Delegation split on tax cut deal

WASHINGTON–Connecticut’s congressional delegation appeared deeply split over the $900 billion tax cut deal that President Barack Obama brokered with top Republicans Monday night.

Among the state’s seven members of Congress, only two said on Tuesday they would cast a “yes” vote on the package: Rep. Jim Himes, D-4th District, and Sen. Joseph Lieberman, an independent who caucuses with the Democrats.

“This package is very easy to defend,” said Lieberman. That’s because the possible alternative-letting all the Bush-era tax cuts expire-is completely unacceptable, he argued.

“What do you want? For everybody’s taxes to go up, including the middle class, on Jan. 1st?” Lieberman asked. Under the White House-Republican agreement, “everybody’s taxes go down and you add in a lot of sweeteners… for our economy.”

Similarly, Himes said it was a “very reasonable” proposal that would stave off a tax hike and stimulate the economy.

But others in the delegation, including Rep. Chris Murphy, D-5th District, expressed serious reservations about the proposal.

“It’s going to be a very hard sell for me,” said Murphy. “I’m prepared to vote to borrow money only for programs that stimulate the economy… I cannot support borrowing hundreds of billions of dollars that will end up in the hands of millionaires or billionaires.”

Rep. John Larson, D-1st District, expressed dismay about the deal before it was even unveiled late Monday night. He said the White House and Senate Democrats never even put up a real fight for what he viewed as a principled stand against giving tax breaks to the wealthy.

Democrats, including Obama, have long campaigned on a pledge to nix the top-tier Bush-era breaks for individuals making over $200,000 and for couples making over $250,000. But now the White House “feels vulnerable,” Larson said, to getting blamed if Congress fails to reach an agreement by Dec. 31, when the cuts expire and every American would see a tax increase.

“So they’re going to try to convince the majority of Democrats that this is a good thing,” he said. “But we’ve just voted, saying “No, it’s not such a good thing’,” he added, referring to last week’s House vote preserving only the lower and middle income tax breaks, not the upper-income ones.

The White House-GOP deal would extend all the Bush-era tax breaks, first enacted in 2001 and 2003, for two years. In exchange, Republicans agreed to support a 13-month extension of unemployment benefits for laid-off workers, which will keep checks flowing to an estimated 7 million people in search of work.

Both sides also agreed to include a gamut of other goodies in the package, which proponents said would help both the middle class and businesses. Those items include:

  • a one-year 2 percent cut in payroll taxes
  • a two-year extension of the child tax credit
  • a two-year renewal of a $2,500 refundable tax credit for college tuition
  • a two-year renewal of a business credit aimed at spurring research and development
  • lowering the estate tax, which was set to rise on Jan. 1 to 55 percent for estates valued at more than $1 million; under this deal, the estate tax will be 35 percent and apply only to estates valued at $5 million or more.

The total two-year price tag is $900 billion, and since none of these provisions are paid for with other cuts to spending, that tally will be added to the national debt.

“This doesn’t seem like much of a compromise,” Murphy said. He had been hoping the White House would negotiate an agreement that raised the $250,000 cap to include more taxpayers, but still let some upper-tier breaks expire; Senate Democrats, for example, pushed a proposal to renew tax breaks for those making under $1 million.

Asked of the president gave up too much, too easily, Murphy said: “This is not the bill that I thought I’d be voting on, having listened to the Administration over the last year.”

Still, Murphy said his mind was not totally made up yet, as he continued to sort through the details and discuss the proposal with his colleagues. To be sure, no one in the delegation was likely to be completely satisfied with the package.

“There are some aspects of this that I’m not thrilled with,” Himes said, citing, in particular, the estate tax provisions, which he called “too permissive.”

Himes also conceded that the $900 billion price tag was “very serious money.” But said his concerns about Washington’s red ink were outweighed by the tepid economy, including the November jobs report that showed an uptick in unemployment to 9.8 percent.

Himes said that in addition to the preserving income tax rates, other provisions in the bill, such as the child tax credit, would help a “vulnerable population” and help jump-start the slow recovery. And Himes argued that the deal was actually more fiscally responsible than last week’s House-passed bill (which he also supported) to extend only the lower and middle income take breaks.

Because that measure called for a permanent extension of the lower breaks, as opposed to the White House’s temporary renewal, the price tag was $3.2 trillion, noted Himes.

“We’re now being a little bit more reasonable,” he said. And because the new version is temporary, the 4th District Democrat said he hopes that will force Congress to go back to the drawing board in two years to craft a wide-ranging tax reform bill.

“We need an overhaul of the tax code, so this deal is helpful for that larger debate,” Himes said.

Lieberman said he also cringed at the price tag. “It makes it all the more imperative that we agree on a long-term deficit reduction plan,” he said.

“There’s no question that before long we’re going to have to raise taxes on higher income people,” Lieberman added. “We’re probably going to have to ask more of everybody so we can pay off our debt and get our country back in balance. But the first thing we’ve got to do is get this economy recovering and I think this package will help us do that.”

Sen. Chris Dodd, whose vote on this issue may be among his last as he prepares for retirement, issued a statement saying that he was still reviewing the deal, “but the most important thing to me is to protect middle class families in Connecticut during these tough economic times.”

Connecticut two other lawmakers remained mum about the deal on Tuesday.

A spokesman for Rep. Joe Courtney, D-2nd District, said his boss wanted more time to review and debate the proposal with his congressional colleagues before commenting on it. Similarly, a spokeswoman for Rep. Rosa DeLauro said the 3rd District Democrat was not available for comment.