Backers and critics see passage of Obama tax deal

WASHINGTON | Sun Dec 12, 2010 6:18pm EST

 

WASHINGTON (Reuters) - President Barack Obama's tax deal with Republicans will likely win grudging passage in the Congress, backers and critics agreed on Sunday, after Obama clashed with liberals in his own party who branded it a giveaway to the rich.
White House adviser David Axelrod said he believed the House of Representatives would approve the sweeping package without significant changes, despite loud complaints from liberal Democrats that Obama conceded too much to Republicans.
The Senate is expected to pass it early this week, then send it to the House for consideration.
"We believe that when it comes back to the House that we will get a vote and it will prevail there," Axelrod said on CNN's "State of the Union."
Obama's $856 billion tax deal, struck after Republicans made major gains in November congressional elections, extends all tax cuts passed under the Republican administration of President George W. Bush, including those for wealthier Americans, that are set to expire on January 1.
Democrats had hoped to allow tax rates to rise for the wealthiest 2 percent of U.S. households to avoid increasing the country's record-high deficit, and were particularly angered by what they see as an excessively generous tax rate for wealthy estates.
But proponents note that the package also includes an extension of jobless benefits and other tax breaks aimed at lower-income families and would renew a wide array of subsidies and breaks for businesses and renewable energy.
"It's quite possible the tax cut extension will be passed, but not with my vote," said Democratic Representative Elijah Cummings.
"The president is going to be depending largely on Republicans to do this. They love this deal," he said on CNN.
In a caucus last week, House Democrats rejected the tax deal and chanted, "Just say no!"

'BITTER PILL'
Despite the opposition from Democrats, Axelrod said he did not expect significant changes to the deal.
"We can't change it in major ways and expect that it is going to pass. ... I expect that the framework that was agreed to will be largely what is voted on," he said.
White House economic adviser Austan Goolsbee also predicted the package would pass.
"I understand the feeling that it is a bitter pill to swallow, the high-income tax cuts," Goolsbee told NBC's "Meet the Press."
 "But what the president was able to get that is substantially bigger than that and important for the economy -- whether it's incentives for investment for firms, whether it's a payroll tax cut for 155 million workers ... is really important and we can't let that go away," he said.
Economists say the package, especially the payroll tax cut, could boost the sluggish economy at a time when Congress has no appetite for stimulus spending. Its cost would exceed the $814 billion stimulus package passed in 2009 to fight the worst recession since the 1930s.
Axelrod said Obama will continue talking to individual lawmakers.
"What he's going to say to them is there is an enormous amount of good in this package that will help their constituents, that will help the broader public and that will move the economy forward," Axelrod said.
Assistant Senate Democratic leader Dick Durbin said Democrats should "eat their spinach" and accept a deal because their influence will plummet when the new Congress convenes next month.
Republicans won control of the House and made gains in the Senate in November 2 congressional elections.
"We have to accept the reality. In three weeks, the world is going to change dramatically in favor of the Republicans," Durbin told CNN. "It is the only stimulus we can bring to this economy."
Representative Chris Van Hollen, appearing on "Fox News Sunday," said the House will vote on the tax deal but "people are looking at various alternatives."
But Republican Representative Paul Ryan, also on Fox, said Republicans would not dilute tax breaks Obama agreed to.
"No, we are not interested in changing this deal," said Ryan, who will chair the Budget Committee when the new Republican-majority Congress convenes.