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House Democrats Lash Out at Obama Over Tax Agreement

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Dec. 10 (Bloomberg) -- House Democratic leaders left a Dec. 6 White House meeting assured that President Barack Obama hadn’t sealed a deal with Republicans that would betray almost a decade of campaign promises not to extend tax cuts for the wealthy.

That was about to change.

Shortly after Maryland Representative Chris Van Hollen, the House Democrats’ chief negotiator, left the White House meeting, he learned of a “tentative deal” from the news website Daily Caller, according to Democratic aides.

Democratic anger over the deal -- and how it was reached -- has grown since then. And two years of frustration among House Democrats who have backed politically risky legislation only to see it weakened or stymied in the Senate boiled over yesterday with a call to block a House vote on the president’s tax deal.

On issues including climate-change legislation and overhauling the U.S. health-care system, House Democrats have been forced to accept changes dictated by the ability of Senate Republicans to block action. For many of these Democrats, Obama’s willingness to reach a deal in private with Republicans was too much.

“The need is great” to settle the issue of expiring tax cuts, “but we do not have to capitulate to just any deal that is offered,” Representative Lloyd Doggett of Texas said yesterday after House Democrats adopted a non-binding resolution calling for changes before the chamber votes on a package.

Reid Announcement

Senate Majority Leader Harry Reid last night announced a Dec. 13 procedural vote on the bill to extend Bush-era income-tax cuts for two years for all taxpayers, including the highest-earning Americans. Obama had been seeking to limit the tax reductions, which expire Dec. 31, to the first $200,000 for individuals and $250,000 for couples filing jointly.

The measure Reid, a Nevada Democrat, introduced as he scheduled the vote to move forward on it remained essentially the same as the one the administration worked out with Republicans on Dec. 6.

On that day, House Majority Leader Steny Hoyer, a Maryland Democrat, had returned to his office from the White House meeting shortly before 5 p.m. and told reporters “nothing is final at this point.”

At 5:30 p.m., Biden told Senate Republican Leader Mitch McConnell of Kentucky that Obama had approved the deal that they had discussed the day before to extend current tax rates for all Americans for two years, according to a Senate Republican aide.

No Calls

Neither Van Hollen, Hoyer nor House Speaker Nancy Pelosi of California, who all had been at the White House for formal talks on a deal, got the same consideration. The White House never called the three Democrats to tell them the president would announce the agreement on television that night, according to leadership aides.

Presidential spokesman Robert Gibbs called the level of anger “understandable” in remarks to reporters today.

Sanders Speech

It’s a frustration that has spilled out in both chambers, with Senator Bernie Sanders, a Vermont independent, taking to the Senate floor for much of today to decry a deal he said will help the rich at a time when many lower-income families are struggling.

“You’ve got the lobbyists here working for the richest people in the world -- and winning,” said Sanders, who caucuses with Democrats.

Outrage among House Democrats brewed during two caucus meetings as the week progressed. Yesterday, it resulted in the near unanimous support for the resolution pushing for changes to the deal before Pelosi schedules a floor vote.

A group of lawmakers chanted “just say no!” during debate on the resolution.

The resolution is intended to empower Pelosi to bargain with the Senate as it debates the tax-extension legislation in the coming days, lawmakers said.

“We’ll have to establish the priorities, go through our process” and “bring something to the floor,” Pelosi told reporters after yesterday’s caucus.

Midterm Vote

Many House Democrats point to the politically difficult votes they’ve taken to advance Obama priorities as key reasons the party suffered a net loss of 63 seats in November’s midterm elections. That gave Republicans control of the chamber in the new congressional session that convenes in January.

In June 2009, the House passed legislation to set up a “cap-and-trade” system to reduce emission of global-warming gases. The measure was denounced by Republicans as economically onerous, and a Senate version never got out of committee.

Many House Democrats were irate over changes the Senate made to the health-care overhaul bill that did become law, particularly the decision to strip from it a publicly run insurance plan.

Yesterday, Senate Republicans blocked a House-passed effort to repeal the ban on gays and lesbians serving openly in the military.

“The problem is the United States Senate,” said Representative G.K. Butterfield, a North Carolina Democrat.

Biden Visits

Since Obama’s announcement of the tax deal, Biden visited Capitol Hill twice to sell the package to Democrats in both chambers. During his Dec. 8 meeting with House Democrats “Biden said ‘take it or leave it,’ and we said ‘leave it,’” Doggett told reporters yesterday.

Administration officials continued their defense of the tax deal, releasing a study showing how it would reduce taxes for families. Obama said yesterday that failure to pass the compromise could result in “smaller paychecks” and “fewer jobs.”

The inclusion of a Republican proposal to set a 35 percent top rate for estate taxes that would apply after a tax-free allowance of $10 million per couple is exhausted was “the straw that broke the camel’s back” for most House Democrats, said Representative Joe Courtney.

The Connecticut Democrat said that in passing yesterday’s resolution, “the caucus is saying we want to be part of” continuing negotiations and telling the Senate “don’t just hand us a hot, steaming ‘take it or leave it.’”

Republican Position

Senate Republicans said altering the estate-tax provision would be unacceptable.

“I wouldn’t agree to that, and I am sure I wouldn’t be the only one,” said Senator Mike Crapo, an Idaho Republican. “I would expect there would be a strong majority that feel the same way.”

Deal supporters among Democrats said the party risks losing a chance to extend unemployment insurance and cut payroll-tax withholding by 2 percent. Those are elements of the accord that the White House has promoted as an aid to economic growth.

Representative Shelley Berkley, a Nevada Democrat who said she cast the lone vote against yesterday’s resolution, cautioned that when Republicans assume the House majority, “you are going to have a dickens of a time getting unemployment benefits.”

To contact the reporters on this story: James Rowley in Washington at jarowley@bloomberg.net; Lisa Lerer in Washington llerer@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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