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Obama Calls Tax-Cuts Deal the 'Right


Thing to Do'; Many Democrats
Disagree
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With the Dec. 31 deadline looming for the expiration of the Bush-era tax cuts,
President Barrack Obama has confirmed that White House and congressional
negotiators have agreed to a deal that would temporarily extend the current tax
rates for all households, while also extending unemployment benefits for
Americans who have been out of work for more than 26 weeks.

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.

"I think for a Democratic president, a Democratic House, and a Democratic


Senate to be following the Bush economic philosophy of tax breaks for
millionaires and billionaires is absolutely wrong public policy and absolutely
wrong politically," Sanders said in an interview on MSNBC. "I've got to tell you,
I will do whatever I can to see that 60 votes are not acquired to pass this piece
of legislation."

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."

Although many Democrats are loath to join Obama in a compromise on the


issue, they may have little choice if they want to keep the middle-class tax cuts
alive. While Democrats in the House of Representatives were able to push
through a permanent extension of the cuts for income below $250,000 last
week, Senate Democrats failed on Saturday to find enough votes to move to a
debate on the measure.

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.

Later, by a 37-53 vote, the Senate also stopped consideration of "the


millionaires' tax," a bill that would have extended the Bush tax cuts for every
American family making less than $1 million per year, while returning income
taxes for everyone else to 2001 levels. Democratic Sens. Richard Durbin of
Illinois, Tom Harkin of Iowa, Jay Rockefeller of West Virginia and Feingold,
along with Lieberman, voted with the Republicans.

After the Saturday vote, congressional negotiators, including Speaker Nancy


Pelosi and House Majority Leader Steny Hoyer, went back to continue talks
with top Republicans and the White House. After several more meetings and
discussions, President Obama felt he had enough certainty to announce the
framework for the deal publicly.

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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