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    Key Setbacks Dim Luster of Democrats' Year
    By Jonathan Weisman and Paul Kane
    The Washington Post

    Thursday 20 December 2007

    The first Democratic-led Congress in a dozen years limped out of Washington last night with a lengthy list of accomplishments, from the first increase in fuel-efficiency standards in a generation to the first minimum-wage hike in a decade.

    But Democrats' failure to address the central issues that swept them to power left even the most partisan of them dissatisfied and Congress mired at a historic low in public esteem.

    Handed control of Congress last year after making promises to end the war in Iraq, restore fiscal discipline in Washington and check President Bush's powers, Democrats instead closed the first session of the 110th Congress yesterday with House votes that sent Bush $70 billion in war funding, with no strings attached, and a $50 billion alternative-minimum-tax measure that shattered their pledge not to add to the federal budget deficit.

    "I'm not going to let a lot of hard work go unnoticed, but I'm not going to hand out party hats, either," said House Democratic Caucus Chairman Rahm Emanuel (Ill.).

    On Iraq, House Speaker Nancy Pelosi (D-Calif.) said yesterday: "Nobody is more disappointed with the fact that we couldn't change that than I am." But Pelosi was not about to accept Republican assertions that her first year as speaker has been unsuccessful, saying: "Almost everything we've done has been historic."

    Unable to garner enough votes from their own party, House Democratic leaders had to turn to Republicans to win passage of a $555 billion domestic spending bill after the Senate appended $70 billion to it for the wars in Iraq and Afghanistan. The war funding passed 272 to 142, with Democrats voting 141 to 78 against it.

    The Democratic leaders again had to appeal to Republicans to win passage of a measure to stave off the growth of the alternative minimum tax, because fiscally conservative "Blue Dog" Democrats were in open revolt and refused to go along. The Blue Dogs insisted that the Senate offset the bill's cost with tax increases on hedge-fund and private-equity managers.

    Needing two-thirds of the House to pass under fast-track rules, the tax measure was approved 352 to 64, with all 64 "no" votes coming from Democrats standing by their pledge not to support any tax cut or mandatory spending increase that would expand the national debt.

    The year's finale angered the entire spectrum of the Democratic coalition, from the antiwar left to new Southern conservatives who helped bring Democrats to power last year.

    "This is a blank check," said Rep. Jim McGovern (D-Mass.). "The new money in this bill represents one cave-in too many. It is an endorsement of George Bush's policy of endless war."

    Still, the Democrats delivered much of what they promised last year. Of the six initiatives on the their "Six for '06" agenda, congressional Democrats sent five to the president and got his signature on four: a minimum-wage increase, implementation of the homeland security recommendations of the 9/11 Commission, college cost reduction, and an energy measure that requires conservation and the expanded use of renewable sources of energy.

    Federal funding for stem cell research was vetoed by Bush.

    Congress also boosted spending on veterans' needs. Just yesterday, Democrats unveiled a proposal to create the first nonpartisan ethics review panel in House history and passed the most significant gun-control legislation since the early 1990s, tightening the instant background-check process.

    Beyond those, Democrats secured the biggest overhaul of ethics and lobbying rules since the Watergate scandal. And they passed a slew of measures that have received little notice, such as more money for math and science teachers who earn more credentials in their field, tax relief for homeowners in foreclosure, a doubling of basic research funding, and reclamation projects for the hurricane-devastated Gulf Coast.

    With the exception of the new energy law, Pelosi characterized most of the year's accomplishments as a cleanup after years of Republican neglect or congressional gridlock.

    But the long-awaited showdown with Bush on the federal budget fizzled this week into an uncomfortable draw. The president got his war funding, while Democrats - using "emergency" funding designations - broke through his spending limit by $11 billion, the amount they had promised to add after Republicans rejected a proposed $22 billion increase in domestic spending.

    Remarkably, House Minority Leader John A. Boehner (R-Ohio) praised the final omnibus spending bill in glowing terms, while Senate Minority Leader Mitch McConnell (R-Ky.) called keeping federal spending at Bush's preferred level "an extraordinary success."

    "Our work on holding the line on spending gave us an omnibus that is better than I've seen in my 17 years here," Boehner said yesterday. Twelve of those years were spent under Republican rule.

    But the disappointments have dominated the news, in large part because Democrats failed on some of the issues that they had put front and center, and that their key constituents value most.

    The military prison at Guantanamo Bay, Cuba, remains open. Bush's warrantless surveillance program was actually codified and expanded on the Democrats' watch. Lawmakers were unable to eliminate the use of harsh interrogation tactics by the CIA.

