Can Obama Sell the Tax-Cut Deal to His Own Party?

For all the horse-trading it takes to get much of anything done in Washington, politicians are almost always happier to talk about standing on principle than the art of the deal. So it was particularly striking to see President Barack Obama call out what he called "sanctimonious" critics as he made an impassioned case for compromise during a Tuesday press conference. "A long political fight that carried over into next year might have been good politics, but it would be a bad deal for the economy and it would be a bad deal for the American people," Obama said, alluding to the withering criticism congressional Democrats and party activists have leveled at the White House in the wake of its tax-cut compromise with congressional Republicans. "To my Democratic friends," he urged, "what I'd suggest is, let's make sure that we understand this is a long game."

As Obama spoke, however, his Democratic colleagues were already gaming out their next moves. In the first high-stakes chess match since the party's November drubbing, some Senate Democrats may be dangling their doubts as bargaining leverage. By agreeing to an across-the-board two-year extension of the Bush-era tax cuts and throwing in an estate-tax concession to boot, Obama was able to broker a second stimulus of sorts — one that would inject a much needed jolt into an economy still foundering at nearly 10% unemployment. But while Obama was able to get Republican leaders on board, his natural allies could still scuttle the pact if their concerns aren't addressed. "I think we're going to have to do some more work on it," Senate majority leader Harry Reid told reporters at the U.S. Capitol on Tuesday.

Reid's remark captured the noncommittal stance adopted by many members of his caucus, as well as some rank-and-file GOP Senators. Indeed, on a day when the White House launched a vigorous defense of its deal, one thing was clear: don't expect either side to sign off just yet. "Everybody's playing hard to get. That's because there are things to be gotten," says a senior Democratic aide. "I don't think there are many yeses. They all want more." That person predicted another round of haggling over the deal's terms, with lawmakers vying to extract additional sweeteners.

To be sure, it wasn't all a bargaining posture; there was a current of genuine anger coursing through the Democratic caucus. It's easy to grasp why party members are upset that Republicans were awarded what Obama himself dubbed their "holy grail" after two years of parlaying obstructionism into political gain. Vice President Joe Biden, dispatched by his boss as an emissary, received an earful from Senators like Bernie Sanders of Vermont who believe the White House threw in the towel without even lacing up its gloves. Sanders, an independent, has threatened to filibuster the deal, and Senator Tom Harkin of Iowa also said he would vote no. "I think a ransom was paid and it was a very high price," New Jersey Senator Frank Lautenberg told reporters Tuesday. "I just don't understand," said California Democrat Dianne Feinstein. "The nation is in trouble financially and we're doing all these things that cost people more money." Neither Democrats indicated whether they would vote against the legislation.

Other Democrats who slammed the pact didn't discount the possibility of signing on. "If I end up voting for this package, it will not be silently," Senator Mary Landrieu of Louisiana told reporters. "It will be because we are dragged to that position having firmly established that I disagree strongly with some of the provisions and can't imagine the President leading the country in that direction." Like colleagues, Landrieu said she was loath to layer hundreds of billions of dollars of unpaid spending onto an already bulging federal deficit, just days after a bipartisan debt commission issued a stark reminder of the depth of the nation's budget crisis. But Landrieu's pronouncement that elements of the plan were "unconscionable" was striking; she voted for the Bush tax cuts of 2001 and 2003 and has supported reducing estate taxes.

Though extending the tax cuts to the wealthy is a hard pill to swallow for Democrats, there's also much for them to like about the deal. The framework hashed out by the White House and Republican leaders includes a $120 billion payroll tax cut, $56 billion to extend unemployment-insurance benefits through the end of 2011, and a host of other tax cuts and credits for parents, students and businesses. As Obama pointed out Tuesday, it spares the middle-class families from an average tax increase of some $3,000 per year on Jan. 1. The Center for American Progress, a liberal think tank, estimates these measures will save or create 2.2 million jobs. "Every economist I've talked to suggests that this will help economic growth and this will help job growth over the next several months," Obama said. "And that is the main criteria by which I made this decision."

For the White House, the challenge will be stitching together a sufficient coalition of centrists in the face of criticism from both flanks. Senator Mitch McConnell of Kentucky, the GOP leader, told reporters Tuesday that he was confident the "vast majority" of Republicans were on board, and his colleagues lavished praise on the President. But McConnell may have trouble marshaling his troops as well. Retiring Senator George Voinovich of Ohio said he would not vote for the plan, and Senator Jim DeMint of South Carolina conceded that conservatives who campaigned on the importance of economic austerity were suffering "heartburn" at the thought of backing a massive new package whose cost, at up to $900 billion, could be greater than the 2009 stimulus package. For Tea Party purists, the notion of piling that sum onto the federal books should be anathema. "I don't know where anyone stands," DeMint, who says he has not made up his mind, tells TIME. "I know a lot of people — like me — who said they wouldn't vote for anything if deficit spending is involved, are going to be between a rock and a hard place."

That decision could grow even more difficult if lawmakers start lobbying to amend the package by adding pet projects or provisions designed to curry favor with their constituents. According to Politico, Reid has approached colleagues about adding to the tax-cut package a measure to legalize Internet poker, which is backed by gaming corporations who have been some of the Nevada Senator's major campaign contributors. Before anyone has formally tallied the tab for Obama's new economic plan, its price tag may already be set to climb — proof, perhaps, that compromise carries high costs of its own.

— With reporting by Jay Newton-Small / Washington