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Dem Sen. Harkin criticizes possible tax compromise in 'fiscal cliff' talks

Sen. Tom Harkin (D-Iowa) criticized an emerging "fiscal cliff" deal on Monday, arguing Democrats were giving up too much on tax rates for the rich. 

Harkin said "no deal is better than a bad deal" in reference to an agreement that could extend tax rates for households with annuals income under $450,000. 

"This is one Democrat who doesn’t agree with that at all,” Harkin said. 

“What it looks like is, it looks like all of the tax things are going to be made permanent, but all of the other things that the middle class in America depend on is extended for one year, maybe two years. I think that’s grossly unfair. Grossly unfair.”

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Harkin argued Democrats were making permanent generous tax rates for wealthier households even as, in return, they were only winning temporary extensions of programs that would help the poor and middle class, such as federal unemployment benefits. 

Harkin also voiced concern that Vice President Biden, Senate Majority Leader Harry Reid (D-Nev.) and Senate Republican Leader Mitch McConnell (Ky.) might extend the estate tax at its current rate: 35 percent for inheritances over $5 million.

“We’re going to lock in forever the idea that $450,000 a year is middle class in America? Need I remind people that at $250,000 a year, that’s the top 2 percent income earners in America?” Harkin said. “I know the president keeps saying he wants to protect tax cuts for the middle class — have we forgotten average income earners in America are making $25,000, $30,000, $40,000, $60,000 a year?” he said. “That’s the real middle class in America and they are the ones getting hammered now.”

Lawmakers have not reached a deal to prevent the looming tax hikes and spending cuts that make up the fiscal cliff, but talks between Biden and McConnell have narrowed differences between the two sides.

President Obama and Reid have shown they are willing to move from their opening position that current tax rates should be extended on annual incomes below $250,000, with income rates above that threshold becoming subject to higher tax rates.

Reid has also signaled flexibility on the estate tax, an issue that is important to Republicans and some Democrats.

Several liberals were critical of reports of these concessions, arguing on social media that Democrats were giving up too much to get a deal.

After his floor comments, Harkin stopped short of threatening to filibuster a deal.

"There might be some extended debate," he told reporters after his floor comments. He added that it is "not true" that Democrats have as a group signed off on a $450,000 threshold or an estate tax status quo.

Immediately after Harkin spoke, Sen. Barbara Boxer (D-Calif.) took to the floor to call for a “more positive tone” in order to ensure a deal is worked out. She said any deal has to be bipartisan and include things neither side is happy with.

“I listened carefully to my friend, Sen. Harkin’s, remarks, which I would have to describe as fairly negative remarks,” she said. “I want to just put out a bit more of a positive view.

“We all know that no side, if there is a deal, is going to get 100 percent of what they want. We know that because one party doesn’t control everything,” she added.

In response to Harkin's suggestion that those making $250,000 in annual income are not middle class, Boxer said she represented a state with a high cost of living and that the middle class had different definitions.

“We know if we’re going to get a deal, we’re going to have to meet somewhere in the middle,” she said. “If we fail, it will be a very, very sad moment in history.”

Boxer's comments could be seen as an effort to keep Senate liberals in line with leadership and to prevent defections on a possible vote. Lawmakers are trying to reach a deal that could allow a Senate vote as early as today.

Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, responded to Harkin by saying: "We are 100 senators. Every one of us has a different point of view. That's why we're here."

Some Democrats have argued their party would be better off letting all of the Bush-era tax rates expire at the end of the year, and then moving legislation to lower rates on the middle class after Jan. 1.

Harkin said he would be fine with allowing all of the Bush-era tax cuts to expire at the end of the night because then tax rates would return to Clinton-era levels, which were in place when the economy was doing well.

“If no deal is reached then on the tax side we go back to the taxes that were enacted under Clinton,” Harkin said. “What’s so bad about that? It worked pretty darn well. The economy was going well and we were paying down the deficit and we’ll go back to that tomorrow.”

A Democratic aide says Harkin has long said the fiscal cliff is not a big deal, but that his view is not a widely held in the caucus. The aide said an agreement struck today could result in a bill being drafted overnight, with votes on Tuesday.

Erik Wasson and Russell Berman contributed

Updated at 12:15 p.m.