    Democratic leaders also could not overcome the president's vetoes on an expansion of the State Children's Health Insurance Program, despite winning over large numbers of Republicans. Policies that liberals thought would be swept aside under the Democratic majority remain untouched, including a prohibition on U.S. funding for international family-planning organizations that offer abortions.

    Efforts to change Bush's Iraq policies took on the look of Pickett's charge at Gettysburg. From the first days of the 110th Congress to its last hours this week, Bush prevailed on every Iraq-related fight, beginning with February's nonbinding resolution opposing the winter troop buildup and ending with this week's granting of $70 billion in unrestricted war funds. Emanuel tried to call the $70 billion funding a partial Democratic victory because it was the first time the president did not get everything he sought for the war. Bush had requested $200 billion.

    Some senior Democrats have grown so distraught that they do not expect any significant change in Iraq policy unless a Democrat wins the White House in 2008. "It's unfortunate that we may have to wait till the elections," Sen. Edward M. Kennedy (Mass.) said yesterday.

    This has left many Democrats resorting to openly political arguments, picking up a theme that Republicans hurled at them - obstructionism - during their many years in the minority. Sen. Charles E. Schumer (N.Y.) conceded that it is time for Democrats to forget about trumpeting accomplishments that voters will never give them credit for - and time to change the message to a starkly political one: If you want change, elect more Democrats.

    Sen. Richard J. Durbin (Ill.), the Senate Democratic whip tasked with trying to find 60 votes for a filibuster-proof majority, acknowledged this week that Democrats' biggest failure stemmed from expecting "more Republicans to take an independent stance" on Iraq. Instead, most of them stood with Bush.

    "Many of them will have to carry that with them into the election," Durbin said.

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    Congress Averts Higher Tax Bill for Middle Class
    By David M. Herszenhorn
    The New York Times

    Thursday 20 December 2007

    Washington - Congress on Wednesday gave final approval to a plan that will spare millions of middle-class taxpayers higher tax bills for 2007. The White House welcomed the development and said President Bush would sign the bill.

    The tax reprieve postpones for one year only an expansion of the alternative minimum tax, a parallel tax system enacted in 1969 to prevent very wealthy investors from using deductions and tax shelters to avoid paying income tax altogether. The alternative tax has ensnared a growing number of middle-class Americans in recent years because the 1969 law was not indexed to inflation.

    Without the fix by Congress, some 25 million filers would have had to pay the tax on their 2007 income, up from four million who paid it on 2006 income, according to the White House.

    The Bush administration took a swipe at Congress, saying that the late action by lawmakers might still cause delayed refunds for up to 38 million filers.

    The measure would increase slightly the amount of income that is exempt from the alternative tax. For individuals, that means the exempt amount increases to $44,350 in 2007 from $42,500 in 2006. For married couples, the exemption amount climbs to $66,250 from $62,550.

    The alternative minimum tax requires taxpayers - generally those who deduct items like high medical expenses and state and local taxes and who claim credits for dependents - to make separate calculations and pay the one producing the higher figure.

    The vote on the alternative tax plan came on the final day of the first session of the 110th Congress, which ended with a burst of last-minute legislation including final adoption by the House of a $555 billion budget package.

    But it was the tax plan that gave a discordant note to the last day before the holiday recess.

    House Democrats angrily approved the bill after giving in to demands by Congressional Republicans and Mr. Bush that the tax cut not be offset by raising other taxes. Democrats started the year by pledging to make up for the $50 billion tax fix with cuts in spending or increases in taxes elsewhere.

    The Democrats repeatedly tried to get Senate Republicans to back a plan that would have imposed new taxes, particularly on wealthy hedge fund managers, but the Republicans refused. Because the lawmakers did not offset relief from the alternative tax, the national debt will increase by $50 billion.

    "The only reason this bill is not paid for is because Republicans almost in lock step in both bodies have prevented us," said Representative Steny H. Hoyer of Maryland, the majority leader, in one of several furious speeches by Democrats on the House floor.

    "We are forced today to recognize that we don't have the votes to pursue the pay-as-you-go principle that we adopted in a bipartisan fashion," Mr. Hoyer said. "I regret this day and this bill."

    The White House, however, cheered the plan. "We're pleased that today Congress was finally able to pass legislation, without raising taxes," the press secretary, Dana Perino, said in a statement. "The A.M.T. was never intended to hit these middle-class taxpayers, and the last thing they or the U.S. economy needs is a tax increase."

