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December 08, 2010

House Democrats Reject Obama Tax Cut Plan

The Democratic caucus of the U.S. House of Representatives has rejected a deal on extending tax cuts negotiated by President Barack Obama and Senate Republicans. Many Democrats are enraged that the president gave in to Republican demands to extend Bush-era tax cuts for all taxpayers, including the wealthiest Americans and are demanding changes to the plan before it comes to the House floor.

House Democrats appear to be staging an open revolt against Democratic President Obama, with just one week to go before this session of Congress planned to finish its business and leave Washington for the holiday recess.

The White House has been strongly pushing a deal the president crafted with Senate Republicans, including Senate Minority leader Mitch McConnell. President Obama and most Democrats originally wanted to extend Bush-era tax cuts only for lower-and-middle wage earners and not for the wealthiest Americans. But earlier this week, the president agreed to extend tax cuts for all Americans for two years, in exchange for Republican concessions to extend unemployment benefits for 13 months and grant new tax breaks to businesses and individuals.

At a closed Democratic caucus meeting, Representative Peter de Fazio of Oregon sponsored a resolution rejecting the presidents' tax cut proposal.

"The tax deal between the White House and Mitch McConnell in the Senate is not acceptable to the Democratic caucus of the House of Representatives and we will not bring it to the floor in its current form," he said.

The resolution was easily approved by a voice vote in the caucus, throwing plans into uncertainty for the House and the Senate to pass legislation extending Bush-era tax cuts before they expire at the end of this year. Democratic Representative James Clyburn of South Carolina explained that for him, plans to exempt estates worth as much as 10 million dollars from inheritance tax went too far in catering to the richest Americans at the expense of lower wage earners.


"Right now there is a proposal out there that I agree with in part and don't agree with in part. I would like to see that proposal modified as it relates to inheritance taxes," said Clyburn.

President Obama has been warning his fellow Democrats that they risk plunging the country back into recession if they reject the tax cut deal, saying it will create thousands of new jobs. White House spokesman Robert Gibbs expressed optimism that the plan will end up passing.

"The White House strongly believes that at the end of the day Congress will give the American people a vote on a plan that prevents their taxes from going up by several thousand dollars at the beginning of the year," said Gibbs.

Meanwhile, the Senate appears to be moving forward, with a vote on the tax cut deal expected within the next couple of days. Ironically, most House and Senate Republicans are standing with President Obama on the tax cut issue. It is unclear whether they would accept any changes to the plan that might make it acceptable to House Democrats.