WEDNESDAY, DECEMBER 8, 2010
KLMNO Tax package angers Democrats tax cuts from A1 Vice President Biden, who
helped negotiate the accord, re- ceived a stony response when he pitched the package to Senate Democrats at a private luncheon Tuesday. Sen. Dianne Feinstein (Calif.) was among those who emerged unconvinced. “I’m just staggered by the enormity of this package,” she said. Others were in full revolt. Sen.
Bernard Sanders (I-Vt.) was one of three senators who interrupt- ed Biden’s presentation. After- ward, he vowed to “do everything I can to defeat this proposal,” including staging a filibuster. “The president’s heart is in the
right place,” Sanders said. But “I think he has not fully understood that the American people are prepared for a fight. The Ameri- canpeople donotwant to give tax cuts to billionaires.” Bidenwill return to theHill on
Wednesday to talk toHouseDem- ocrats, according to several law- makers.
The center of the debate Set to expire on New Year’s
Eve, the Bush tax cuts are at the heart of a post-election drama: Obama andmostDemocratshave sought to end benefits for the wealthiest households as a down payment on deficit reduction. ButRepublicans oppose any form of tax increase and blocked two attempts by Senate Democrats to preserve only the provisions that benefit themiddle class. At a news conference Tuesday,
Obama said he had weighed the alternative to a GOP deal — allowing all the tax cuts to expire — and concluded the price was too high. “I understand the desire for a
fight. I’msympathetic to that. I’m as opposed to the high-end tax cuts today as I’ve been for years,” he said. “But in the meantime, I’m not here to play games with the American people or the health of our economy.” For the first time in his presi-
dency,Obama is pursuing a legis- lative path that does not cut exclusively through Democratic territory. Republicans, who op- posed the president virtually unanimously on all of his major initiatives over the past two years, warmly embraced the tax
HouseGOP picksRogers, Upton to lead key panels
BY FELICIA SONMEZ The House Republican Steer-
ing Committee selected Rep.Har- old Rogers (Ky.) onTuesday as the next chairman of the Appropria- tions Committee, while Rep. Fred Upton (Mich.) will be the next leader of the Energy and Com- merce Committee. The two were among the slate
of new committee chairs elected by the 34-member steering com- mittee, according to House GOP aides. The full House Republican Conference is scheduled to vote Wednesday on whether to ratify the panel’s recommendations, a step that is largely a formality. Rogers bested Reps. Jerry Lew-
is (Calif.) and Jack Kingston (Ga.) to win the Appropriations spot. Kingston had been a favorite of tea party groups but signaled Monday that he had not won the support of GOP leaders. Upton, meanwhile, won out
over Reps. Joe L. Barton (Tex.), John Shimkus (Ill.) and Cliff Stearns (Fla.) for the Energy and Commerce chairmanship. Lewis and Barton would have required term-limit waivers from the House GOP leadership in or- der to sit atop the committees. Democrats are slated to choose
their ranking members for com- mittees on Thursday.
sonmezf@washpost.com
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deal. Senate Minority Leader Mitch McConnell (Ky.) called the plan “essentially final” and pre- dicted that a “vast majority” of Senate Republicans will back it. Democrats were cool by com-
parison. House Speaker Nancy Pelosi (Calif.) ignored the deal in a statement that lambasted Re- publicans, saying they have “held the middle class hostage for pro- visions that benefit only the wealthiest 3 percent.” She con- cluded tersely, “We will continue discussions with the president and our caucus in the days ahead.” Senate Democrats also de-
scribed the deal as a work in progress. “This is only a frame- work. It’s up to the Congress to pass it,” Majority Leader Harry M. Reid (Nev.) said after the Bidenmeeting. The Senate could take up the package next week. But, Reid said, “I think we’re going to have to do some more work on it.” While liberals plotted rebel-
lion, someDemocraticmoderates were open to the plan. Sen. Kent Conrad (N.D.), chairman of the Budget Committee, said he will support it despite the large in- crease in short-termdeficits, con- ceding that compromise on the Bush tax cuts was inevitable. The next step for Obama will
be identifying key Democrats in both chambers who can help push the package forward. For instance, Senate Majority Whip Richard J.Durbin (D-Ill.), a tradi- tional ally, signaledinrecentdays that a compromisewould be nec- essary—but he declined to com- ment Tuesday.
