Tags: obama | tax | democrat | white | house | axelrod | cuts

Obama Aide Sees Democrats Backing Tax Deal

Sunday, 12 Dec 2010 02:03 PM

 

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White House adviser David Axelrod said the administration expects House Democrats, including Speaker Nancy Pelosi, to back the compromise tax package negotiated by President Barack Obama and the Republicans.

“At the end of the day no one wants to see taxes go up for 150 million Americans on January 1st,” Axelrod said on CNN’s “State of the Union” program. “This framework represents a compromise that both sides can accept and we can’t change it in major ways and expect that this thing is going to pass.”

The administration is in talks with House Democrats who have objected to keeping Bush-era tax cuts for the wealthiest Americans and to an estate-tax provision that would set the top rate at 35 percent after a $5 million tax-free allowance per individual, Axelrod said.

The agreement Obama announced Dec. 6 would temporarily sustain the tax cuts for all income levels. The president said the compromise was needed to break a deadlock with congressional Republicans who vowed to block tax cuts for middle-income Americans if those for individuals earning more than $200,000 and couples earning more than $250,000 weren’t extended, too.

House Democrats held a nonbinding vote Dec. 9 to prevent the tax compromise from being voted on in the House of Representatives, unless changes are made. The Senate will take up the estimated $857 billion proposal this week.

Unemployment

Obama, 49, inherited an economy in crisis. Joblessness, which reached a 26-year high of 10.1 percent in October 2009, stood at 9.8 percent nationwide last month. Republicans in the Nov. 2 midterm election gained control of the House in the next congressional session and made gains in the U.S. Senate.

Austan Goolsbee, chairman of the White House Council of Economic Advisers, said unemployment may decrease as a result of the tax package.

“I understand that the high-income tax cuts are a bitter pill to swallow but what the president was able to get was substantially bigger than that,” Goolsbee said on NBC’s “Meet the Press.”

Goolsbee pointed to incentives for businesses, payroll tax cuts for 150 million workers and money for college education as gains Obama made by giving in to Republicans on extension of tax cuts for higher-income individuals.

‘Left Out’

Democratic lawmakers in the House of Representatives feel “left out,” after Obama negotiated the tax package with Republicans, Representative Elijah Cummings, a Maryland Democrat, told CNN’s ‘State of the Union.’

“There are some principled concerns we have,” Cummings said. “It’s not some purist ideological theories.”

The U.S. budget deficit would be exacerbated if Congress approved the tax package, Cummings said. Republicans would later blame the shortfall on Obama and Democratic lawmakers, using it to cut programs, Cummings said.

Representative Jim McDermott, Democrat of Washington, told CNN that if the current lame-duck session of Congress failed to pass the tax package, the new Republican majority in the House could “reinstate tax cuts for the wealthy on their own” when they take over in January. “They simply want us to do it so that it becomes Obama’s tax cuts.”

Still, both lawmakers said Speaker Nancy Pelosi is likely to bring the tax package to a vote and it’s likely to pass in Congress after “sweeteners” are added to satisfy opponents.

Cummings said he would not vote in favor of the compromise tax package.

Temporary Cuts

The extension of tax cuts is temporary, Axelrod told ABC’s “This Week.’”

“In the long term, these are not going to have impacts on our deficits,” Axelrod said. “For the next few years, it will.”

Based on tax-cut extensions negotiated by Obama, “almost every economist has raised their estimation of what our growth will be in 2011,” Axelrod said.

Asked on CNN if Obama is likely to face a challenge from within the party in the 2012 elections, Axelrod said the president continues to enjoy support among Democrats.

“I really don’t expect” a primary challenge, Axelrod told CNN. “I see strong support for this president. They understand he’s trying hard and see what we have accomplished.”

© Copyright 2014 Bloomberg News. All rights reserved.

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