House Dems rebel against tax deal; passage likely

By David Espo

Associated Press

Published: Thursday, Dec. 9 2010 3:37 p.m. MST

WASHINGTON — Angry House Democrats staged a noisy revolt Thursday against President Barack Obama's year-end tax cut agreement with Republicans, pledging to block a vote unless there are changes to scale back billions ticketed to help the rich. The White House still predicted quick passage.

"If it's take it or leave it, we'll leave it," said Rep. Lloyd Doggett, D-Texas, after a closed-door meeting in which rank-and-file Democrats chanted, "Just say no."

Despite the flare-up, the White House expressed confidence the measure would be approved before Congress goes home for the year, and Senate Democratic officials said talks were under way to add tax breaks for the alternative energy industry as a way of building support in the party.

"The deal will get passed," said presidential press secretary Robert Gibbs. There were no predictions to the contrary among senior Democrats on either side of the Capitol.

As announced by Obama on Monday, the deal would extend tax breaks at all income levels that are due to expire on Jan. 1, renew a program of jobless benefits for the long-term unemployed that is due to lapse within days and implement a one-year cut in Social Security taxes.

The two-year cost of the plan, estimated at as much as $900 billion, would further swell record federal deficits.

Despite the additional red ink, the president has said the plan is essential to add strength to an economy recovering slowly from the worst recession in eight decades. Joblessness stands at 9.8 percent, and a top White House official bluntly warned Democrats earlier in the week they would bear responsibility for a return to recession if they blocked the measure.

Senate Republican Leader Mitch McConnell has said he expects most of his rank and file to support the bill. Prominent House Republicans back it, too, although they have generally refrained from speaking out at a time when doing so would divert attention from the spectacle of Obama at odds with lawmakers of his own party.

Rep. John Boehner of Ohio, in line to become House speaker when Republicans take power in January, "supports the framework as agreed to by" Obama and McConnell and spoke with the president about it over the weekend, a spokesman said Thursday.

Rep. Paul Ryan, of Wisconsin, whose views on economic issues are influential among House Republicans, also swung behind it. "While I have concerns with some specific aspects of the plan, I support the proposed framework to avert further economic hardship and provide a first step to restore the foundations for sustained growth and job creation," he said in an interview.

It was not clear precisely what changes House Democrats would seek, but much of the criticism focused on a provision that would cut taxes on large estates.

Speaker Nancy Pelosi, D-Calif., said, "That was a bridge too far for many of our members" already upset about Obama's decision to bow to Republican demands for extending tax cuts on individuals making over $200,000 and couples earning more than $250,000.

Under the estate tax provision, the first $5 million of a couple's estate could pass to heirs without taxation, and an additional $5 million for the spouse. The balance would be subject to a 35 percent tax rate.

According to a Tax Policy Center estimate based on census data, that would mean only about 3,500 estates would be liable for taxes in 2011, out of more than 2.5 million forecast to be filed. Barring legislation, about 44,000 estates would be subjected to taxation in 2011, the groups said.

Some Democratic officials suggested a relatively minor change to the estate tax portion of the Obama-GOP deal might assuage critics of the plan. If accepted, however, it could come at a price in the form of additional concessions to Republicans, several officials said.

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