After a rare deal between the Obama White House and Republican leaders, the Senate on Wednesday voted 81 to 19 to extend the Bush-era tax cuts, including to the highest tax brackets, and fund measures to boost the economy and unemployed workers.
The size of that bipartisan vote – also rare in the typically gridlocked Senate – gives the tax deal a significant boost as it moves to the House, as early as Thursday. But elements of the package have sparked grass-roots revolts on both sides of the aisle, leaving the outcome on the House side still in flux.
The uproar on the Democratic side of the aisle flared up immediately. The House Democratic caucus voted to reject the deal on Dec. 9 during a closed meeting that many described as angry and intense. But a two-hour meeting Tuesday night ended with no plan of action, signaling that many lawmakers may now see the outcome as inevitable.
Opposition to the deal appears to be growing on the Republican side, as conservative critics blast the impact of the $858 billion deal on the federal deficit and the credibility of GOP campaign promises to curb spending in Washington.
“This is a huge lame-duck deal,” says Rep. Steve King (R) of Iowa, who says that Republicans should block the tax deal and bring the issue up again in January. “The voice of the American people was heard on Nov. 2. They voted for no new taxes, debt, or deficit, and their voices should be heard,” he adds. “This deal disenfranchises 87 freshman Republicans, and their voice ought to be heard.”
Conservative support wanes
Moreover, support among conservatives outside of Washington is also waning. A new poll, released Wednesday, signals that public support for the deal among Republicans has dropped from 70 percent last week to 61 percent this week, according to Rasmussen Reports. Democrats still back the plan by a 46 to 35 percent margin, little changed from a week ago.
“A 9 percent drop in a week is pretty significant,” says president and CEO Scott Rasmussen. He says the shift reflects the fact that “the deal has been talked about more and more.”
Conservative critics, notably Charles Krauthammer, say that Republicans gave up too much to the president by backing new social spending without demanding offsets. “Republicans are far more concerned about restraining spending than they are about cutting deficits,” Mr. Rasmussen adds.
House Republican leaders are not asking their caucus to unite on this issue, as they have on other key votes of the 111th Congress. GOP leadership aides say they do not expect all their members to support the bipartisan deal.
“It’s not a question of loyalty,” says Michael Steele, a spokesman for House Republican leader John Boehner. “But our top priority is stopping job-killing tax hikes on Jan. 1. This is the only option at this time that will do that.”
The leadership challenge is even tougher for Speaker Nancy Pelosi, who has carefully avoided the appearance of a break with President Obama. Democratic leaders had not been included in the negotiations, mainly between Vice President Joe Biden and Senate Republican leader Mitch McConnell.
Among Democrats' concerns:
- Not extending the Bush tax cuts to the wealthiest has been an article of faith for Democrats throughout this Congress and into the campaign season.
- A new version of the estate tax that exempts the first $5 million of an estate and taxes those above that level at 35 percent, instead of the 55 percent rate due to take effect on Jan. 1.
- The one-year tax holiday, which cuts employee share of Social Security payroll taxes from 6.2 percent to 4.2 percent, is being seen as the opening shot of an all-out assault on the program once Republicans take back control of the House in January.
“It’s a step down on Social Security and a continuation of a process that gives more and more to the rich,” says Rep. Jim McDermott (D) of Washington, who says he will vote no on the bill. “It’s unfair to give a two-year tax break to the rich while giving the unemployed only 13 months [for extended benefits].”
But the votes of progressive critics could well be eclipsed by a coalition of Republicans and fiscally conservative Democrats. The 54 conservative "blue dog" Democrats in the House could be enough to pass the bill – even with GOP defections.
A wildcard in the outcome is whether House leaders will opt to rule out amendments to this legislation. Senate Republican leader Mitch McConnell says that any change in the House voids the agreement with the White House.
Commenting on the deal in a meeting with business leaders on Wednesday, President Obama said: "I know there are different aspects of this plan to which members of Congress on both sides of the aisle object. That’s the nature of compromise. But we worked hard to negotiate an agreement that’s a win for middle-class families and a win for our economy, and we can’t afford to let it fall victim to either delay or defeat."