Obama presents Dems with proposed tax deal
December 6th, 2010
05:38 PM ET

Obama presents Dems with proposed tax deal

WASHINGTON (CNN) - President Barack Obama presented congressional Democratic leaders Monday with a proposed deal with Republicans that would extend Bush-era tax cuts for two years and unemployment benefits for 13 months while also setting the estate tax at 35% for two years on inheritances worth more than $5 million, a senior Democratic source told CNN.

The deal also includes a temporary 2% reduction in the payroll tax to replace Obama's "making work pay" tax credit from the 2009 economic stimulus package for lower-income Americans, the senior Democratic source said. As currently crafted, the deal would prohibit amendments by either party, according to the source, who spoke on condition of not being identified by name.

House Democrats, who passed a measure extending the Bush-era tax cuts for income up to $250,000 a year, indicated earlier Monday they were unhappy with the negotiations that the White House was conducting with congressional Republicans.

"We won't rubber stamp a deal between the White House and (Senate Minority Leader) Mitch McConnell," one Democratic congressional source told CNN. "We want to make it clear. Don't take our support for granted."

Speaker Nancy Pelosi, D-California, and Majority Leader Steny Hoyer, D-Maryland, were among Democratic leaders who attended a White House meeting with Obama and Vice President Joe Biden to discuss the proposed deal.

According to the senior Democratic source, Obama and Biden told the congressional Democrats that the proposed deal was the best they could expect.

Liberal House Democrats are believed to be among the most reluctant in Congress to agree to a deal extending all of the 2001 and 2003 tax cuts.

The House measure, which was blocked from consideration in the Senate by a Republican filibuster, would cause tax rates to increase to 1990s levels for individuals making more than $200,000 a year and families earning more than $250,000. Senate Republicans blocked a similar proposal that set the income threshold for higher tax rates at anything over $1 million.

Top senators from both parties had indicated Sunday that a deal linking the extension of lower tax rates for everyone with extended unemployment benefits was likely. Congress would continue working on a long-term plan to reduce the nation's debt.

Democrats contend the nation must prevent working-class Americans from facing higher taxes, as promised by Obama in his 2008 election campaign, but can't afford the extra hundreds of billions of dollars it would cost to maintain the tax cuts for the wealthy. Republicans argue that the economy remains too weak to allow anyone's taxes to increase.

Earlier Monday, Obama reiterated his position that extending the cuts for the wealthiest Americans would be fiscally irresponsible, and stressed the opinion of Democratic leaders that an extension of unemployment benefits needs to be part of any agreement with the GOP.

"We have got to find consensus here because a middle-class tax hike would be very tough, not only on working families, it would also be a drag on our economy at this moment," Obama told an audience in Winston-Salem, North Carolina.

"We've got to make sure that we are coming up with a solution even if it is not 100% of what I want or what the Republicans want."

CNN's Alan Silverleib, Tom Cohen, and Brianna Keilar contributed to this report


Topics: President Obama • Tax cuts

soundoff (2 Responses)
  1. hsr0601

    ** How do you pay for tax cuts for the wealthy ?
     
    1. First attempt : threatening Social Security and Medicare Cut through the deficit panel.
     
    2. Second attempt : holding the desperate Hostage, say, the Ransom.
    How long will it take for Obama to learn that we think compromise is a synonym for unconditional surrender, or another Bush-era?
     
    ** The deal based on the outright lies and supportive Dead Media will lead to another Bush-era & irreversible RECESSION.
     
    1. The reps uses the recession as an excuse for tax cuts for the wealthy.
     
    THIS IS A MIDDLE CLASS RECESSION.
     
    2. The Republican Senate minority leader has been arguing that the outcome of the midterm elections confers a mandate on Congress to extend the Bush-era tax cuts.
    "There's bipartisan opposition to raising taxes on anyone at this time."
     
    (a). Only 34 percent of Americans believe that tax cuts ought to be extended for those households making more than $250000 a year, according to a new CNN poll.
     
    (b). A recent CBS News poll indicated that Only 26 percent indicated they support extending the tax cuts for all Americans regardless of income level
     
    (c). In the AP-CNBC poll, 34 percent favor extending the tax cuts for all Americans.
     
    (d). A recent Gallup poll found 40 percent favor maintaining the Bush-era tax cuts for all Americans.
     
    3. The reps road the waves of deficit reduction just 2 months ago.
     
    Now, 2 months later they are set to increase the deficit and increase the governments debt ceiling just so they can give themselves and their rich pals more money.
    This isn't what Americans voted for.
     
    4. Tax cut for small businesses.
     
    A small business bill was blocked for weeks by a republican filibuster in the Senate.
     
    5. Tax cut for job creation.
     
    (a). There is no evidence that the tax cuts created even a single job.
    Back when Bush was pushing his tax cut packages through Congress in 2001 and 2003, supporters said the cuts (which weren't balanced with spending reductions) would initiate an era in which the American economy would grow so robustly the nation would be running a surplus of more than $5 trillion at the scheduled expiration date. U.S. now runs a deficit of about $1.3 trillion.
    In fact, the available evidence is the exact opposite:
    Former President Bill Clinton left a record surplus and created 20 million jobs, despite the warning of potential economic disaster over tax increase for the wealthiest.
     
    (b). Your Waterloo = our windfall.
    Even when the economy was on the cusp of entire collapse just like Lehman Brothers ahead of the roll-out of stimulus package, it was held hostage by Audacity of Nope, and the time was running out.
    Power first then said : Nope ! How do we pay for it ?, Just let it go under exactly like Lehman Brothers.
     
    6. The GOP along with Big Business bought this past midterm election.
    The structure that the last champion is authorized to pick the next match winner .
     
    The ruling that allowed Corporate money to back Political Candidates destroyed the very fabric of the Elections and Americans are paying dearly for it.
    The incessant barrage of negative campaign ads drove most Americans towards something they knew nothing about, the Republican­/Corporate take-over of the US. Millions upon millions were spent to defeat certain Democrats.
     
    7. From my perspective, Communism & extreme Capitalism have one thing in common : Power First, Corruption at the cost of people !

    December 6, 2010 at 7:28 pm |
  2. Notfooled

    They need to get rid of the fillibuster 60 vote rule. This bill would have passed the Senate if it were the majority. I hope something better can be worked out. I don't blame the Democrats though they have tried. The Repubs had better come up with the jobs they promised the rich are supposed to create.

    December 7, 2010 at 2:59 am |