(Bloomberg News) Senate Democratic leaders proposed a new 5 percent tax on people earning more than $1 million a year to help pay for President Barack Obama's job-creation plan.
Majority Leader Harry Reid, of Nevada, said Wednesday in Washington that he aims for the Senate to take its first vote on the jobs plan "very, very soon," after it completes work on China currency legislation. Reid said the surtax would raise about $450 billion, which he said would be enough to cover the entire cost of the jobs bill.
"Drawing the line at a million dollars is the right thing to do" to pay for the jobs plan, said Senator Chuck Schumer, a New York Democrat, who last year unsuccessfully pushed an amendment that would have allowed tax cuts enacted in 2001 and 2003 to expire for millionaires.
Obama has been campaigning across the country for his jobs plan with a simple refrain: "Tell Congress to pass this bill." Republicans are against him and he has faced opposition from some members of his own party, too.
This week, Senate Democratic leaders delayed action on the jobs bill to advance the measure that would retaliate against China for undervaluing its currency. Obama doesn't support that legislation.
For the jobs measure, Senate Democratic leaders are trying to win over such Democrats as Ben Nelson of Nebraska and Joe Manchin of West Virginia, who are up for re-election next year and don't yet favor the job plan.
Asked whether Obama's agenda appeals to senators who face voters in 2012, Manchin said in an interview yesterday, "His approval rating is 28 percent in West Virginia. You do the math."
Some Democrats are rebuffing pending trade agreements with South Korea, Colombia and Panama, while others bristle at some of the $1.5 trillion in tax increases in Obama's plan to trim budget deficits by $3 trillion over a decade. With Republicans in control of the House, White House discord with the Senate's Democrats risks slowing Obama's economic agenda to a crawl.
Democrats hold a 53-47 Senate majority and risk losing control to Republicans next year. Of the 33 Senate seats up for re-election, 23 are held by Democrats, and Democrats hold all but two of the almost dozen seats rated by the nonpartisan Cook Political Report as vulnerable to a party switch.
Some Democrats facing re-election come from states with unemployment rates at least as high as the nation's 9.1 percent, including Debbie Stabenow of Michigan, Sherrod Brown of Ohio and Bill Nelson of Florida. Other senators such as Bob Casey of Pennsylvania and Manchin are showing independence from a president whose approval ratings have dipped below 40 percent in national opinion surveys.
Senate Republicans, largely united against Obama's domestic agenda, see nothing but political opportunity in the split. Senator John Cornyn of Texas, chairman of the National Republican Senatorial Committee, said Obama is a "desperate man."
"He's obviously in a defensive crouch, given the mood of the country and this feeling that he hasn't done enough to help facilitate job growth," Cornyn said. "Democrats don't want to be associated with him because he's unpopular, and I think it's making a lot of them very uncomfortable."
While he faces dissent in his party, Obama is sharpening his rhetoric against the Republican leaders he says stand in the way of his job-creation plan. At a Texas rally yesterday, he criticized House Majority Leader Eric Cantor, a Virginia Republican, prodding him to schedule a vote on the jobs bill.
'What's the Problem?'
"I mean, what's the problem?" Obama said at a community college in the Dallas suburb of Mesquite. "Do they not have the time? They just had a week off. Is it inconvenient?"
The president's plan would reduce payroll taxes for employees and employers, extend jobless benefits, provide $35 billion in aid to states to prevent as many as 280,000 teacher and first-responder layoffs, add $30 billion for high school and community college modernization, and boost spending on public works projects such as roads and bridges. It also would provide tax breaks for new employers to hire the unemployed.
Obama would pay for it by capping itemized deductions for individuals earning more than $200,000 a year and couples earning more than $250,000. The plan would treat carried interest as ordinary income to raise $18 billion, end oil and gas subsidies for a savings of $40 billion, and repeal accelerated depreciation on corporate jets to save $3 billion.
Some tension between Obama and Senate Democrats was evident in July and August during negotiations for a plan to cut the deficit while raising the U.S. borrowing limit.
Talks With Boehner
Democrats were angered that Obama discussed a deficit- reduction deal of about $3 trillion with Republican House Speaker John Boehner that would have cut domestic priorities while delaying tax increases. Talks fell apart, and lawmakers enacted a smaller deficit-cutting plan.
Obama's jobs plan, offered on Sept. 8, was immediately dismissed by Manchin, who said he had "serious concerns" about the amount of spending and likely effectiveness. Nelson of Nebraska questioned the wisdom of tax increases proposed to pay for it, which include capping itemized deductions and some tax exclusions for the wealthy and rolling back tax breaks for private-equity fund managers and oil companies.
The free-trade deals, with wide support from Republicans in the House and the Senate, are running into Democratic resistance.
"With an exploding trade deficit that has caused massive job loss, now is not the time to pass more wrongheaded free- trade agreements," Brown said in a statement released after the White House sent the measures to Congress on Oct. 3.
Reid has said he won't support them, though he won't try to block floor consideration.
The China currency measure lets vulnerable Democrats from manufacturing states such as Ohio, Michigan and Pennsylvania criticize that country while ignoring the administration's reluctance to directly take on a major trade partner. It is co- sponsored by Brown, Stabenow and Casey.
"The U.S. has allowed China to manipulate its currency without consequence, and the practice has taken a dramatic toll on Pennsylvania's companies and workers," Casey said Oct. 3. "We have had enough tough talk -- now we need tough action."
The Obama administration has used guarded language in discussing the debate. White House spokesman Jay Carney said the administration shares the goal of increasing the value of China's currency, but added that the bill must be "effective and consistent with our international obligations."