Democrats Decry House Vote on Tax Breaks

Democrats in the Capitol fume over the passage of a bill that gives further tax breaks to investors who make capital gains and earn stock dividends. The Republican-controlled House voted to extend the tax cuts. The Senate is still considering the measure.

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The House of Representatives adjourned last night after a red-letter week for tax cuts. Summed up, the Republican-controlled House passed more than $100 billion worth of new and extended tax cuts for the coming years. Democrats did put up a fight unlike what they'd done with some other tax matters. They complained that these tax cuts would only help the rich, as NPR's Andrea Seabrook reports.

ANDREA SEABROOK reporting:

Virtually unanimous agreement of the entire House is rare. But this week it happened three times--on tax cuts, no less. A bill to create a special economic and tax zone around the hurricane-hit Gulf Coast region and an extension of special tax credits for members of the military collecting combat pay, and a one-year shield of middle-income earners from the alternative minimum tax. That was Wednesday; then came yesterday, and the smiling bipartisanship fell apart.

Representative JIM McDERMOTT (Democrat, Washington): So the first thing you do is take child care away from 300,000 children and you put that in the stocking of the rich.

SEABROOK: That's Democrat Jim McDermott of Washington State. He's holding a cardboard heart with two Christmas stockings hanging from it labeled, `Poor and rich.' As McDermott describes his view of Republican policy, he takes wrapped packages out of the poor stocking and drops them into the rich one.

(Soundbite of House meeting)

Rep. McDERMOTT: And Medicaid, oh, well, they don't need health care. Why there's $10 billion we can take away from poor people's heath care and put it in the rich people's stocking.

SEABROOK: McDermott was protesting the bill Republicans brought to the floor yesterday that would extend already reduced tax rates for investors who make capital gains and who earn stock dividends. Republicans, like Florida's Clay Shaw, rejected Democrat's arguments and said keeping those taxes low will help drive future economic growth.

Representative CLAY SHAW (Republican, Florida): I have yet to hear anybody from the other side say that the reduction in capital gains does not stimulate the economy; say that any of these items are bad for the economy. All we've heard from the other side is class warfare: who's getting what.

SEABROOK: Shaw and other Republicans pointed out that close to 60 percent of American families now own stocks and other investments, often in retirement accounts, so, they said, cutting investment taxes doesn't help only wealthy people. Pennsylvania's Melissa Hart said contrary to what Democrats say, cutting those investment taxes will eventually help all Americans.

Representative MELISSA HART (Republican, Pennsylvania): You would listen to those on the other side of the aisle, you would think that we are in a shrinking economy. However, since the capital gains and dividends taxes were reduced in 2003, we've seen 10 straight quarters of--What is it?--growth.

SEABROOK: But Democrats argued that to reduce these taxes now was hypocritical. That's because just a few weeks ago Republicans justified slashing billions of dollars from social welfare programs--like Medicaid, food stamps and school lunches--as a way to trim federal budget deficits. Yesterday's tax cuts, however, would cost about $20 billion more than the earlier spending cuts saved. And many Democrats, including Oregon's Peter DeFazio, said they don't believe the argument that allowing wealthier people to keep more of their cash stimulates the economy.

Representative PETER DeFAZIO (Democrat, Oregon): Trickle-down economics works they tell us. Unfortunately, that's not what most Americans find with their real income stalled out over the last five years. No, trickle-down economics does one simple thing: It rewards the benefactors of the Republican Party.

SEABROOK: In the end, this tax package, too, passed the House, though by a closer vote of 234-to-197. Now members of the House will have to sit down with members of the Senate to work out their differences on the bill, and they are considerable. Senators dropped the investor tax cuts in favor of cuts targeted at lower and middle-income families. Andrea Seabrook, NPR News, the Capitol.

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