Sing to the tune of “Rudolph the Red Nosed Reindeer”
(note: repub = republican, rino = republican in name only)
.
Romney, the revise repub
has a very floppy nose.
And if you ever heard him,
you would even say it grows.
.
All of the other repubs
used to laugh and call him names.
(flip-flop! rino!)
They never let “Flip” Romney
join in any repub games.
(tax evasion! tea parties!)
.
Then one foggy tax day eve
Wall Street came to say:
“Willard with your nose so long
you’ll do our bidding before long.”
.
Then all the repubs loved him
and they shouted out with glee,
Romney, the revise repub,
won’t you be our nominee?
.
This can also be found be found at :
https://www.facebook.com/pages/Everybody-Sing-Flip-Romney/208650439209909

WASHINGTON (Reuters) – Angry Democrats in the House of Representatives defied President Barack Obama on Thursday and rejected a deal he struck with Republicans to extend low tax rates that are set to expire in three weeks.

In a raucous, closed-door meeting on Capitol Hill, Democrats chanted “Just say no!” as they agreed to block Obama’s plan to extend low tax rates for nearly all Americans, according to lawmakers in the room.

Several at the party meeting said they were angered by the White House’s “take it or leave it” attitude about the deal, which includes tax breaks for the wealthy.

Obama’s plan would keep lower rates in place for another two years, reduce the estate tax, and extend tax breaks and other benefits aimed at lower-income Americans.

Democrats have opposed extending the tax breaks for the wealthiest 2 percent of American households, arguing that the lost revenue can be put to better use at a time when unemployment is close to 10 percent.

There was still strong support in Congress for the broader deal and time for lawmakers to negotiate a compromise in the coming days. Tax bills will rise in January by an average of $3,000 per household of Congress does not act.

Senate Democratic leader Harry Reid was to unveil tax-cut legislation later in the day, with a vote possible on Saturday.

The administration is confident that the “major components” of the deal will survive the congressional maneuvering, White House spokeswoman Amy Brundage said.

After Democrats suffered substantial losses in the November midterm elections, Obama must now quell an insurrection from the liberal wing of his own party.

He grudgingly accepted a rare compromise on taxes with the Republicans, who will soon wield greater clout in Washington.

Economists say the deal could boost the sluggish economy at a time when Congress has no appetite for spending-based stimulus efforts.

The plan will cost between mid-$700 billion to upper-$800 billion, the White House said, deepening budget deficits that are already at their highest levels relative to the economy since World War Two.

Bond markets slumped this week on fears that the tax cuts would put too heavy a burden on the budget, but U.S. Treasuries prices rose on Thursday as investors reckoned the selloff was overdone.

ESTATE TAX ‘GIVEAWAY’

A measure that would allow the tax breaks to expire for the wealthiest households passed the House last week, but failed in the Senate.

Though it is unlikely a similar measure would pass the Senate on a second try, House Democrats could try to toughen the estate tax, an element of Obama’s package that House Speaker Nancy Pelosi called “a giveaway” after the meeting.

“The estate tax … is a bridge too far for many of our members,” Pelosi said.

Democrats only have a few more weeks to wield power in the House before they hand control to Republicans, who won big in the November congressional elections on a promise to slash government spending.

Many House Democrats blame Obama for the loss, feeling he failed to adequately defend them and go after Republicans. Their decision to reject the deal came a day after Vice President Joe Biden met with them in an unsuccessful effort to drum up support.

“He said ‘take it or leave it,’ and we said leave it,” Representative Lloyd Doggett said.

Many Democrats say the tax deal could set a bad precedent for the coming two years by showing Republicans that he is quick to compromise.

“It’s only going to get worse for the president if he allows himself to be pushed around like this,” Democratic Representative Anthony Weiner said on ABC television.

Obama’s plan could boost growth from a half to a whole percentage point next year, create millions of jobs and lessen demand for the Federal Reserve to boost its bond-purchasing stimulus program, according to various analyses.

WASHINGTON (Reuters) – Democrats in the House of Representatives defied President Barack Obama on Thursday, rejecting a tax deal he struck with Republicans and complicating efforts to extend tax breaks that run out in three weeks.

House Democrats voted at a meeting in Congress against his proposal and called for changes to provisions that they say are too generous for the wealthiest 2 percent of Americans.

