Obama predicts tax bill passage, possible changes

[December 10, 2010]  WASHINGTON (AP) -- President Barack Obama is predicting congressional approval of the tax-cutting compromise he has reached with Republican leaders, but he's not ruling out that unhappy Democrats will make some changes in the mammoth legislation.

In an interview with NPR released Friday, Obama said that despite a rebellion by many Democrats against his tax deal, it will pass because "nobody -- Democrat or Republican -- wants to see people's paychecks smaller on Jan. 1 because Congress didn't act."

The pact would extend cuts in income tax rates for all earners that would otherwise expire next month, renew long-term jobless benefits and trim Social Security taxes for one year.

Democrats have objected that it is too generous to the rich, especially its provisions cutting estate taxes for the wealthiest Americans. House Democrats voted in a closed-door meeting Thursday not to allow the package to reach the floor for a vote without changes to scale back tax relief for the rich.

Asked about those objections, Obama said there will be talks between House and Senate leaders about the package's final details.

"Keep in mind, we didn't actually write a bill," he said of his agreement with GOP leaders. "We put forward a framework. I'm confident that the framework is going to look like the one that we put forward."

Rep. Michele Bachmann, R-Minn., one of the House's highest-profile conservatives, said that Democratic discontent highlights the difference between the two parties.

"The compromise that was forged wasn't rich enough for Speaker Pelosi and the Democrats," Bachmann said on NBC's "Today" show, referring to Nancy Pelosi, D-Calif. "They want the taxes up even higher. And that's really where the line of demarcation is in this discussion."

Speaking separately, Tim Kaine, chairman of the Democratic Party, said Democrats objecting to Obama's tax deal may be showing voters in their districts that they have "some spine" and predicted that the two-year extension of the lowered income tax rates would eventually help Democrats.

"By extending it two years, and I think this is going to happen, you're putting the debate about tax cuts for the wealthiest right in the heart of the presidential election. I think the president feels very confident he can make the case," Kaine said on CBS' "Early Show."

The measure appears headed for Senate approval after negotiators added a few sweeteners to promote ethanol and other forms of alternative energy.

Tax provisions designed to increase production of hybrid automobiles, biodiesel fuel, energy-efficient homes, coal and energy-efficient household appliances would be extended through the end of 2011.

There is no precise timetable for passage in the Senate, but a test vote was set for Monday afternoon that appears likely to demonstrate overwhelming support for the legislation. Supporters say it would help accelerate a sluggish recovery from recession.

"This bill is not perfect, but it provides the economic boost middle-class families and small businesses in Nevada and across America need," said Senate Majority Leader Harry Reid, D-Nev. "Middle-class families and small businesses will see their taxes go down."

At the insistence of Republicans, the measure includes a more generous estate tax provision. That infuriated Democrats already unhappy with Obama for agreeing to extend tax cuts at incomes of more than $200,000 for individuals and $250,000 for couples.

In all, the package would cost about $855 billion, according to a preliminary congressional estimate.

"If we pass this agreement as written, it says we are going to continue the Bush policy of trickle-down economics for at least two more years, and in my mind, that is absurd," said Sen. Bernie Sanders, a Vermont independent.

Vice President Joe Biden has told Democrats in closed-door meetings this week that they are free to oppose the agreement but it might unravel if they do.

"If it's take it or leave it, we'll leave it," said Rep. Lloyd Doggett, D-Texas, after a closed-door meeting in which rank-and-file Democrats chanted, "Just say no."

Despite significant criticism from fellow Democrats, Obama has said the sweeping measure is necessary to help the struggling economy recover from the worst recession in decades.

Senate GOP leader Mitch McConnell has said he expects most Senate Republicans to support the tax bill. Prominent House Republicans back it, too.

Among the energy tax provisions added was an extension through 2011 for the current 45-cent per gallon subsidy for ethanol, at a cost to the Treasury estimated at nearly $5 billion. The issue is of particular interest to lawmakers from Midwestern states with grain crops.

"While this legislation is not as long as we had hoped, it is a commonsense approach that will ensure American ethanol production continues to evolve and new technologies commercialized," said Bob Dinneen, president of the Renewable Fuels Association.

[Associated Press; By STEPHEN OHLEMACHER]

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