A top adviser to President Barack Obama and a key Democrat in the House of Representatives predicted Sunday that a compromise on extending tax cuts for all Americans will win congressional approval before the year is out.
David Axelrod, a top member of Obama's White House team, said the deal Obama reached with Republicans was a "tremendous win" for middle- and lower-income taxpayers even though the compromise is laden with measures that remain distasteful to the president and the liberal wing of his party.
Rep. Chris Van Hollen, a member of the Democratic leadership in the House, predicted liberals, including Speaker Nancy Pelosi, would not "hold this up" despite roiling anger among progressives.
A Senate vote is set for Monday on legislation that would avert a Jan. 1 increase in income taxes for nearly all Americans. The package faces a tougher sell in the House of Representatives, where Democrats have voted not to allow it to reach the floor without changes to scale back tax relief for the rich.
At issue is the extension of tax breaks for Americans at all income levels. Those lower rates, that were put in place during the administration of former President George W. Bush, expire at the end of the year. Obama campaigned for the presidency and had routinely vowed during his first two years in office to keep the tax breaks in place for American households earning less than $250,000 a year.
The Republicans have been fighting that, insisting that the cuts remain in place for all income levels. The opposition party vowed to block any extension if the wealthy did not benefit as well.
Obama, realizing the Republicans had the votes to make good on their threat, crafted a compromise a week ago to go along with a renewal of cuts for all income levels for a two-year period. In return Republicans promised to drop their opposition to a separate measure: an extension of unemployment benefits for the long-term unemployed. They said they would agree to a 13-month extension of those payments.
Also included in the deal is a 2 percent reduction in payroll taxes that Americans pay into the Social Security federal pension fund for retired people.
The most explosive part of the deal, the one that Pelosi at one point called "a bridge too far," was a major concession to Republicans on the amount of taxes heirs pay on inheritance. The package Obama negotiated would set the top rate at 35 percent and exempt the first $5 million of an individual's estate. Couples could exempt $10 million. Without the deal, the estate tax was scheduled to return next year to a top rate of 55 percent for estates larger than $1 million for individuals and $2 million for married couples.
"We believe that when it comes back to the House, that we will get a vote, and that we'll prevail there, because at the end of the day, no one wants to see taxes go up on 150 million Americans" on New Year's Day, Axelrod said. "No one wants to see 2 million people lose their unemployment insurance, and everybody understands what it would mean for the economy if we don't get this done."
Axelrod said he does not foresee "major changes" in the House to the compromise and that Pelosi "understands the consequences of inaction" and "urgency in passing it."
The No. 2 Senate Democrat, Dick Durbin of Illinois, said there was a "good cross-section" of fellow Democratic senators who are ready to accept the deal. He said House Democrats, who will become the minority party when the next Congress is seated in January, should go along because they won't be in a position to fight for a better deal in 2011.
Van Hollen said many House Democrats want to scale back the estate tax breaks, but he declined to say whether that will be a deal-breaker and said middle-class families will not see tax increases in January.
"The president made a deal with Senate Republicans and ... to the credit of Republicans, they did not say this better deal on the estate tax was essential," Van Hollen said. "We're not going to hold this up at the end of the day, but we do think this simple question should be put to test. We're going to ask Republicans and others, are they going to block this entire deal" to protect wealthy estates?
While Obama and his supporters have cast the issue as make it or break it by year's end, the reality of the matter is that Republicans likely would get their way on tax breaks for all income brackets when they take control of the House next year. They become the majority in the lower house and significantly diminished their minority status in the Senate in a landslide election victory last month.
If the tax cut extension has to be passed by the next Congress, the legislation would almost certainly be made retroactive to the first of the year, making the year-end deadline somewhat of a false issue.
Axelrod spoke on CNN, Van Hollen appeared on Fox News.
