updated 12:53 p.m.
They say they were betrayed by a spineless, politically expedient president. They insist he was browbeaten and duped by Republicans into signing off on a major tax deal that will line the pockets of the wealthiest Americans and add nearly $1 trillion to the federal debt. And those were some of the kinder things liberal congressional Democrats and activists had to say about President Obama’s tentative tax-and-spending agreement with Republican leaders.
A day after the President used a nationally televised news conference to defend the deal and lecture stunned liberals who are spoiling for a fight with Republicans, the Democratic liberal wing on Wednesday lashed back with angry denunciations of a president they once blindly followed — and threatened to block the tax cuts and economic stimulus package when it is brought up for a vote in the House and Senate.
Then, by voice vote in a closed caucus meeting on Thursday, Democrats passed a resolution saying the tax package should not come to the House floor for consideration as written, even though no formal House bill has been drafted. Rep. Peter DeFazio, D-Ore., introduced the resolution.Said Rep. Lloyd Doggett, D-Texas: "If it's take it or leave it, we'll leave it."
Rep. Loretta Sanchez, D-Calif., grumbled that the unyielding GOP leaders had taken advantage of the president. Rep. Jan Schakowsky, D-Illinois, protested that the agreement was a bad bargain for the country, even with concessions from the Republicans that would help the unemployed and middle-income families. Rep. Gary Ackerman, D-New York, said flatly that the president had “screwed” his own party, and vowed to fight the measure on the House floor. Over in the Senate, the sentiment among liberal Democrats wasn’t much different.
"I think a ransom was paid and it was a very high price," said Sen. Frank Lautenberg, D-N.J., among the wealthiest members of Congress. "I don't give a damn about a tax cut. I'd rather have a strong country than get a few bucks back on my taxes."
Obama has argued that he got the best deal possible in light of Republican insistence that the Bush-era tax cuts be extended for all Americans, including millionaires and billionaires. And he said he is unwilling to risk sending a fragile economy into another tailspin for the sake of scoring some political points against the Republicans when economists across the political spectrum say the package of tax cuts and spending initiatives would likely spark the economy. But many liberal Democrats believe the president was far too eager to accede to Republicans’ demands, and argue that it’s not too late to alter the package.
In a masterful piece of understatement, House Speaker Nancy Pelosi, who spent the past two years marshalling her forces to pass health care reform and other signature Obama initiatives, told reporters “There’s a certain amount of unease with the proposal.”
Pelosi, D-Calif., attacked the deal via Twitter, writing that the GOP provisions “help only wealthiest 3 percent, don't create jobs and add tens of billions to deficit.”
Since the Nov. 2 midterm election, when the Republicans were swept to power in the House and sharply narrowed the Democratic majority in the Senate, Obama has attempted to reach out to GOP leaders, including during a recent summit at the White House. There has been considerable speculation that — just as former President Bill Clinton found common ground with Newt Gingrich and other Republican revolutionaries in the mid-1990s — Obama would try to “triangulate” between the Democrats and the newly energized Republicans.
The Obama-GOP compromise would extend all the tax cuts that are set to expire Dec. 31, including for the wealthiest households. It would continue long-term unemployment benefits through the end of next year. It would also give businesses a major tax break to encourage capital investment, while providing working couples as much as $4,200 in extra cash in 2011 through a one-year payroll-tax holiday. The far reaching package — which economists calculate would add more than $900 billion to the deficit over the next two years — also contains numerous other provisions, including extensions of smaller individual and business tax breaks that had been widely expected to lapse.
Renewal of the estate tax could be tough pill to swallow for liberal Democrats, who have argued for higher rates. Under President George W. Bush, the tax on the largest estates dropped from 55 percent to 45 percent — then to zero this year. Under the deal announced by Obama, it would change to 35 percent next year for estates larger than $5 million.