Speaker Nancy Pelosi, who has been a key ally of the White House, joined the rebellion against the tax plan, vowing to prevent the House from voting on it.

But there was still strong support in Congress for the proposal and time for lawmakers to negotiate a compromise.

Obama wants to extend all individual income tax cuts for two years, in addition to extending jobless benefits, enacting a payroll tax cut and other measures.

Economists say the deal could boost the sluggish economy at a time when Congress has no further appetite for spending-based stimulus efforts.

But Democrats say the deal is too generous to wealthier Americans and bond markets have also balked, concerned that more tax cuts will dig a deeper hole in the $1.3 trillion budget deficit.

Prices for U.S. Treasury bonds rose early on Thursday after a two-day sell-off fueled by fears that the tax deal would worsen the federal government’s fiscal prospects. But Treasuries prices later erased gains.

DEMOCRATS UPSET

The House Democrats are particularly upset at an extension of tax breaks for wealthier Americans and a generous estate tax.

“The Democratic caucus resolves that in its current form the tax package should not come to the floor of the House for consideration,” read a resolution approved by the Democrats.

Obama has tacked to the center and compromised with the Republicans after his party lost heavily at congressional elections in November.

“If the idea is that this is a take-it-or-leave-it deal, I think the president’s going to realize there are going to be a lot of Democrats who are going to be voting no,” Democratic Representative Anthony Weiner earlier told ABC.

But fellow Democrats in the Senate were drafting legislative language behind closed doors, and could begin debating it later in the day, moving the tax bill forward.

Senate Democratic Leader Harry Reid said the chamber may hold a vote on Saturday on the legislation.

The tax plan could boost growth from a half to a whole percentage point next year, create millions of jobs and lessen demand for the Federal Reserve to boost its bond-purchasing stimulus program, according to various analyses.

It also would worsen budget deficits at a time when voters are increasingly worried about record levels of U.S. debt. The plan would cost $700 billion for two years, according to a Senate Republican aide, although other estimates have put the total cost as high as $1 trillion.

WASHINGTON – House Democrats voted Thursday to reject President Barack Obama’s tax deal with Republicans in its current form, but it was unclear how significantly the package might need to be changed.

By voice vote in a closed caucus meeting, Democrats passed a resolution saying the tax package should not come to the House floor for consideration as written, even though no formal House bill has been drafted. Rep. Peter DeFazio, D-Ore., introduced the resolution.

Said Rep. Lloyd Doggett, D-Texas: “If it’s take it or leave it, we’ll leave it.”

The vote will at least temporarily stall what had seemed to be a grudging Democratic movement toward the tax package.

House Speaker Nancy Pelosi said in a statement that House Democrats share Obama’s “commitment to providing the middle class with a tax cut to grow the economy and create jobs.” She noted that a House-passed bill, which Republicans blocked in the Senate, did not include “a bonus tax cut to millionaires and billionaires.”

“We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote,” the California Democrat said.

The voice vote in the caucus was quite lopsided. Rep. Shelley Berkley of Nevada told reporters afterward that “one person voted against it. That would be me.”

Asked what happens next, Rep. James Clyburn of South Carolina, the No. 3 person in the Democratic leadership, said, “I don’t know.”

Speaking earlier Thursday at a White House event promoting American exports, Obama said the vote will determine whether the economy “moves forward or backward.”

The president again pressed Congress to pass the agreement, saying it has the potential to create millions of jobs. He said if it fails, Americans would see smaller paychecks and fewer jobs.

But Rep. Chris Van Hollen, D-Md., said “the jury is still out” on the measure’s enactment because many Democrats are furious over an estate tax provision.

Obama agreed to exempt the first $5 million of a deceased person’s estate, and to tax the rest at 35 percent. Congressional Democrats had expected a 45 percent tax rate on anything above $3.5 million. Without congressional action, the estate tax will revert to an even higher rate: 55 percent on estates valued above $1 million. That should have strengthened Obama’s hand when negotiating with Republicans, Van Hollen said.

Some Democrats have reluctantly embraced the tax package, which would let rich and poor Americans keep Bush-era tax cuts that were scheduled to expire this month. Even so, 54 House Democrats wrote a letter to House Speaker Nancy Pelosi saying they’re opposing the deal.

