Both Conservatives and Democrats Are Divided Over Supporting the Tax Deal

The Senate has no votes scheduled today. Last night, the Senate took a procedural vote in order to take up the tax package agreed on by Republicans and the White House.

Senate Majority Leader Harry Reid then filed cloture on the motion to concur in the House amendment to the Senate amendment to H.R. 4853, the vehicle for the tax package, with a Reid/McConnell amendment containing the tax deal.  The cloture vote has been scheduled for 3 PM on Monday.

Also yesterday, the Senate voted 59-40 to table the motion to proceed to the Senate version of DREAM Act, allowing Reid to take up the House version (H.R. 5281) sometime later. If passed by the Senate, the House version of the DREAM Act would go directly to the president for his signature.

Democrats later failed to get cloture on the motion to proceed to H.R. 847, a 9/11 responders health bill.

Reid then forced another failed cloture vote on the motion to proceed to the fiscal year 2011 Defense Authorization bill, S. 3454, which includes a repeal of the “don’t ask, don’t tell” law. The motion failed by a vote of 57-40.

In the last couple of days, there has s definite differences of opinions between prominent conservatives over supporting or not supporting the tax framework negotiated by Republicans with the White House that prevents taxes from going up in January. Primarily it is because the Democrats have added lots of pork programs that are not funded. Also, it is clear that if the tax cuts were not extended now, the Republicans with its increase in numbers could push for maybe even permanent tax reductions in the next session of Congress. Again, not everyone agrees or disagrees with this compromise bill by the Republican leadership with President Obama. But the same can be said on the liberal side. President Obama today even brought in former Democrat President Bill Clinton to in an attempt to rally Democrats to support the bill.

Last night, FreedomWorks President Matt Kibbe wrote in a letter to senators, “I am writing today to offer our support for the general framework for the compromise tax proposal announced by President Obama and leaders in Congress.  It is not our ideal proposal, but it is worth supporting while concurrently pushing for a major overhaul of the entire tax code and major spending reductions. . . . Ultimately, we want fundamental tax reform and serious spending cuts so Washington may be both less of a burden on the economy and also live within the means taxpayers are willing to provide.  We believe this compromise puts us in a better position to achieve those goals than letting tax rates go up dramatically on January 1st, 2011.”

Keith Hennessey, former senior White House economic advisor to President George W. Bush, wrote Wednesday, “Given a Democratic President, this is the best possible deal that could be reasonably expected.” He argues, “This bill is an enormous policy win because the effective changes actually go beyond 2012. Along with the actual changes to law through 2012, this bill should change your expectations of rates beyond 2012. . . . All the arguments that were effective in 2010 will be as effective in 2012, and Congress will already have cast this extension vote once.” Hennessey acknowledges that in an ideal scenario, there would be things he’d improve, but he writes, “It’s silly to compare this bill to any one person’s ideal tax policy and say it’s inadequate. This is legislating, not a theoretical tax seminar.” His conclusion? “No-brainer. Support the deal.”

And Pete Sepp, Executive Vice President of the National Taxpayers Union, while also noting some reservations, points out, “A two-year extension of all current income-tax rates will definitely help to keep small business and investor uncertainty from getting even worse. Preserving the moderate rates on capital gains and dividends is an especially urgent priority, not only to prevent a year-end market nosedive but to help economic growth climb back to its proper altitude.”

However, Bill Wilson, President of Americans for Limited Government, addressed the likely $1.5 trillion deficit that is also created by the Obama-McConnell tax deal: "Unfortunately, when this deal was first presented, it was commonly understood to contain an unpaid-for $56 billion extension of unemployment benefits and a $120 billion cut in payroll taxes on employees. Without offsetting budget cuts presented alongside these budget-busters, the deal was bad enough. But now Harry Reid is busy inserting provisions extending hundreds of billions of dollars of tax credits, corporate welfare subsidies, and other handouts from the 2009 Obama 'stimulus' program. These include ethanol subsidies, windmill subsidies, and other so-called 'green' programs that have nothing to do with creating the conditions for a sustainable economic recovery. It even includes extension of tax deductions for public school teachers. Enough is enough.

"This is all unacceptable to the American people, and it should be unacceptable to Senate Republicans, who never agreed to lift their filibuster so that already-failed 'stimulus' measures could be extended as a means of passage. Over $650 billion of this now-$990 billion package has nothing to do with preventing imminent tax rate hikes on all Americans, as revealed today by columnist Charles Krauthammer. It has everything to do with holding the economy hostage to get as much wasteful spending as possible.

"Senate Republicans must hold the line and not be afraid to reject this bill that has become a Christmas tree monster of handouts, kickbacks, and other favors that they never agreed to in the first place. The American people voted for spending cuts in November, not a trillion dollar boondoggle. The imminent tax increases on all Americans need to be prevented, but not at the cost of the nation's very fiscal solvency. Where are the spending cuts the American people were promised?""

U.S. Sen. Jim Demint (R), Chairman, Senate Conservatives Fund also opposes the tax deal. He said today, "I do not want to see anyone's taxes go up and I have been fighting for years to permanently extend all the tax rates. . . . But this bill does much more than simply extend tax rates.

For starters, it includes approximately $200 billion in new deficit spending and stimulus gimmicks. That's a lot of money that will have to be borrowed from China and repaid by our children and grandchildren. If we're going to increase spending on new programs, we must reduce other spending to pay for it.

The bill also fails to extend all of the tax rates. It actually increases the death tax from its current rate of zero percent all the way up to 35 percent. One economic study shows that this tax increase alone will kill over 800,000 jobs over the next ten years.

"Finally, the bill now includes dozens of earmarks for special interests, including ethanol subsidies, tax breaks for film and television producers, give aways for Puerto Rican rum manufacturers, favors for auto racing track owners, and a hand out for businesses in American Samoa.

"We've known for years that these tax rates were going to expire but he did nothing about it until the last minute. Now Americans are being told they have to accept hundreds of billions in new spending and stimulus gimmicks, an increase the death tax, and a bunch of unnecessary earmarks or their taxes will go up.

I'm not going to be bullied into voting for things that will hurt our country because politicians in Washington ignored the problem until it was a crisis. Many of you fought hard to elect new leaders to the Senate this year with the expectation that they would fight deficit spending, tax hikes, and backroom deals. I take that commitment very seriously and I'm prepared to vote against this bill even if I'm the only one in the Senate to do so.

"I appreciate the efforts made by my party's leaders to negotiate this deal but I believe Americans deserve much better. This deal should be rejected and then fixed. We can easily extend these tax rates without increasing spending once the new crop of Republican senators, including Pat Toomey, Marco Rubio, Rand Paul, Mike Lee, and Ron Johnson, are sworn in. The President has already conceded that taxes cannot go up and we'll have more Republicans in Congress in a few weeks to fight for a better deal."

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