Congressional Democrats on Thursday scrambled to shore up support for a package of tax breaks and safety-net spending amid concerns about its $84 billion cost and doubts about a tax hike on fund managers, Reuters reports.
The House of Representatives was expected to vote on the measure later after slashing its costs by nearly a third on Thursday, but prospects for passage appeared uncertain as centrist “Blue Dog” Democrats still believe it would add too much to the deficit.
Representative Stephanie Herseth Sandlin, a leader of the Blue Dog coalition, said she believed that Democrats at this point do not have enough votes to pass the bill.
“Leadership is experiencing a lot of cross pressures within the caucus,” Herseth Sandlin said.
Further cuts could anger liberals who want additional spending on construction projects and other programs to reduce the 9.9 percent unemployment rate. Connecticut unemployment is 9 percent.
With November’s congressional elections looming, the Democrats who control Congress face conflicting pressures to stimulate the economy while bringing down the budget deficit, which hit a record $1.4 trillion last year.
“Members who are from low-unemployment areas are very concerned about the deficit. Members who are from high-unemployment areas are very concerned about the jobs,” House Speaker Nancy Pelosi said at a news conference.
Democrats hope to pass the bill out of both chambers of Congress by week’s end to avoid disrupting jobless benefits and other expiring safety-net provisions. But even if it clears the House additional barriers loom in the Senate.
Senate Republicans, who could block quick action, are pressing to offset all of the new spending with unused funds from last year’s $863 stimulus package.
Meanwhile, several Senate Democrats hope to weaken a provision that would raise taxes on investment-fund managers.
Under the current bill, 75 percent of a manager’s income would be taxed at ordinary income rates of about 35 percent. They currently only pay 15 percent capital gains tax rates.
The Senate Democrats’ amendment would tax only 60 percent of the income of private equity, venture capital and real estate fund managers at the higher rate, a Democratic aide said.
If the Senate adopts the measure, the two chambers would have to work out their differences, leading to further delays.
