Reid says tax cut agreement still needs work

WASHINGTON -- Nevada Democrats on Tuesday showed little enthusiasm for the two-year tax cut agreement hammered out by President Barack Obama and Republican leaders, but a Republican lawmaker said it was a positive move.

Democratic Sen. Harry Reid said he is not ready to embrace the deal, noting that "it's not done yet" and needs more work.

Rep. Dina Titus said she was not happy about its limited tax cut for the middle class but probably will vote for it while holding her nose.

"If that is the way you have to do it sometimes, then you have to do it," she said.

Rep. Shelley Berkley said she would have preferred more generous treatment for middle-income earners but plans to vote for the agreement as probably the only chance to restore jobless benefits and extend tax breaks for families if only for the next two years.

"I could go home and say this wasn't good enough, but the reality is for the hundreds of thousands of people in my district and the million-plus in Nevada, that wouldn't wash," Berkley said. "Right now this might be the only stimulus we see for the economy for a long time."

Democrats in Congress expressed frustration over the deal, in which Obama agreed to a GOP demand to extend Bush-era tax cuts for two years to earners of all income levels.

In doing so, the president set aside a long-held position by most Democrats that the tax cuts should be made permanent for joint filers earning less than $250,000, while allowing the full benefit to expire -- in effect a tax increase -- for taxpayers who earn more.

Republicans argued it would risk economic recovery to raise taxes during a recession. They showed through Senate test votes in recent days that they had the strength to force Obama to compromise.

Nevada Republican Rep. Dean Heller said the agreement "is a positive first step."

"As our economy continues to struggle, it would be a mistake to raise taxes on anyone," Heller said in a statement. "I await final legislation and remain cautiously optimistic that an extension will pass before the end of the year."

Sen. John Ensign, R-Nev., was not available to comment, his office said.

Obama defended the agreement at a White House news conference, and Senate Republican leader Mitch McConnell of Kentucky declared it final.

But Reid, the Senate majority leader, said he was not confident that he and Senate Democrats will sign off on the deal, whose details were outlined to them by Vice President Joe Biden in an afternoon meeting.

"No, I think we're going to have to do some more work on it," Reid said .

The agreement would extend unemployment insurance payments through 2011, but it would not create new benefits for jobless people who have exhausted the maximum 99 weeks of payments.

It includes a 2 percentage point reduction in payroll taxes for the next year, a potential savings of $120 billion for workers.

And it would incorporate changes in the estate tax, similar to legislation Berkley has sponsored. The new rate would be 35 percent, with the first $5 million of estate property exempted.

Some Democrats said the overall tax deal would help the economy recover, but others argued that Obama gave in too easily.

"Extending unemployment insurance in this economy should have been a natural, not something you have to bargain with Republicans for," Titus said.

Reid said, "While this is not an arrangement many in the caucus would have made, we understand the president is negotiating with congressional Republicans who are willing to risk everything in order to secure tax cuts for the wealthiest of all Americans."

At the White House news conference, Obama said he did not want to risk a long fight with Republicans to where all the tax cuts expire at the end of the year.

Berkley also said she did not want to take the risk.

"People in Nevada are hurting," she said. "I am not willing to play Russian roulette with their lives."

Contact Stephens Washington Bureau Chief Steve Tetreault at or 202-783-1760.