Led by Rep. Peter Welch of Vermont, they said they were against “acceding to Republican demands to extend the Bush tax cuts to millionaires and billionaires.”

“We’re paying a king’s ransom,” Welch said in an interview. “We didn’t need to and couldn’t afford to.”

The 54 Democrats, by themselves, would not be enough to block the package in the House, depending on how much support it gets from Republicans.

After Obama publicly defended the plan for a third day Wednesday, and Vice President Joe Biden met with Democratic lawmakers in the Capitol for a second day, several Democrats predicted the measure will pass, mainly because of extensive Republican support.

Rep. Barney Frank, D-Mass., predicted the tax cut compromise “will be passed by virtually all the Republicans and a minority of Democrats.” He said he would vote against it.

Obama said more congressional Democrats would climb aboard as they studied details of the $900 billion year-end measure.

Raising the direst alarm yet, his administration warned fellow Democrats on Wednesday that if they defeat the plan, they could jolt the nation back into recession.

Larry Summers, Obama’s chief economic adviser, told reporters that if the measure isn’t passed soon, it will “materially increase the risk the economy would stall out and we would have a double-dip” recession. That put the White House in the unusual position of warning its own party’s lawmakers they could be to blame for calamitous consequences if they go against the president.

With many House and Senate Republicans signaling their approval of the tax cut plan, the White House’s comments were aimed mainly at House Democrats who feel Obama went too far in yielding to Republicans’ demands for continued income tax cuts and lower estate taxes for the wealthy.

Obama says the compromise was necessary because Republicans were prepared to let everyone’s taxes rise and to block the extension of unemployment benefits for jobless Americans if they didn’t get much of what they wanted.

Economists say the recent recession officially ended in June 2009. But with unemployment at 9.8 percent, millions remain out of work or fearful of losing ground economically, and the notion of the nation falling back into a recession would strike many as chilling. It also could rattle markets and investors.

The deal Obama crafted with Senate Republican leaders would prevent the scheduled Dec. 31 expiration of all the Bush administration’s tax cuts enacted in 2001 and 2003, even though Obama had often promised to end the cuts for the highest earners.

House Democrats, who will lose their majority in January, still hold a 255-179 edge in the current Congress. To pass a big bill with mostly Republican votes would mark a dramatic departure from recent battles, such as the health care overhaul, which was enacted with virtually no GOP support in either chamber.

Passage of Obama’s plan seems more assured in the Senate, where numerous Democrats have agreed that the president had little choice in making the compromises with Republicans. Still, Majority Leader Harry Reid, D-Nev., said he and colleagues are considering possible changes, and action could come within days.

WASHINGTON – House Majority Leader Steny Hoyer said Thursday congressional Democrats have no choice but to accept the tax package negotiated by President Barack Obama and GOP lawmakers, even as some fellow Democrats continue to resist.

“We’re going to have an increase in taxes on working Americans … if we continue to have gridlock,” said Hoyer, a Maryland Democrat.

He said that continuing to fight the deal because it includes cuts for the wealthy would put tax cuts for middle- and lower-income people at risk, and jeopardize unemployed workers who badly need jobless benefits.

Speaking Thursday at a White House promoting American exports, Obama said the vote will determine whether the economy “moves forward or backward.”

The president again pressed Congress to pass the agreement, saying it has the potential to create millions of jobs. He said if it fails, Americans would see smaller paychecks and fewer jobs.

But Rep. Chris Van Hollen, D-Md., said “the jury is still out” on the measure’s enactment because many Democrats are furious over an estate tax provision.

Obama agreed to exempt the first $5 million of a deceased person’s estate, and to tax the rest at 35 percent. Congressional Democrats had expected a 45 percent tax rate on anything above $3.5 million. Without congressional action, the estate tax will revert to an even higher rate: 55 percent on estates valued above $1 million. That should have strengthened Obama’s hand when negotiating with Republicans, Van Hollen said.

Still, many congressional Democrats were grudgingly edging closer to embracing Obama’s tax cut compromises, which would let rich and poor Americans keep Bush-era tax cuts that were scheduled to expire this month. Even so, 54 House Democrats wrote a letter to House Speaker Nancy Pelosi saying they’re opposing the deal.

Led by Rep. Peter Welch of Vermont, they said they were against “acceding to Republican demands to extend the Bush tax cuts to millionaires and billionaires.”

