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Lukewarm Response for Jobs Bill Payment Plan

Bill Clark/CQ Roll Call File Photo
House Minority Whip Steny Hoyer was noncommittal on President Barack Obama’s plans to pay for the jobs bill he introduced Monday to Congress.

President Barack Obama's plans to pay for his jobs legislation are facing a cool reception from some House Democrats who wonder how the proposals — which went nowhere in the 111th Congress, when Democrats held majorities in both chambers — can attract support now.

"You have to pay for it. He suggested ways to pay for it, which, as you point out, he's suggested in the past, and I think there is support for that. How broad the support is, I don't know," House Minority Whip Steny Hoyer (D-Md.) said Tuesday. "I don't know the extent of the support, the breadth of the support, because it just came down [Monday]."

In 2009, Obama proposed many of the same ideas to help pay for his health care legislation.

"I think they will be familiar to most of you because they are ideas that we have been talking about for some time," White House Office of Management and Budget Director Jacob Lew said Monday in reference to the proposals.

But the ideas, which include limiting tax deductions to charitable contributions and increasing taxes on hedge funds and private equity groups, have not fared well in Congress, prompting opposition from key Democrats.

Rep. Sander Levin (D-Mich.), who is the ranking member on the tax-writing Ways and Means Committee, delivered a speech in June in defense of many of the same tax deductions Obama is now targeting.

"In the case of the charitable deduction, one has to keep in mind that the recipients of the contributions include universities, hospitals, churches and soup kitchens that provide critical services to working families," Levin said.

In July, Democratic Reps. Jared Polis (Colo.) and Mike Quigley (Ill.) sent a letter to Obama warning him that a proposal that subsequently made it into Obama's jobs pay-for "could devastate our hopes for recovery" if it caused a "collapse" in the commercial real estate market.

At issue in the letter is Obama's plan to change how some investment income is taxed, effectively increasing taxes on hedge funds, private equity groups and, as Polis and Quigley worried, real estate income.

Polis is a member of the New Democrat Coalition, which has strongly opposed the proposals in the past.

But a day after Obama announced he would again be pressing forward with the plan, many Democrats tried to lay low.

Polis declined to comment on Obama's latest push for the plan. "I haven't had a chance to study it yet. I think it just came out [Monday]," he said.

"I'm not commenting on it. I haven't read it at all yet," said Rep. Bill Pascrell (D-N.J.), a senior member of the Ways and Means Committee.

"They don't want to shoot the president down, that's probably why," said a political operative representing the financial services industry, who was surprised that Polis passed on commenting on the issue.

A Democratic House aide suggested that opponents of the plan are hoping they won't have to fight the president head-on to defeat it because Republicans also oppose it.

"We don't know what we'll vote on," the source said.

Members of the New Democrat Coalition are meeting Thursday, where the proposal is likely to be discussed. Reps. Chris Van Hollen (Md.) and Xavier Becerra (Calif.), who also are members of the Joint Committee on Deficit Reduction, will attend the meeting.

Obama's proposal did get the support of a key economist, Joseph Stiglitz, who voiced his approval for the plan Tuesday at a Democratic Caucus meeting.

Stiglitz argued that the jobs bill and the plan to pay for it were a "good combination," according to Rep. Henry Waxman (D-Calif.). Stiglitz said targeting tax increases to the upper-income brackets would not reduce the stimulative effect of government spending and the cutting of payroll taxes.

But Obama's proposal faces some political peril if it angers charitable organizations, universities and nonprofits that benefit from donations, particularly from wealthy benefactors.

The plan would work by limiting the overall amount of deductions that high-income earners may claim on their annual tax forms, write-offs that frequently wind up in the coffers of charities and academic institutions.

In the 111th Congress, the White House estimated the changes on deductions would bring in $318 billion over 10 years. On Monday, Lew said the changes would bring in $400 billion over 10 years.

Higher education institutions might be hit particularly hard, experts say, adding to the bleak financial situation many academic administrators already find themselves in.

Insiders say universities and charitable organizations have significant influence on Capitol Hill because of the good will their groups have engendered.

Sandra Swirski, executive director of the Alliance for Charitable Reform, a group that has opposed Obama's plan to limit deductions in the past, wasn't worried that the president's most recent proposal would gain traction this time around.

"It's been pretty roundly rejected," she said.

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