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President Barack Obama’s tax cut deal drew protests Tuesday from progressive groups that have spent much of the first two years of the Obama presidency drumming up support for his initiatives such as health care and financial reform.
At the same time, it elicited rare praise from prominent business trade groups, including the U.S. Chamber of Commerce, that have aggressively opposed much of the president’s domestic agenda and helped finance GOP efforts to wins seats in Congress in the November elections.
For a deal that hasn’t even reached a floor vote in either chamber, the impact was immediate.
At issue for many liberal groups was the extension of the tax cuts for all wage earners as well as the $5 million individual threshold for the estate tax. They complained about Obama retreating on a campaign promise to allow tax cuts for the wealthy to lapse. They said he was too easily steamrolled by the Republicans even though they will not take over control of the House until next year.
“Watching the tax cut negotiation has been like watching a car crash in slow motion,” Justin Ruben, executive director of MoveOn.org, said in a statement. “The president’s commitment to bipartisanship should not mean leaving principles behind.”
The liberal group has been pressing its members to call lawmakers to oppose the deal. It also coordinated protests Tuesday outside the state offices of Republican Senators from Texas, Illinois and Massachusetts who voted to extend all the tax cuts Saturday.
On Monday, as the White House worked on an agreement in private, liberal donors tied up direct phone lines to senior White House adviser Valerie Jarrett after they were urged to do so by the Agenda Project, a New York group headed by political strategist Erica Payne.
Payne said many members of her group are Democratic donors who are increasingly reaching the conclusion that Obama is capitulating to Republicans.
“People are off the reservation about it,” she said.
Payne said she received an e-mail from an economist who called the tax compromise “a terrible deal.”
“If Obama signs onto it he might as well start packing his bags,” the e-mail said. Another e-mail, she said, came from a hedge fund millionaire who complained that the Democrats “hold all the cards but are getting rolled by the Republicans.”
Payne said Obama already had lost much of his financial support from Wall Street donors who helped boost his campaign coffers in 2008 after he signed into law a measure imposing tougher regulations on financial institutions. Now with the tax deal, she said, the president stands to lose his liberal donors.
“I’m not sure what major funders he goes back to,” she said.
Nita Chaudhary, national campaigns director at MoveOn, said Obama will have a harder time rallying liberals in the future.
“He cannot count on the support of the progressive base, no questions asked,” she said.
Labor unions, which have also provided substantial financial support for Democratic lobbying and political campaigns, expressed similar dismay with the tax deal. Their statements were largely critical of Republicans and did not mention Obama.
“This tax cut deal rewards Republican obstructionism by giving the wealthy the tax breaks they demand,” a statement from AFL-CIO President Richard Trumka said.
While the union opposed extending tax cuts for upper-income people, it did support the extension of unemployment benefits that the White House made part of the package. But in his statement, Trumka said, “Gains for the middle class and jobless workers in the deal come at too high a price.”
Service Employees International Union President Mary Kay Henry blamed Republicans and Wall Street executives for the tax compromise.
“It’s already clear that Wall Street and corporate CEOs got exactly what they paid for when they bought the Republican Party,” Henry said in a statement. “CEOs and the wealthiest Americans get rewarded with millions more in tax breaks to pad their already hefty profits and bonuses while the American people get fewer jobs and increased hardship.”
Even though business groups were not thrilled by every aspect of the compromise, they viewed it as sufficient to eliminate uncertainty in the near future among their membership that taxes would not increase.
In a statement, Chamber of Commerce lobbyist Bruce Josten said the optimal way to erase uncertainty is to extend the tax cuts permanently. Nevertheless, he said that “we are very pleased that lawmakers of both parties were able to work together to provide a bipartisan path to prevent one of the largest tax increases in American history.”
Dorothy Coleman, vice president of the National Association of Manufacturers, said her group was particularly interested in some of the lesser-known tax provisions such as allowing companies to write off 100 percent of new business equipment until 2013.
“We are pleased with what has come out of the White House negotiations,” she said.
Coleman said her group was “neutral” about the extension of unemployment benefits for 13 months that was included in the package. But National Federation of Independent Business Senior Vice President Susan Eckerly said in a statement that her group was concerned that extending jobless benefits would be a burden to small-business owners who have to pay increased unemployment taxes. Eckerly said her group supported the tax provisions in the plan.
Since the elections, in which Republicans took control of the House and made inroads in the Senate, Obama has made several overtures to the business community. He recently pushed to complete negotiations on the South Korea free-trade agreement, which also was a priority of NAM and the chamber.
However, Brad Close, NFIB vice president for public policy, was cautious in predicting a permanent thaw in relations between the White House and business. He said a better test will come next year when the new Congress convenes and considers issues such as repeal of the health care law, which many businesses support.
“It’s too early to draw the conclusion that there is new cooperation with business,” Close said.