“We’re paying a king’s ransom,” Welch said in an interview. “We didn’t need to and couldn’t afford to.”

The 54 Democrats, by themselves, would not be enough to block the package in the House, depending on how much support it gets from Republicans.

After Obama publicly defended the plan for a third day Wednesday, and Vice President Joe Biden met with Democratic lawmakers in the Capitol for a second day, several Democrats predicted the measure will pass, mainly because of extensive Republican support.

Rep. Barney Frank, D-Mass., predicted the tax cut compromise “will be passed by virtually all the Republicans and a minority of Democrats.” He said he would vote against it.

Obama said more congressional Democrats would climb aboard as they studied details of the $900 billion year-end measure.

Raising the direst alarm yet, his administration warned fellow Democrats on Wednesday that if they defeat the plan, they could jolt the nation back into recession.

Larry Summers, Obama’s chief economic adviser, told reporters that if the measure isn’t passed soon, it will “materially increase the risk the economy would stall out and we would have a double-dip” recession. That put the White House in the unusual position of warning its own party’s lawmakers they could be to blame for calamitous consequences if they go against the president.

With many House and Senate Republicans signaling their approval of the tax cut plan, the White House’s comments were aimed mainly at House Democrats who feel Obama went too far in yielding to Republicans’ demands for continued income tax cuts and lower estate taxes for the wealthy.

Obama says the compromise was necessary because Republicans were prepared to let everyone’s taxes rise and to block the extension of unemployment benefits for jobless Americans if they didn’t get much of what they wanted.

Economists say the recent recession officially ended in June 2009. But with unemployment at 9.8 percent, millions remain out of work or fearful of losing ground economically, and the notion of the nation falling back into a recession would strike many as chilling. It also could rattle markets and investors.

The deal Obama crafted with Senate Republican leaders would prevent the scheduled Dec. 31 expiration of all the Bush administration’s tax cuts enacted in 2001 and 2003, even though Obama had often promised to end the cuts for the highest earners.

House Democrats, who will lose their majority in January, still hold a 255-179 edge in the current Congress. To pass a big bill with mostly Republican votes would mark a dramatic departure from recent battles, such as the health care overhaul, which was enacted with virtually no GOP support in either chamber.

Passage of Obama’s plan seems more assured in the Senate, where numerous Democrats have agreed that the president had little choice in making the compromises with Republicans. Still, Majority Leader Harry Reid, D-Nev., said he and colleagues are considering possible changes, and action could come within days.

Hoyer made his remarks in an interview on MSNBC.

Washington (CNN) — House Democrats vented their frustrations with President Barack Obama’s tax proposal at a closed-door meeting Tuesday night, with rank-and-file members slamming the White House for leaving House Democrats out of final negotiations, and agreeing too quickly to a GOP proposal on the estate tax.

According to several Democratic members and aides, much of the discussion centered on the addition of the estate tax exemption to the package extending all the Bush-era tax cuts for two years.

Democrats are fuming that the administration agreed to exempt inheritances up to $5 million and to set the tax rate at 35%. The estate tax is scheduled to be reinstated at a higher rate of 55% next year, with the exemption up to $1 million. A bill passed the House a year ago that set the threshold for the exemption at $3.5 million and the tax rate at 45%.

Pennsylvania Democrat Allyson Schwartz said, “My sense is people are not happy with this,” telling reporters that Democrats plan to “push back at little” at the White House to try to change the estate tax back to the version that passed the House. Schwartz said if the administration agreed to do that, she could support the package, but she could not predict how many other Democrats would do the same.

Liberal Democratic Rep Anthony Weiner of New York called the estate tax provision “one of the biggest problems, because that was the one we had the most leverage on.”

According to a senior House Democratic aide, Democratic Rep Chris Van Hollen of Maryland, who represented House Democrats in discussions with the administration and Republicans, said the decision to accept the GOP estate tax proposal was “an unnecessary giveaway to Kyl.”

GOP Sen. Jon Kyl of Arizona, who was negotiating for Senate Republicans, sponsored an estate tax bill that is essentially the same as the deal outlined by Obama.

About 20 House Democrats lined up at microphones at the evening meeting to complain about the president’s proposal. According to the senior Democratic aide, in addition to concerns about the substance of the proposal, equally upsetting to attendees was how “House Democrats were left out of the process at the end.”