A bigger boost The mood was cheery at the
White House as administration officials celebrated a package that, if approved by Congress, would provide a far bigger jolt to the economy than anyone had expected. While lamenting the need to compromise on the Bush tax cuts and particularly on a revived estate tax, administra- tion officials said the package wouldinject anextra$300billion into the economy next year alone. Mark Zandi, chief economist for Moody’s Analytics, predicted
that the package would acceler- ate economic growth, adding more than 1.6 million jobs next year and driving unemployment down to 8.5 percent by the end of 2011. Buyers of U.S. government
debt were less pleased with the prospect of additional borrow- ing: The interest rate the govern- ment must pay to borrow money for 10 years rose 0.2 percentage points, to 3.1 percent, a rate that, if it persists, could reduce the stimulative effects of the tax cuts. But White House economic
adviser Lawrence H. Summers said that “the first priority for addressing the budget deficit has to be getting the economy grow- ing again at a rapid rate.” The tax deal, he said, “offers the best prospect that was available for achieving the kind of escape ve- locity that we’ve been seeking for the past two years.” The deal developed over the
past two weeks, after congressio- nal leaders fromboth partiesmet with Obama at theWhite House. While Treasury Secretary Timo- thy F. Geithner andWhite House budget director Jacob Lew led talks with Democratic and Re- publican negotiators, Biden talk- ed separately with McConnell and Sen. Jon Kyl (R-Ariz.) about the prospects for a Senate vote to ratify the New START nuclear arms pact with Russia, a top WhiteHouse priority. Talk of the tax cuts inevitably
crept into those conversations, administration officials said, and the outlines of a compromise became clear over the weekend. Obama would agree to extend all the tax cuts for two years in exchange for another year of long-term unemployment insur- ance and a payroll tax holiday, which would reduce the Social Security tax that workers pay on income up to $106,800 from 6.2 percent to 4.2 percent. Econo- mists rank the two provisions as among themost powerfulways to inject cash into the economy. Republicans were still press-
ing on the estate tax, demanding more generous terms that would exempt estates worth up to $10 million for couples and im- pose a rate above that amount of
EZ SU
Politics & The Nation
Breaking down the tentative tax deal President Obama agreed to extend all the Bush tax cuts and provide a more generous estate tax in exchange for a continuation of refundable tax credits and a 13-month extension of unemployment benefits.
TWO-YEAR COST OF THE PLAN: About $990 billion In billions
$79
Extension of Bush tax cuts High-income tax cuts
WHO SUPPORTS THIS? Favored by Democrats
Favored by Republicans Bipartisan support
Projected impact of the plan on . . .
Unemployment rate 10
9.6% 8 6 280 Middle-income tax cuts 5.7%
A5
4
2 140 Indexing alternative minimum tax for inflation To prevent millions of Americans from having to pay the tax. Estate tax changes
44 24
56
120 21
146
Would exempt inheritances up to $5 million for individuals and $10 million for couples. Would cut the rate heirs pay to 35 percent. Democrats wanted an exemption of $3.5 million and $7 million, respectively, and a 45 percent rate.
Extension of unemployment benefits Payroll tax holiday
Would cut payroll taxes by 2 percentage points for every American worker.
To calculate, multiply your pay, up to $106,800, by 0.02. A couple making $70,000 a year would save $1,400.
-4 Extension of refundable tax credits Includes earned-income tax credit, child tax credit, college tuition deduction. -6 Business expensing
Would permit companies of all sizes to write off the entire value of their capital investments next year.
80 Business tax extenders
Includes a two-year extension of the research and development tax credit and other incentives
SOURCES: Moody’s Analytics, Congressional Budget Office
only 35 percent. On Monday, Biden made a counteroffer: The GOP could have a relaxed estate tax in exchange for a two-year extension of refundable tax cred- its created in the 2009 stimulus package that benefit college stu- dents andworking-class families. McConnell agreed, and a deal
-8.9% -10 ’09’10 ’15 KAREN YOURISH AND LAURA STANTON/THE WASHINGTON POST
was struck late Monday that would give Democrats at least $100 billionmore inmiddle-class benefits than the GOPwouldwin for the wealthiest taxpayers, se- nior administration officials said. “This gave us a chance to do
whatmost people thoughtwasn’t going to be possible in this envi-
ronment,” Summers said, “which is to provide a real forward lift to the economy relatively quickly.”
murrays@washpost.com
montgomeryl@washpost.com
Staff writer Felicia Sonmez contributed to this report.
SHOP 8AM-MIDNIGHT WEDNESDAY. HOURS MAY VARY BY STORE.
VISITMACYS.COMAND CLICKONSTORES FORLOCAL INFORMATION.
THE DECEMBER -8 -3.7%
0 ’09’10 Deficit
As percent of GDP 0
’15
-2
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