House Democrats Prepare to Abandon Resistance on Tax Cut Deal

They aren't going to win this fight, say commentators

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House Democrats will probably cave on the tax cut deal--including the part that sharply reduces the estate tax, a compromise that outraged many liberals as a giveaway to those least affected by the bad economy, reports The Washington Post's Lori Montgomery. The deal, which extends the Bush tax cuts for two years and unemployment benefits for 13 months, got 83 yeas in the Senate in a test vote earlier this week. That high level of support "appeared to have weakened resolve among House Democrats to block the measure," Montgomery writes.

But House Democrats still plan on holding votes aimed at undoing the estate tax measure of the deal. Dems want to lower the level at which estates are exempt from taxation from $5 million to $3.5 million, and to raise the rate at which big estates from 35 percent to 45 percent. And some House leaders are also pushing for a measure that would change the payroll tax holiday into a refund check as a way of safeguarding Social Security. But if the House adopts any of these changes to the deal, the Senate will have to vote again, and House Democrats don't want to add any amendments that would make the legislation D.O.A. in the Senate. Thoughts on this latest chapter of the tax cut saga:

  • An Increase in the Estate Tax Will Lead to the Murder of Grandmas, The American Spectator's Jay D. Homnick argues. Imagine grandma's life, Homnick writes--a WAC in WWII, a flight attendant, an entreprenuer with grandpa, who died and left her with $7 million. Her little fortune grew, but with the financial crisis and health care costs, she's got about $15 million in the bank. "If she dies Jan. 1 or thereafter, the government will take 35 percent of everything over five million. So you see, kids, there is no way Grandma would want to live another few days into the new year and cost us all over three million smackers. ... You know she will not suffer, it only takes a minute or so with the pillow over her mouth." Homnick writes. Sure, the story is fiction, "but the point is no less valid. ... To raise the Death Tax from zero to 35 percent in one swoop will fell many oldsters in the next two weeks; that is, among those who have not already been picked off during the buildup to this thing."
  • Sad Day for Deficit Hawks, The Washington Post's Ezra Klein reports. "The $858 billion package does more damage to the deficit than anything other piece of legislation passed during the Obama presidency. It's also expected to receive the largest bipartisan majority of any major piece of legislation the Senate has considered in the last two years."
  • Good for the Economy, Good for Compromise, the Boston Globe editorial board writes in an editorial urging Massachusetts members of the House to "embrace" the bargain. Sure, there's stuff in the deal for both sides to complain about. But on the other hand, "it could usher in a much wished-for era of cooperation--or at least lower the heat between the two parties. Obama understands that the benefits of this compromise go beyond its provisions, to advancing the spirit of compromise itself."
  • The House Is More or Less Resigned, Brian Beulter reports at Talking Points Memo.
On Tuesday night [House Dems] vented their frustrations to their harried leadership in a private caucus meeting, but emerged acknowledging that they've been boxed effectively in by the White House and GOP.  ... That endgame may involve passing the legislation word for word. Leaders may allow votes on amendments to the Senate-passed bill, and may even allow some minor tweaks to the package. But as far as dramatically tweaking its key provisions--particularly the estate tax--or otherwise endangering the deal, members predict leadership will allow those efforts to fail.
  • On the 'Liberal Purists' Holding Out The New Republic's Jonathan Cohn wondered a few days ago about the justness of liberal anger. The president compared liberal outrage about this deal to their anger that the public option was left out of the health care law, saying his base was letting the perfect be the enemy of the good. And apt comparison? Cohn thinks not, pointing out that the health care law was about immediate and permanent step on a standard liberal talking point. To contrast: "The tax deal will help boost the economy in the next year or two. That's no minor thing ... But it's also a temporary change. If we're lucky, the time Obama has bought with this temporary extension will allow him to do in two years what he couldn't do now--and end the upper income tax cuts once and for all." In short, though he buys the administration's argument "that there was no way to win this tax fight even back in the summer," he also thinks progressive critics have a stronger case here than with health care.
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