The aide added, “they view it as a trend,” noting that it started with the president’s stimulus package. “The House always seems to get rolled,” the aide said.

House Speaker Nancy Pelosi “didn’t really weigh in either way” during the meeting about how members should vote on the president’s plan, according to the aide, “but she certainly wasn’t cheerleading for it.”

But Pelosi made it clear Democrats were unhappy, telling reporters outside the meeting, “I think it’s fair to say that there is a certain amount of unease with the proposal that was put forth by the president.” She also noted that the estate tax benefits a much smaller number of families than the middle-class tax cut.

The senior Democratic aide conceded that despite the threats to vote against the plan, it’s also a reality that the proposal could still pass the House. “This gets done, but does not get done with a majority of Democratic votes,” the aide said.

Vice President Joe Biden is scheduled to talk to House Democrats Wednesday afternoon. Asked whether Biden could convince Democrats to support the plan, House Majority Leader Steny Hoyer quipped, “You’ll have to ask him.”

Hoyer didn’t directly answer whether he believed House Democrats could make significant changes to the administration’s plan, saying, “I think it’s under discussion,” but he added, “the majority of the House is still Democratic”

WASHINGTON (MarketWatch) — House Democrats voted Thursday to block a deal struck by President Barack Obama and congressional Republicans on extending Bush-era tax breaks from coming to the floor until changes are made to the compromise.

Democrats are upset that the agreement Obama struck is too generous to the wealthy since it extends income-tax rates for the top two tiers, and brings back the estate tax at 35% with a $5 million exemption.
Read “House Democrats acting like angry drunk at bar.”

Markets sent mixed signals

News on jobless claims and from DuPont that contain some positives and negatives are leading to diverging markets. Kristina Peterson, Steve Russolillo and George Stahl report.

The vote, in a Democrat-only caucus meeting, isn’t binding but underscores the difficulty the White House is having selling the deal to rank-and-file Democrats.

“In the Caucus today, House Democrats supported a resolution to reject the Senate Republican tax provisions as currently written,” said Speaker of the House Nancy Pelosi in a statement.

“We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote.”

The White House predicted that a bill would ultimately pass.

“This is a long and winding process,” White House press secretary Robert Gibbs told reporters. “But I think at the end of the day, members are not going to want to be in their districts, senators are not going to want to be in their districts when their constituents find out on the first of January that their taxes have gone up by several thousand dollars.”

The Senate may begin debating the proposal as soon as Thursday. Senate Majority Leader Harry Reid, a Nevada Democrat, said he wants to make sure lawmakers have ample time to read the legislation but didn’t promise a vote time.

“As far as future votes, stay tuned,” Reid said on the Senate floor.

Lawmakers don’t have much time to act to prevent tax rates going up on most taxpayers next year. Unless Congress passes an extension of the Bush-era tax cuts, they will expire on Dec. 31.

WASHINGTON – Opposition by House Democrats to a tax-cut deal negotiated by President Barack Obama and Republican leaders erupted into open revolt Thursday, threatening to undermine GOP support and rekindling the threat of an increase in the income-tax withholding of virtually every American worker beginning New Year’s Day.

The rebellion came as House and Senate Democratic leaders scoured for votes to pass the White House deal extending George W. Bush-era tax breaks, facing enormous pressure with only a week remaining before Congress is scheduled to adjourn for the holidays.

The White House and key lawmakers late Thursday agreed to extend breaks for ethanol and other forms of alternative energy through the end of 2011 as part of overall tax-cut deal.

The Senate could vote on the expanded deal within days, but the developments Thursday thrust the proposal into deep uncertainty in the House. The White House was forced into the position of defending its deal while trying to accommodate demands for changes.

During an angry and emotional meeting of their caucus, House Democratic lawmakers in a voice vote overwhelmingly recommended against bringing the Obama package to the floor without substantial modification.

“Just say no!” some shouted in the Democratic caucus meeting.

The Democrats were particularly incensed by inclusion of a new estate-tax provision that would benefit a few thousand wealthy households, a provision sought by Republicans that has drawn strong Democratic opposition.

“That estate tax is obscene – it’s just obscene,” said Rep. Jan Schakowsky, D-Ill., emerging from the closed-door meeting. “We’re talking about a handful of Americans that we should have to trade for millions of unemployed people, for millions more middle-income Americans.”

