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In remarks Monday night, Obama called the bipartisan agreement "the right
thing to do" and detailed the framework of the deal, which would extend for
two years the Bush tax cuts for all earners -- both those making above and
below $250,000 annually, while also continuing current tax rates on dividends
and capital gains, also for two years. In addition, the estate tax, which expired
in 2009, would be temporarily set at 35 percent with a $5 million exemption,
while extended unemployment benefits would continue for 13 months. Obama
also said that negotiators had agreed to a one-year, 2-percent cut in the payroll
tax for all workers.
The president stressed his displeasure with several aspects of the agreement,
especially the extended tax cuts for the highest earners and the 35 percent rate
for the estate tax. But he said that he did not want to risk the expiration of the
middle-class tax cuts in the likely event of a lengthy impasse between
Democrats and Republicans in Congress.
"It would be a grave injustice to let taxes go up for these people," President
Obama said of middle-class workers.
Even as Obama spoke, senior Democratic aides stressed that members of the
Democratic caucus could reject the proposal. A compromise on extending the
tax cuts for the highest earners would represent a painful concession for the
most liberal Democrats, who fought the tax cuts when they passed Congress in
2001 and 2003 and have fought to end them ever since. Democrats had also
badly wanted to make permanent the tax cuts for middle- and lower-income
workers.
Even President Obama made a rollback of the Bush tax cuts for wealthy
Americans a cornerstone of his campaign for president in 2007 and 2008.
After the deal was announced, a torrent of angry reaction from liberal
Democrats in the House and Senate made it clear that the compromise would
not get through Congress without a heated debate. Sen. Bernie Sanders (I-Vt.),
one of the most liberal members of the Senate, threatened to filibuster the
agreement in the upper chamber, calling it politics and bad policy.
On the House side, Rep. John Conyers (D-Mich.) said that he, too, would do
whatever he could to stop the compromise from passing in the lame duck
session of Congress.
"This is a fight for the heart and soul of the Democratic Party and the nation,"
Conyers said after the president made his announcement. "I can tell you with
certainty that legislative blackmail of this kind by the Republicans will be
vehemently opposed by many if not most Democrats, progressives, and some
Republicans who are concerned with the country's financial budget."
In a rare weekend session, senators voted 36-53 against moving to the House-
passed bill, seven votes short of the 60 votes needed to break the filibuster.
Four Democrats -- Joe Manchin of West Virginia, Jim Webb of Virginia, Ben
Nelson of Nebraska, and Russ Feingold of Wisconsin -- voted with the
Republicans to block action on the bill, as did Sen. Joe Lieberman, an
independent from Connecticut.
Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry
Reid are expected to present the final proposal to their members at caucus
meetings on Tuesday, while House leaders will do the same on their side of
Capitol Hill on Tuesday night. Once each side has gauged the support for a
compromise from their members, votes in the House and Senate are expected c
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