    The Treasury secretary, Henry M. Paulson Jr., while thanking the House for approving the bill, warned that there would probably be some delays "including delays of some refunds."

    Changes in the tax code require substantial work, especially in reprogramming I.R.S. computers.

    Officials said Wednesday that they could not project how many taxpayers might be affected by delays. Previously the I.R.S. had said that a delay in Congressional action until Christmas could stall as many as 38 million tax returns corresponding to $87 billion in refunds.

    The I.R.S. said Wednesday that within 72 hours it would post on its Web site revisions to a dozen forms affected by the change.

    The anger over the tax plan dampened the spirits of Congressional Democrats who earlier in the day had celebrated Mr. Bush's signing of a major energy bill.

    Party leaders in both chambers held dueling news conferences across Capitol Hill to proclaim themselves winners in the first year of the Democratic-controlled Congress. At the same time, there was ample griping within both parties, signaling that Congress remains deeply divided heading into a hotly contested election year.

    Speaker Nancy Pelosi and other House Democrats boasted that Mr. Bush had signed legislation addressing four of the issues from their Six for '06 platform in last year's elections: raising the minimum wage, adopting the 9/11 Commission's findings, improving college financial aid and setting new energy standards.

    The Democrats also cheered themselves for passing new ethics and lobbying rules. But they tempered their remarks, saying they could have accomplished far more, were it not for obstruction by the Republican minority, particularly in the Senate, where Republicans often denied Democrats the 60 votes needed to proceed on major bills.

    "Last year voters asked us to take America in a new direction," Senator Harry Reid of Nevada, the majority leader, said at a news conference with Ms. Pelosi and other Democratic leaders. "Democrats were working every day to bring about that change, and while we have made a down payment on that agenda, there is much left to do."

    At his own news conference earlier in the day, Senator Mitch McConnell, the Republican leader, said his caucus had forced the Democrats to compromise if not capitulate altogether on many issues.

    Most important, Mr. McConnell said, the Republicans stopped Democrats' efforts to shift the course of the Iraq war. "Senate Republicans were able to hold together to prevent the Congress from either telling the generals how to conduct the war and providing dates certain for surrender," he said.

    There was similar chest-thumping by House Republicans, who boasted that they had thwarted the Democrats at virtually every turn, forcing them, for instance, to accept President Bush's spending limits, blocking an expansion of a children's health insurance program and preventing them from raising taxes to offset relief from the alternative minimum tax.

    "The accomplishments that have occurred, in a Congress that is noted for lack of accomplishment, were really on our turf and our terms," said Representative Adam H. Putnam of Florida, the No. 3 Republican. "That is a real story of missed opportunity and lack of achievement on the part of the majority."

    In a sign of Democrats' continuing distrust of Mr. Bush, Mr. Reid said the Senate would hold pro forma sessions throughout the holiday break to prevent the White House from making recess appointments.

    In other action on Wednesday, the House approved an extension of the State Children's Health Insurance Program through March 31, 2009. The bill fell far short of the expansion of the program that Democrats had sought in recent months but provides enough money to maintain enrollment at current levels.

    Without the extension, 20 states were at risk of exhausting their money for the program, which insures the children of poor families with incomes too high to qualify for Medicaid.

    The House also approved a measure strengthening the Consumer Product Safety Commission's authority to enforce safety regulations.

    In a separate development, a House Special Task Force on Ethics Enforcement, led by Representative Michael E. Capuano, Democrat of Massachusetts, issued a report calling for the creation of an independent ethics panel to review allegations against lawmakers.

    Senate Republicans refused Wednesday to reauthorize a program that provides financial support and training to people who lose jobs because of foreign competition. The program, which was created in 1962, expires at the end of the year. The House approved a three-month extension last week, but the Senate could not reach a deal before adjourning for the year.

    By far the most frustrated lawmakers were the House Democrats in the fiscally conservative Blue Dog coalition who had battled intensely over the alternative minimum tax. They lashed out at the Republicans in Congress and the White House.

    "The president, along with Senate and House Republicans, has sent a clear message that he has no interest in reversing the reckless fiscal policies of the past six years," Representative Mike Ross, Democrat of Arkansas, said. "The Blue Dogs have made a promise to the American people," Mr. Ross added. "We refuse to abandon our commitment to fiscal responsibility now or in the future."

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    Carl Hulse, Robert Pear, Edmund L. Andrews and Sarah Abruzzese contributed reporting.