Barack Obama, Ursula Burns, Valerie Jarrett, Gary Locke, Jim McNerney Jr.
Pablo Martinez Monsivais  /  AP
President Barack Obama holds a meeting with the President's Export Council on Thursday in the Executive Office Building, on the White House campus in Washington. From left are, Commerce Secretary Gary Locke, Boeing Chairman, President and CEO Jim McNerney, Jr., the president, Xerox CEO Ursula Burns, and White House Senior Adviser Valerie Jarrett.
updated 12/10/2010 12:47:34 PM ET 2010-12-10T17:47:34

President Barack Obama said he expects disgruntled Democrats to make changes to the sweeping tax-cut deal he cut with Republican leaders, a pact he predicted will win congressional approval.

Democrats have objected to the deal on grounds 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.

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."

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."

Video: House Dems reject tax cut deal (on this page)
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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.

Mounting a lobbying effort to different audiences by the day, the White House on Friday turned its focus to women.

Obama aides met Friday morning with women's groups and presented an administration analysis of how elements of the tax deal, particularly extensions of a tax credit for low-income workers and another one for qualifying families with children, would particularly help working women.

The measure appears headed for Senate approval after negotiators added a few relatively modest sweeteners to promote ethanol and other forms of alternative energy. It was unclear whether House Democrats would be able to demand changes that go much further.

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.

The measure also includes tax breaks for commuters who use mass transit. The program saves commuters about $1,000 a year. Workers can set aside up to $230 a month to cover transit costs. The money isn't taxed. It goes into a separate account to pay for mass transit costs.

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."

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GOP, Dems respond to deal
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.

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."

Video: Rep. Bachmann: Keep tax bill ‘simple’ (on this page)

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."

'Just say no'
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.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Video: House Dems reject tax cut deal

  1. Transcript of: House Dems reject tax cut deal

    BRIAN WILLIAMS, anchor: Now we turn to the president's tax plan negotiated with Republicans and presented to members of his own party as practically a done deal, but today House Democrats, the president's fellow Democrats , rejected it. Our own Kelly O'Donnell has more tonight from Capitol Hill . Hey, Kelly , good evening.

    KELLY O'DONNELL reporting: Good evening, Brian . So we've got a family feud among Democrats . House liberals turned their back on the president over this tax cut deal. And there is limited sympathy from the White House and Senate Democrats .

    Representative CHRIS VAN HOLLEN (Democrat, Maryland): It is not acceptable to the House Democratic caucus . It's as simple as that.

    O'DONNELL: Politically, liberal Democrats feel ignored and claim the White House cut them out of negotiations in favor of Republicans .

    Representative LLOYD DODGETT (Democrat, Texas): We were told yesterday by the vice president this was a take it or leave it deal. We're saying, leave it.

    O'DONNELL: Substantively liberals reject changes to the estate tax that would reduce how much wealthy families pay on big inheritances.

    Representative JAMES CLYBURN (Democrat, South Carolina): The inheritance tax thing is something that goes far beyond anything that any of us anticipated.

    O'DONNELL: That one provision would allow wealthy families to save an estimated $70 billion over two years. Liberals argue the rich just don't spend that money on the kind of essentials, like food and clothes, that would actually boost the economy.

    Senator BERNIE SANDERS (Independent, Vermont): You know who benefits from the estate tax ? The top three-tenths of 1 percent, 99.7 percent of families do not benefit one nickel.

    O'DONNELL: Today, the president held his ground, telling Democrats if they don't go along the unemployed and middle class families suffer.

    President BARACK OBAMA: Americans would see it in smaller paychecks. That would have the effect of fewer jobs.

    O'DONNELL: But House Democrats demand new negotiations.

    Representative JAY INSLEE (Democrat, Washington): We would like to find a bipartisan way forward, but our caucus will not submit to hostage taking and we will not submit to this deal.

    O'DONNELL: Today a cool response from the White House , saying this is the best deal.

    Mr. ROBERT GIBBS (White House Press Secretary): The nature of compromise is taking enough things to get an agreement through. And I think in the end we will.

    O'DONNELL: And Senate Democrats could get this passed within days, putting more pressure on the House . And, Brian , there's a big development tonight for Democrats who wanted to see an end to the ban on gays serving openly in the military. That failed to move forward in the Senate . They couldn't push through a giant defense bill that had included the repeal of Don't Ask , Don't Tell . Brian :

    WILLIAMS: All right, Kelly O'Donnell on the Hill tonight as the beat goes on for this lame duck Congress . Kelly , thanks.


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