Tax cut plans clears House, on to Obama

A tax-cut compromise between President Barack Obama and congressional Republicans – a harbinger of a new era of divided government in Washington – cleared the House around midnight Friday, sending the $858 billion bill to the president’s desk.

The bill, which passed 277 to 148, provides a two-year extension for all tax cuts that were due to expire Dec. 31 – including for families earning more than $250,000 a year — and extends unemployment insurance benefits through next year. It also sets estate tax rates at 35 percent, with an exemption on the first $5 million.

In the end, the House vote wasn't close, with 139 Democrats joining 138 Republicans to approve the bill. The Senate passed the bill comfortably as well Wednesday, 81 to 19.

The bill represented a major shift for Obama, as he abandoned an oft-repeated campaign promise that he would end the policy of cutting taxes for the wealthy. But the House Republican landslide in the midterm elections – a “shellacking,” Obama called it – forced the president to cut a deal so middle-class families didn’t see a tax hike on his watch, even though it infuriated his liberal base.

The political gamble has paid off for Obama, at least in the immediate term. Polls show the deal is widely popular with Americans, and it has allowed Obama to put space between himself and the liberals in his party – not least congressional Democrats. He has opened an avenue to portraying himself as the reasonable consensus-builder that he promised to be in the heart of his 2008 campaign, something his team seems eager to do after two bruising years marked by the messy fight over health care.

The bill also will be one of the final pieces of legislation taken up by the Democratic majority led by House Speaker Nancy Pelosi (D-Calif.), a champion of the left. And its passage provided a remarkable scene, of Pelosi herself railing against a bill that her majority was powerless to defeat – from the very same spot where she had presided over Obama’s earlier legislative triumphs, health care reform and a crackdown on Wall Street.

She said Republicans had extracted a “king’s ransom” in exchange for support of middle-class tax cuts. “I’m sorry the price that has to be paid by our children and our grandchildren to the Chinese government to pay for the increase in the deficit that the Republicans insisted upon,” Pelosi said in closing.

At the same time, it is one of the best bills for Congressional Republicans in years, as they prepare to take the majority for the first time since 2006. Incoming House Majority Leader Eric Cantor (R-Va.) said from the floor Thursday night that the choice was simple for the Congress.

“The choice is to act now or impose the onset of a $3.8 trillion tax increase that will crush the fragile recovery and cost tens of thousands of jobs nationally,” he said. “This is an indisputable fact and an unacceptable result.”

To many Senate Democrats, cognizant of the political winds and recognizing the sagging economy, it was good enough.

But to liberals in the House, Obama’s compromise was a bitter repudiation of their long-held beliefs – a promise to end the Bush-era policy that they contend added no jobs and racked up a mountain of debt. It led them to closed-door fights with their leadership, angry rants of “no, we can’t,” and a rejection of their president that will likely sting for months to come.

Obama also made his feeling about the liberal angst clear, essentially saying that progressives were willing to give up a good deal in pursuit of perfection and political point-scoring against the Republicans – a tactic he wholeheartedly rejected.

Furthermore, he’s engendered a bit of goodwill with congressional Republicans – namely incoming Speaker John Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) – with whom he must work for the next two years.

But even in the face of stunning electoral losses, and the impending shrinking of their ranks, House Democrats weren’t ready to roll over, infusing their remarks on the House floor with a dose of class warfare and cries of Republican hypocrisy.

“We now see their slogan is ‘deficit, schmeficit,’ ” said Rep. Barney Frank (D-Mass), chairman of the House Financial Services Committee, mocking the Republicans’ stance of fiscal responsibility. The tax-cut plan isn’t paid for and will add nearly a trillion dollars to the deficit – roughly the same amount as Obama’s much-reviled stimulus plan.

Rep. Jan Schakowsky (D-Ill.) rattled off names of the America’s wealthiest families, saying they would get billion-dollar tax windfalls under the compromise. “Are these the people that this Congress is supposed to represent?” she asked.

On Thursday, just hours before the bill was set to hit the floor, progressives such as Reps. Peter DeFazio (D-Ore.), Peter Welch (D-Vt.) and Anthony Weiner (D-N.Y.), forced Democratic leadership to pull back a procedural vote that would have cleared the way for final passage earlier in the night.

The estate tax emerged as a flash point between progressive Democrats and their leadership, leading to a revolt, of sorts, that was solved within hours with just minor changes that fully satisfied nearly no one.

