S.C. Sens. Graham, DeMint divided on tax cut deal

McClatchy NewspapersDecember 16, 2010 

U.S. Sens. Lindsey Graham and Jim DeMint once against canceled each other’s votes on major legislation Wednesday as Graham backed but DeMint opposed a compromise two-year extension of the Bush-era tax cuts.

Graham said the deal between President Barack Obama and Republican congressional leaders isn’t perfect – but that it achieves the critical need to prevent tax hikes on some Americans.

Only four other Republican senators joined DeMint in voting against the tax legislation, while Graham was among 37 GOP senators who voted for it.

Graham praised the Senate’s 81-19 vote to pass the tax bill as an early payoff from the Republican rout in the Nov. 2 elections.

“The Obama administration agreeing to extend the tax cuts for all Americans is one of the first dividends from the election of more Republicans to the House and Senate,” the Seneca Republican said

“Overall, I think the agreement is a good one for the American people,” Graham said. “No agreement is ever perfect. There are, of course, areas I would have liked to see improved. But overall it is worth supporting as it will give certainty to those concerned about what a tax increase would mean to their businesses and family budgets.”

DeMint, whose amendment to make the tax cuts permanent was rejected before the vote on the broader bill, said the package will increase the deficit too much as it trades more federal spending for extended tax cuts.

“I’m concerned the bill currently under consideration does not permanently extend tax rates – and thus will have a marginal, if any, benefit to our economy,” DeMint said on the Senate floor. “Temporary rates make for a temporary uncertain economy.”

The legislation extends all Bush-era tax rates, including those on the very wealthy, for two years; they are due to expire Dec. 31.

In exchange for accepting the across-the-board tax cuts, Obama gained Republican agreement to extend by 13 months jobless benefits for the long-term unemployed; to cut 2 percentage points from the Social Security payroll tax next year and to extend dozens of special interest tax breaks, notably for energy, business and education.

Most aggravating to liberals, the compromise package would impose a 35 percent tax on individual estates of more than $5 million. Many Democrats are pushing for a 45 percent rate with a $3.5 million exemption.

The Senate vote to extend tax cuts enacted in 2001 and 2003 under President George W. Bush would dramatically increase already-huge federal deficits, yet many of the lawmakers who rail against deficits eagerly backed the tax breaks.

“I don’t think that keeping the current tax rates raises deficit spending,” explained U.S. Sen. John Cornyn, a Texas Republican.

U.S. Sen. Bill Nelson, a Florida Democrat acknowledged that the tax deal’s projected cost of $858 billion is “a bitter pill to swallow.” He quickly added: “I doubt that there is anybody in this chamber that wants the alternative.”

That alternative, the bill’s supporters said, would be a return to the tax rates that prevailed before 2001 — higher rates they asserted would stifle the fragile economic recovery.

Lawmakers, though, are feeling public pressure to pay more attention to the deficit, with some conservative commentators speaking out about the package’s price tag.

While an effort to cut spending to help pay for the legislation failed Wednesday, it got 47 Senate votes, including those of five Democrats.

The House of Representatives was expected to approve the tax package today, but the uneasiness over the deficit is continuing to grow among lawmakers from both parties.

U.S. Rep. Peter Welch, a Vermont Democrat who is leading liberal opposition to the measure, blasted the plan as “fiscally irresponsible.”

Welch said his colleagues had “forgotten quickly” the 12-day-old recommendations of the bipartisan deficit commission, which urged tough steps to cut deficits by $4 trillion over the next decade.

U.S. Rep. Mike Pence, an Indiana Republican who has crafted companion legislation to DeMint’s bill making the Bush tax cuts permanent, said he would vote against the compromise deal.

“Frankly, we can provide assistance to families struggling in this economy by making the hard choices to pay for it without adding to the national debt,” Pence said.

Adding fuel to their fury are the cries from the conservative heartland.

An online petition circulated by Tea Party Patriots, a conservative grass-roots group, says the bill has triggered “an anger that will not diminish.”

Conservative radio talk show host Hugh Hewitt protested that the deal “spends billions and billions of dollars that the country does not have in order to prevent a tax hike that the country voted against.”

Independent economists and budget experts have offered widespread, if grudging, praise for the package.

While the deficit is a serious concern, the analysts say the economy needs a short-term stimulus, and the breaks for the middle class and poor, as well as the jobless benefits, will be particularly helpful.

“In an ideal world, one would combine this boost with some sort of long term retrenchment,” said Chuck Marr, head of federal tax policy at the Center on Budget and Policy Priorities, a Washington think tank that focuses on government finance. “But this isn’t an ideal world.”

Last year’s deficit was $1.29 trillion, and the nonpartisan Congressional Budget Office estimates that without the tax cuts, the deficit should top $1 trillion in the current fiscal year.

The measure passed Wednesday in the Senate should add $374.1 billion to this year’s deficit and $422.9 billion next year, according to CBO estimates.

Lawmakers promise that a long-range plan to reduce the deficit is coming.

U.S. Senate Budget Committee chairman Kent Conrad of North Dakota, a deficit commission member, voted for its plan Dec. 3 – but also backed the deficit-increasing measure Wednesday to extend tax cuts.

"All reputable economic analysis shows that this package is necessary to strengthen economic growth next year,” Conrad said.

That view is expected to prevail in the House, though many members have qualms.

U.S. Rep. Elijah Cummings, a Maryland Democrat who is considering a no vote, said Republicans will use the huge deficit to “justify cutting social programs.”

While Cummings backs tax cuts for poor and middle-class Americans, “the middle class in the end will pay big time for a loss of programs.”

U.S. Rep. Jeff Flake, an Arizona Republican, said spending would be scrutinized closely whether or not there was a tax bill. But he was still concerned about the ballooning deficit and questioned the tax plan’s impact on the economy.

Flake asked how a one-year payroll tax cut would spur economic growth?

The next fiscal fight has already started.

Government funding runs out Saturday night unless Congress extends it. Democrats are pushing a spending plan for the rest of fiscal 2011, through next September, that Republicans maintain is too expensive.

“I think this is an outrage,’’ Cornyn said.

But the plan contains about 6,600 earmarks worth $8 billion, special local projects inserted by lawmakers, including some that Cornyn wanted.

Republicans have vowed to end the practice — though some have earmarks in the bill.

“We will reject any earmarks requested by us or anyone else because that’s what the American people told us they want,” Cornyn said.

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