Dems Held Hostage By Tax Cut Deal

Democrats’ unease with President Obama’s tax cut compromise waned slightly yesterday — particularly in the Senate, after members were briefed about the economic upsides to getting this package passed before the end of the year. But even as the legislation was being drafted — in preparation for a Senate floor debate that could begin today — Dems were hoping the framework could be tweaked a bit — particularly the estate tax provision, which even sympathetic members regard as too-friendly to the children of the über-rich.

That’s not going to happen.“It’s not going to be changed,” insisted Senate Minority Whip Jon Kyl yesterday afternoon, as aides were finalizing legislative language. “The deal is resolved, so there’s not a question of it being changed. But both leaders will work together to insure that it has the votes to pass.”

That means none of Democrats’ chief objections to the framework will likely be addressed. Not the estate tax, not the fact that it won’t include a provision to raise the debt ceiling, not a mathematical quirk that will result people at the very lowest income levels paying more in taxes next year than they did this year.

Moments after Kyl briefed reporters, Senate Budget Committee Chairman Kent Conrad, who is broadly supportive of the deal, said he’d like to see changes to the package, particularly to the estate tax provision. Confronted with Kyl’s edict, Conrad laughed, “he’s not a dictator.”

But later in the day, on the other side of the Capitol, Vice President Joe Biden faced angry House Democrats and told them, much to their dissatisfaction, that the fix is in.

The legislation could hit the Senate floor as early as today and, depending on how Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell agree to proceed, there could be votes to amend the package. But those will all require 60 votes, and all, with the help of leadership and the White House, will almost certainly fail.

That’s tough news for Democrats who broadly believe that the compromise should be changed in two major ways: tax estates larger than $3.5 million at a rate of 45 percent for value above that amount; and make sure that lower income people do not pay more in taxes in 2011 than they did in 2010. Because the compromise swaps out the Making Work Pay tax credit, which sent all payroll employees a check, with a reduction of the payroll tax rate, some of the lowest income workers in the country will actually see less benefit from this deal than they had under the stimulus.

But it looks like Democrats who want to vote for the plan will have to live with these provisions.

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