Essentially, progressives were miffed that debate was structured so that those opposed would have to vote for the legislation, with just a modest change to the estate tax that was unlikely to pass.

Eventually, House Democrats brought the bill to the floor with an amended process that didn’t assuage the concerns of all liberals, but at least gave them a chance to express their dissatisfaction with the legislation by voice, and by vote.

The amendment to alter the estate tax provision - pushed by liberals - failed 194 to 233, with one voting present. Several Democrats joined Republicans to defeat the bill, including departing Reps. Artur Davis (Ala.), Steve Kagen (Wisc.), Glenn Nye (Va.) and Brad Ellsworth (Ind.).

But the anger from House Democrats was on full display late Thursday night, voicing concern over everything from debt accrued by the bill to the generous estate tax provisions secured by Republicans to the Social Security payroll tax cut, which they think will threaten the program’s solvency.

“I hope the White House is listening,” DeFazio bellowed from the House floor. “They’re about to spring the trap and next year they’ll say ‘Oh, we can’t , Mr. President, you’re going to raise taxes on every working American by making Social Security whole, you can’t do that. Oh, and by the way we’re tired of subsidizing that program we’re borrowing.’ That is a horrible step for this Congress to take.”

Rep. Donna Edwards (D-Md.), who was involved with some of the progressive rebellion over the legislation, likened the fight to combat. “If this is war then let’s put away this white flag,” she said Thursday night. “I refuse to surrender to those who want to benefit the two percenters for the benefit of the rest of us.”

The bill did get some vocal support from Democrats. Rep. John Dingell (D-Mich.), the longest serving House lawmaker whose father helped pass Social Security, saying that, “Now is one of the times when it is ultimately better for our government leaders to come together on common ground where it can be found, instead of letting the perfect be the enemy of the good enough.”

Pelosi, forever a progressive, did not try to rally her caucus around the bill, but rather heard the voices in her caucus and tried to accommodate them to the extent she was able. Democrats privately conceded that she could not hold the compromise back from getting a vote, something liberals hoped she would do.

It also laid bare the shifting dynamics of House Democrats. In the driver’s seat for the last two years, they are likely to be relegated to an afterthought as the president seeks a centrist mantle. Some in the House predict the burn will be temporary.

“We’re going to be fine with the president,” Welch said in an interview with POLITICO Thursday night. “The irony here is those of us opposing the bill support the president’s position, which he held for two years.”

Frank, who expressed opposition to the bill, said he was “disappointed that the result will not be what I would like it to be.”

House Republicans had little to complain about. They secured a slew of elements in the legislation that would’ve been difficult even under a Republican president.

“I’m trying to remember something that we passed under Bush that was this good,” one senior House Republican aide said.

Still, 36 of them peeled off, largely concerned about the deficit. Some of them thought the two-year extension of tax rates created uncertainty in the business community.

Any time the hard left is whining, it is a positive step. I personally don’t think this bill is all that good, but it does provide some certainty for those of us (taxpayers) that would be most effected by the expiration of the tax cuts that carried this country through the post-911 decade.

I would like nothing better than for the “progressive” tax rates to be replaced by a flat rate so that the deadbeats that make up the base of the democrat party get to pay their fair share.

“”Rep. Jan Schakowsky (D-Ill.) rattled off names of the America’s wealthiest families, saying they would get billion-dollar tax windfalls under the compromise. “Are these the people that this Congress is supposed to represent?” she asked. “”

I know it was late and I was tired but I believe it was Pelosi who rattled off some names of the wealthiest families in America and their worth - she kept repeating the number of 6600 and that witch from IL followed suit by using the same numbers but no names. I remember Pelosi said the Walton family, Koch (?) family who she said financed the TEA Party (again ?), perhaps Buffett and I can’t remember the others. It was only about 6 names. But very obvious the Pelosi name was missing!!!!!

As far as that witch from IL is concerned, just what gives her the idea that Congress only gets to represent a certain segment of the population? Pelosi remarked about the “unfairness” of it all. I didn’t know the oath they took to uphold the US Constitution required them to BE FAIR at the same time.

Interesting that I’ve searched today for Pelosi’s comments from last night and only tonight ran into a transcript from her office but the family names were left out. It was
badly edited as where they deleted words, they just left the rest of the sentences hanging.....

Do you know where I can find the vote and an actual transcript of Pelosi’s remarks? Her remarks are not in the Congressional Record that I can find.

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