Obama tax plan splits Nevada delegation

By Karoun Demirjian

Wednesday, Dec. 8, 2010 | 12:22 p.m.

Sen. Harry Reid might not be sure about Obama’s tax cut proposal, but that doesn’t mean other Nevadans in Washington aren’t ready to back the president’s plan.

Rep. Shelley Berkley came out today with a strong endorsement of the president’s tax extension proposal, which lays out a two-year extension of all tax cuts at every income level, a 2 percent reduction in the Social Security tax rate for workers and a 13-month extension of unemployment benefits.

It’s a plan Republicans have been cheering, and Democratic leaders in the Senate and House have been swallowing.

Neither Reid nor House Speaker Nancy Pelosi were willing to rubber stamp the deal Tuesday, or pledge to support the president with their own vote.

The Senate is expected to go first, and Reid is meeting with his caucus this afternoon to hammer out a party strategy.

While Berkley’s announcement would seem to split the usually like-minded Nevada Democratic delegation, it’s not actually that dramatic an announcement.

Reid and Berkley have always been split over the issue of tax cuts: while both of them support an extension of cuts for incomes up to $250,000, Berkley has been willing to go further, advocating a short-term extension of the full roster of cuts for at least a year or two as a way of encouraging companies to create jobs.

“I support this proposal because it combines these savings along with an extension of unemployment benefits critical for my home state,” Berkley said in a statement today.

Reid has remained adamant that tax cuts over $250,000 are irresponsible and unnecessary, citing economists who calculate that while extra tax cuts would add another $700 billion to the deficit over the next 10 years, they won’t do much to create jobs.

Other Democrats have voiced other concerns about potential holes in the president’s plan, such as Maryland Sen. Barbara Mikulski, who questioned Tuesday whether the reduction in the Social Security tax rate would add to an already growing crisis over Social Security funding. “Is this a step toward privatization?” she asked.

As for the president, he delivered the closest thing to a tongue-lashing Tuesday to those in the Democrats’ ranks who were balking at supporting his plan.

“If that’s the standard by which we are measuring success or core principles, then let’s face it, we will never get anything done,” he said. “People will have the satisfaction of having a purist position and no victories for the American people. And we will be able to feel good about ourselves and sanctimonious about how pure our intentions are and how tough we are, and in the meantime, the American people are still seeing themselves ... not being able to pay their bills because their unemployment insurance ran out.”

In her statement, Berkley indicated that the framework’s inclusion of a break on the forthcoming estate tax hike was another important factor contributing to her backing.

The estate tax correction featured in the president’s compromise is almost an exact reflection of legislation Berkley sponsored in the 111th Congress. It would increase the exemption ceiling to $5 million for individuals and $10 million for couples, and establish a new 35 percent rate for estates outpacing those levels, instead of the 55 percent rate presently set to take effect Jan. 1.

“No one should lose their job because the estate tax forced a family business to close ... so it’s urgent that we come together and pass this compromise,” she said.