall, the proposal could
increase federal borrowing by $900 billion.
The lower estate tax has emerged as the biggest
sticking point among House Democrats.
"That's the topper," said Rep. Bill
Pascrell Jr., D-N.J. "I understand give and take. But I have to resolve in
my mind if this was too much giving."
Rep. Anthony Weiner, D-N.Y., said, "I don't
think that the president should count on Democratic votes to get this deal
passed."
Republicans and business groups have been generally
supportive of the package.
Senate GOP leader Mitch McConnell of Kentucky said
he expects "a large majority" of Senate Republicans to support the
package.
Both the Business Roundtable and the U.S. Chamber
of Commerce — two business groups that have been at odds with the president's
economic policies — praised the package.
"Enacting this bipartisan framework forged by
the president and Congress is one of the best steps Washington can take to
eliminate the uncertainty that is preventing our employers from hiring,
investing and growing their businesses," said Bruce Josten, the chamber's
vice president for government affairs.
Copyright
2010 The Associated Press.
(AP
Photo/Pablo Martinez Monsivais)
