Obama fends off Democrats' attacks of tax plan

By Stephen Ohlemacher

Associated Press

Published: Tuesday, Dec. 7 2010 10:02 p.m. MST

Sen. Bernard Sanders, I-Vt., speaks to reporters about his position on the tax compromise, Tuesday, Dec. 7, 2010, on Capitol Hill in Washington.

Harry Hamburg, Associated Press

WASHINGTON — President Barack Obama struggled Tuesday to prevent wholesale defections by fellow Democrats that could sink the tax deal he worked out with Republicans — angry opposition that could subject millions of Americans to a big holiday-season tax increase.

Many GOP lawmakers seemed ready to embrace the Obama-GOP compromise and declare victory. The question was whether enough Democrats would join them in support, especially in the House, where liberal resentment of the president's concessions on tax breaks for the wealthiest runs strong.

Obama went on national TV to give a ringing defense of his compromise, declaring it the necessary price for heading off a tax increase that neither taxpayers nor the weak economy could stand and for gaining more months of unemployment payments for millions of jobless workers.

The compromise plan would extend unemployment benefits for millions of people, and reduce Social Security payroll taxes for a year. Workers would pay a 4.2 percent tax rate instead of 6.2 percent.

Democratic leaders in the House criticized the tax plan, sometimes harshly, but stopped short of saying they would try to block it.

In a 35-minute news conference, Obama chastised liberals for seeking ideological purity that would cause legislative logjams on vital issues. He didn't spare Republicans, either, likening them to "hostage takers" willing to hurt the great majority of Americans for the "holy grail" of extending tax cuts for millionaires.

House Speaker Nancy Pelosi was noncommittal before and after Obama's afternoon appearance, saying she would discuss the matter with fellow Democrats in a closed evening meeting. "So far the response has not been very good," she said after meeting with other Democratic leaders.

Another House Democratic leader, Rep. Chris Van Hollen of Maryland, said he couldn't recommend the package to his colleagues.

Obama said no one is entirely happy with the compromise he crafted with Republicans, but "it's a good deal for the American people."

"This country was founded on compromise," he said.

If Democrats kill the tax plan, 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 leads to higher taxes starting Jan. 1. Few on Capitol Hill believe Democrats will take that gamble. But liberal lawmakers' discontent is hard to measure in the wake of last month's big election setbacks.

Despite their minority status, Senate Republicans managed last week to block Obama's long-promised bid to end Bush-era tax cuts for households earning more than $250,000. They insisted that all the tax cuts from 2001 and 2003, scheduled to expire in three weeks, be extended, for rich and poor alike.

"I have not been able to budge them," Obama said. 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.

Besides the most-publicized proposals, the plan would continue other programs such as enhanced tuition tax credits for college and breaks for businesses that hire new workers. And it would set the estate tax at a rate preferred by Republicans.

Overall, officials said, the plan could add $900 billion to the federal deficit.

Unless both houses approve some version of the tax proposal before Congress adjourns this month, income taxes will rise for virtually all workers. Democrats hinted Tuesday they wanted a few more sweeteners to make the package less distasteful, but it wasn't clear what they might be.

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