“I would say the people who are going to get screwed, as Congressman Ackerman says, are the American people if we don’t act to prevent their taxes from going up on January 1st,” David Axelrod, a senior White House adviser, told CNN Wednesday. “The typical family in this country would see a $3,000 tax increase on January 1st. Unemployment insurance would end and two million people would see their lifeline cut, people who are desperately seeking work right now. And the economy would take a huge hit for that.”
Economists from Washington to Wall Street began ratcheting their forecasts upwards the moment Obama and congressional Republican leaders announced their compromise tax plan. Consensus growth estimates for 2011, previously an anemic 2.5 percent on average, are now a percentage point or more higher — enough to give employment a substantial boost. Mark Zandi, chief economist for Moody's Analytics, predicted that the package would accelerate economic growth, adding more than 1.6 million jobs next year and driving unemployment down to 8.5 percent by the end of 2011.
Lawrence Summers, the president’s outgoing top economic adviser, on Wednesday told reporters: “Failure to pass this bill in the next couple weeks would materially increase the risk that the economy would stall out and we would have a double-dip” recession.
Vice President Biden, who helped negotiate the accord, was back on Capitol Hill Wednesday afternoon trying to tamp down the Democratic insurrection. He received a stony response when he pitched the package to Senate Democrats at a private luncheon Tuesday. Sen. Dianne Feinstein, D-Calif., was among the unconvinced. "I'm just staggered by the enormity of this package," she said.
Others were in full revolt. Sen. Bernard Sanders of Vermont, an independent who caucuses with the Democrats, was one of three senators who interrupted Biden's presentation. Afterward, he vowed to "do everything I can to defeat this proposal," including staging a filibuster.
Senate Democrats also described the deal as a work in progress. "This is only a framework. It's up to the Congress to pass it," Majority Leader Harry M. Reid (D-Nev.) said after the Biden meeting. The Senate could take up the package next week. But, Reid said, "I think we're going to have to do some more work on it."
Obama and most Democrats have sought to end benefits for the wealthiest households — making $250,000 or more a year for families — as a down payment on deficit reduction. But Mitch McConnell, the Senate Republican leader, and John Boehner, the incoming House speaker, oppose any form of tax increase. The Republicans blocked two attempts by Senate Democrats to break up the Bush package and preserve only the provisions that benefit the middle class.
At a news conference Tuesday, Obama said he had considered the alternative to a GOP deal — allowing all the tax cuts to expire — and concluded the price was too high. "I understand the desire for a fight. I'm sympathetic to that. I'm as opposed to the high-end tax cuts today as I've been for years," he said. "But in the meantime, I'm not here to play games with the American people or the health of our economy."
On Wednesday, he said “I expect everybody to examine it carefully. When they do, I think they’re going to feel confident that in fact this is the right course, with all understanding that for the next two years we’re going to have a big debate about taxes and we’re going to have a big debate about the budget and we’re going to have a big debate about deficits, and Republicans are going to have to explain to the American people over the next two years how making those tax cuts for the high-end squares with their stated desire of reducing deficits and debt.”
The media also weighed in. Len Burman, a professor of public affairs at Syracuse University, writes for CNN Money that Obama never seems to look more than one move ahead, and the consequences of his “compromise” could be devastating. If the economy remains fragile in 2012 and Republicans take control of both houses and the White House, the GOP could make the Bush-era tax cuts permanent, he said. Doing so would do considerable harm to the economy.
Washington Post political reporter Dan Balz questioned whether New York Mayor Michael Bloomberg has backhandedly declared himself a candidate for the 2012 election by calling out Washington’s dysfunctional political system. Though he praised the agreement between President Obama and Republicans to extend temporarily extend the Bush tax cuts, Bloomberg attacked “ideologues on the left” as well as “ideologues on the right.” He also chastised Washington for not moving ahead immediately to take up the recommendations of the national debt and deficit commission.
Adam Ross and Jennifer DePaul of The Fiscal Times contributed to this report.