The White House tried for days to quell the discontent among the House Democrats, but the efforts may have backfired after Vice President Joe Biden met with lawmakers earlier in the week and presented the agreement with the GOP as a “take it or leave it” deal, representatives said.

Rep. Peter DeFazio, D-Ore., author of the resolution that led to the voice vote, said he heard one expression of opposition. “We have given our leadership license to force the Senate leadership and the White House back to the table, to get a better deal for the American people,” he said.

The setback took Democratic leaders by surprise as the White House has mounted an aggressive campaign to portray the agreement as a needed economic-stimulus measure that will boost the economy and create as many as 2 million jobs next year.

It is also the first major challenge to Obama from his party in Congress as he navigates in a new political reality: negotiating with Republicans who will have the majority in the House and larger numbers in the Senate in the new Congress.

White House spokesman Robert Gibbs was optimistic that Congress would act by the year-end deadline, while acknowledging the agreement was a compromise.

“A perfect deal? Not by any means,” Gibbs said. “But the nature of compromise is taking enough things to get an agreement through. And I think in the end we will.”

The White House ceded to Republican demands to extend the expiring tax cuts approved during the Bush administration – including for the wealthiest 2 percent of taxpayers who earn beyond $250,000, cuts that most Democrats oppose. In exchange, the administration won several provisions Democrats support.

Among those are an extension through 2011 of unemployment benefits for jobless Americans, including 2 million who are without benefits during the holidays.

The package includes a 2 percent reduction in the Social Security payroll tax that will provide up to $2,000 for all workers.

But inclusion of the new estate tax that had been a long-sought GOP objective has become a deal-breaker among many Democrats, who say they cannot agree to what they see as a generous tax break for the wealthy on top of the tax-break extension for the upper 2 percent of earners.

“To add insult to injury, they added the estate tax – that was a bridge too far,” said House Speaker Nancy Pelosi, D-Calif., emerging from the meeting. “It’s just not fair.”

The federal estate tax lapsed this year and, without action, is scheduled to return to pre-2001 levels. That would mean a 55 percent tax on all estates valued at more than $1 million.

Most Democrats favor an estate tax of 45 percent rate, exempting estates worth up to $3.5 million for singles and up to $7 million for couples. That is the formula established in 2001 under the Bush tax cuts.

But Republicans have pressed for a reduced 35 percent rate, with exemptions of estates worth up to $5 million for singles and up to $10 million for couples.

Obama included the Republican-led proposal in the agreement he reached with the GOP. Analysts say the proposal will benefit 2,900 more estates than under the Democratic proposal.

While the Senate will launch the debate in a matter of days, House Democrats are contemplating ways to structure the votes to separate the provisions. Both chambers are also considering other changes.

Angry Democrats in the U.S. House of Representatives on Thursday rejected President Barack Obama’s plan to extend low tax rates, as the Senate scheduled a vote on the measure, which has significant Republican support. Skip related content

The House Democrats’ rebellion gives Obama another political headache just over a month after he took a beating in congressional elections, although it will not necessarily derail the tax plan.

In a raucous, closed-door meeting on Capitol Hill, mutinous Democrats chanted: “Just say no!” as they vowed to overhaul Obama’s plan to extend lower tax rates for nearly all Americans, according to lawmakers in the room.

But in the Senate, the plan took a significant step forward as Democrats unveiled legislation late in the day that reflected the terms the White House had reached with Republicans. The Senate bill adds a subsidy for ethanol but leaves out the Build America bonds program popular with Democrats and local governments.

Senate Majority Leader Harry Reid set a vote for Monday at 3 p.m. (2000 GMT).

Obama said on Thursday he expected the agreement would eventually pass.

“Here’s what I’m confident about, that nobody, Democrat or Republican, wants to see people’s paychecks smaller on January 1st because Congress didn’t act,” Obama told NPR News in an interview due to air on Friday at 5 a.m. (1000 GMT).

Obama’s plan would keep lower rates in place for another two years, reduce the estate tax, and extend tax breaks and other benefits aimed at lower-income Americans.

Economists say it could boost the sluggish economy at a time when Congress has no appetite for spending-based stimulus efforts.

