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Democrats defy Obama :

Oppose US tax deal

US: Angry Democrats in the US House of Representatives defied President Barack Obama Thursday and rejected a deal he struck with Republicans to extend low tax rates that are set to expire in three weeks.

While unlikely on its own to derail the tax plan, the House Democrats’ rebellion gives Obama another political headache just over a month after he took a beating in mid-term elections.

In a raucous, closed-door meeting on Capitol Hill, mutinous Democrats chanted “Just say no!” as they vowed to overhaul Obama’s plan to extend low tax rates for nearly all Americans, according to lawmakers in the room.

But in the Senate, the plan took a significant step forward as Democrats there unveiled legislation late in the day that reflected the terms laid out by the White House.

A vote could come by Saturday, Senate Majority Leader Harry Reid said.

Obama’s plan would keep lower rates in place for another two years, reduce the estate tax, and extend tax breaks and other benefits aimed at lower-income Americans.

Economists say it could boost the sluggish economy at a time when Congress has no appetite for spending-based stimulus efforts.

Democrats have argued that the revenue that would be lost by extending tax breaks for the wealthiest two percent of US households can be put to better use at a time when unemployment is close to 10 percent.

Tax bills will rise in January by an average of $3,000 per household if Congress does not act.

The administration is confident that the “major components” of the deal will survive the congressional maneuvering, White House spokeswoman Amy Brundage said.

After Democrats suffered substantial losses in the November midterm elections, Obama grudgingly accepted a rare compromise on taxes with the Republicans, who will take control of the House and wield greater clout in the Senate in January.

Obama now must now quell an insurrection from the liberal wing of his own party. Under the resolution approved by House Democrats, his plan would not even come up for a vote in that chamber.

WASHINGTON, Friday, Reuters

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