In a blow to President Barack Obama, his Democratic allies in the House of Representatives voted Thursday to reject a compromise he reached with Republicans to avert a massive New Year’s tax hike.
Despite an unrelenting White House charm offensive, House Democrats declared behind closed doors, by voice vote, that the framework deal was unacceptable in its current form, ensuring it could not pass this year absent key changes.
“We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote,” said Democratic House Speaker Nancy Pelosi.
At the White House, spokesman Robert Gibbs played down the rejection, saying the president shared some of his allies’ concerns, but predicted “I think at the end of the day this will get done.”
“If everybody took out what they didn’t like, we would have nothing. And we know the consequences of doing nothing,” he said, referring to the political price of letting taxes rise on all Americans come January 1.
Shortly before the vote, Obama warned that if lawmakers defeat the accord, “Americans will see it in smaller paychecks that will have the effect of fewer jobs” and urged approval of “this essential priority.”
In the deal, Obama agreed to extend tax cuts for the richest sliver of US earners for two years in return for doing the same for the middle-class while extending unemployment benefits for 13 months.
Many Democrats denounced the planned extension on income over 250,000 dollars for families and 200,000 for individuals as well as the way the deal rolls back the US estate tax on all but a tiny number of the very richest Americans, saying those funds could go to reduce the deficit.
In the US Senate, Democrats planned to introduce their own bill later in the day, including “some changes” to the compromise Obama reached with Republicans, according to a senior aide, who did not elaborate.
The White House and Republicans have resisted calls to change the deal, which would extend tax cuts enacted in 2001 and 2003 with a built-in January 1, 2011 expiration date when rates rise to their previous levels.
Obama had campaigned on letting the uppermost tax rates rise, and many Democrats, including some of the White House’s key allies, denounced the plan as an expensive and unnecessary surrender to Republicans.
“Do I think the president could have done that perhaps more vigorously? The answer is yes. Does my caucus think that’s the case? Yes,” Democratic House Majority Leader Steny Hoyer told MSNBC television.
“But in the final analysis, the president was confronted with the reality,” Hoyer said in a defense of the plan.
Democrats control 58 seats in the 100-member Senate, two shy of the 60 needed to overcome parliamentary delaying tactics, while all 42 Republicans have refused to budge.
“The president and the Congress are confronted with an increase in middle-income taxes if we continue to have gridlock, and no extension of unemployment insurance. Both of those will undermine the economy,” said Hoyer.
His comments came after the House of Representatives late last week voted 234-188, largely along party lines, to extend the middle-class tax cuts but let those that directly benefit only the uppermost US earners expire.
Copyright © 2010 AFP