Democrats have argued that the revenue that would be lost by extending tax breaks for the wealthiest 2 percent of U.S. households can be put to better use at a time when unemployment is close to 10 percent.

Tax bills will rise in January by an average of $3,000 per household if Congress does not act.

After Democrats suffered substantial losses in the November elections, Obama grudgingly accepted a rare compromise on taxes with the Republicans, who will take control of the House and wield greater clout in the Senate in January.

Obama now must now quell an insurrection from the liberal wing of his own party. Under the resolution approved by House Democrats, his plan would not even come up for a vote in that chamber.

The plan will cost roughly $850 billion over 10 years, according to a congressional estimate by the Joint Tax Committee, deepening budget deficits that are already at their highest levels relative to the economy since World War Two.

Bond markets slumped this week on fears the tax cuts would put too heavy a burden on the budget, but U.S. Treasuries prices rose on Thursday as investors reckoned the sell-off was overdone.

ESTATE TAX ‘GIVEAWAY’

A Democratic bill that would allow the tax breaks to expire for the wealthiest households passed the House last week, but failed in the Senate.

Although it is unlikely a similar measure would pass the Senate on a second try, House Democrats could try to toughen the estate tax, an element of Obama’s package that House Speaker Nancy Pelosi called “a giveaway” after the meeting.

“The estate tax … is a bridge too far for many of our members,” Pelosi said.

The estate tax, which lapsed at the beginning of this year, is due to kick in again in January at a rate of 55 percent for estates worth more than $1 million. Obama’s plan would lower that rate to 35 percent for estates worth over $5 million.

House Democrats are also pushing hard for a two-year extension of tax breaks for the renewable-energy industry that they say will bolster tens of thousands of jobs in the budding solar and wind-power sectors.

Many House Democrats blame Obama for the heavy losses they suffered in the congressional elections, feeling he failed to defend them adequately and go after Republicans. Their decision to reject the deal came a day after Vice President Joe Biden met with them in an unsuccessful effort to drum up support.

“He said, ‘Take it or leave it,’ and we said, ‘Leave it,’” Representative Lloyd Doggett said.

Many Democrats say the tax deal could set a bad precedent for the coming two years by showing Republicans Obama is quick to compromise.

House Speaker Nancy Pelosi pledged to continue negotiations with Republicans and the White House

House Democrats have rejected a tax cut deal struck by President Barack Obama with the Republican opposition.

The non-binding vote was led by liberals angry about the extension of tax cuts for the rich.

The White House had spent the week lobbying Democrats to back the bill and had appeared to be winning support.

Unless the Congress acts, all American taxpayers face a big hike in their tax bill beginning in January and millions will see unemployment payments end.

“We will continue discussions with the president and our Democratic and Republican colleagues in the days ahead to improve the proposal before it comes to the House floor for a vote,” House Speaker Nancy Pelosi said.

Unless the House of Representatives changes course under an intense dose of White House lobbying, the decision sends White House and Republican negotiators back to the drawing board.

It is unclear what other options are available.

Bitter compromise

The debate over the tax cut comes as the current “lame duck” session winds down. The core issue is the extension of low tax rates enacted by President George Bush and the Republican party in 2001 and 2003 and due to expire at the end of the year.

“If it’s take it or leave it, we’ll leave it”

Surveys show a majority of the American public supports Mr Obama and the Democrats’ preferred approach, which would allow taxes on the rich to rise next year.

Republicans in the Senate twice blocked votes on those proposals at the weekend.

Mr Obama had vigorously opposed extending the cuts for the richest Americans, saying they are unaffordable at a time of steep budget deficits.

But announcing the deal, he said a bitter compromise was the only way to avoid damage to American families and the economy that would ensue if taxes rise and long-term unemployment benefits are allowed to end.

Liberals, meanwhile, have been outraged that Mr Obama agreed to extend tax cuts for the rich and also to a lower rate on the estate tax.

The White House has deployed Vice-President Joe Biden to mollify angry Democrats and the administration appeared to have won support in the Senate.

But House Democrats, a more fractious and liberal group than those in the Senate, revolted on Thursday.

In a voice vote, the Democratic caucus on Thursday passed a non-binding resolution declaring the tax cut deal should not come to a floor vote.

“If it’s take it or leave it, we’ll leave it,” said Representative Lloyd Doggett, a Texas Democrat.