U.S. Rep. Keith Ellison, DFL, represents Minnesota's 5th Congressional District in Congress. MPR file photo/Tim Nelson

Minnesota 5th District Congressman Keith Ellison said Thursday that Democratic lawmakers "need to create a real crisis" to force Republicans to renegotiate the tax cut compromise.

House Democrats voted Thursday to reject the tax cut deal between the White House and Congressional Republicans.

The compromise would extend Bush-era tax cuts for all Americans, including the wealthy. It also would renew benefits for the long-term unemployed, a measure President Obama had pushed for to prevent about 2 million Americans from losing benefits in the coming weeks. Republicans had opposed extending unemployment benefits.

Ellison, who was recently elected co-chair of the Progressive caucus in the House, voted against the compromise.

"I think that we need to create a real crisis here so that the Republicans will have to answer for denying Americans unemployment benefits on the eve of the Christmas holiday," Ellison said. "We let them off the hook, in my opinion."

Ellison said Democrats should have negotiated more aggressively to protect the interests of middle class and low income Americans, but he defended Obama's effort to reach a compromise.

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"I think (Republican lawmakers) exploited the president's compassion for people who are facing a very grim holiday with no unemployment insurance extension," Ellison said, "but I think that we should have bargained harder because what we're doing is we're going to fundamentally shift the income spread in this country."

Ellison discussed the tax cut deal with MPR's Tom Crann on Thursday. An edited transcript of their conversation is below.

Tom Crann: Tell us, Congressman Ellison, what are your objections to the tax cut deal as it stands now?

Rep. Keith Ellison: Well, first let's just say that there are a number of good things in the bill, things that I've been fighting for such as unemployment insurance extensions, things like that. This is critical. So let me just say that it's not a 100 percent bad deal.

Let me also say that I think the president has been put into a very difficult situation, but my fundamental objection to this is that it exacerbates the income disparity among Americans to levels that we really haven't seen. We're seeing such an unfair and uneven distribution of how these funds are going to be distributed, that it's simply that the deal really just fails.

Also, the deal is not a deal that really promotes jobs because even though there are some aspects of it that promote jobs, this give away on the estate tax and the top income levels of the 2001 (and) 2003 tax cuts just really don't encourage job creation at all.

Crann: Well, the White House says 2.2 million jobs could come out of this, as many of that. So you're obviously not getting numbers from the same place. Where's your evidence that that won't happen?

Ellison: You need to understand me. I'm not saying that there won't be any jobs created from this bill, but how much per dollar will the jobs cost? I mean the fact is if we're giving away what could be over the course of ten years trillions of dollars in the estate tax and the fact is that what we're seeing is such a high expense for the jobs, that we could do so much better than we're doing.

So what I've argued is that we need to say first of all this estate tax deal is just intolerable and we can't abide by it. It can't be part of the deal. I understand that there will need to be a deal, but this estate tax doesn't need to be part of it, and we need to renegotiate that part of it.

The other part that I'm saying is that I'm very concerned about how we're going to be doing this payroll tax. I'm not against the payroll tax element, but I need some real assurances that this is not going to be used to fundamentally undermine Social Security into the future. And I want to hear the president make some real firm statements about how he's going to protect Social Security because I think that this payroll tax deduction could be a set-up for undermining Social Security.

And then let me also say that after these tax cuts go through, we're going to be facing only a few months with a challenge regarding the debt ceiling. Should we raise it or not? Obviously the Republican Congress that's going to be in office is going to say no.

And what that's going to cause is dramatic cuts, I mean devastating cuts to programs that people really need. We're going to see cuts in education. We're going to see cuts in job creation. We're going to see cuts across the board.

And so what I'm saying is that let's not put ourselves in a position where we're going to be faced with dramatic and fundamental cuts into the future. ... Another thing that's very disturbing about this bill is that the giveaways to the highest income brackets are so startling that what we're literally doing is funding our own demise. We live in the era of Citizens United. This is a Supreme Court case which said that corporate dollars could be spent in campaigns, and as yet, we haven't even passed the legislation to demand that these dollars disclose their source.

Crann: I need a little more clarity on that. When you say, 'funding our own demise,' do you mean the American citizens or do you mean as members of Congress you're funding your own demise?

Ellison: I mean American citizens ... We are pushing money to the highest income levels in our society which will invariably be used to suppress programs that are in the best interests of our country, such as education and job creation. Do you understand what I mean now?

Crann: I want to talk about the aspect of compromise, if we could here.

Ellison: Yes, compromise is important, and I think we do need to have a compromise. But if you want me to vote to extend all of the tax cuts, which is something I am loathe to do, I can't do it at the price that they're asking for.

Crann: In order to get the extension on employment benefits, that's not worth it to you?

Ellison: I think it would be to the detriment of people who are seeking those unemployment benefits. And plus, there's other ways to get them. I think that we need to create a real crisis here so that the Republicans will have to answer for denying Americans unemployment benefits on the eve of the Christmas holiday.

I don't think they would do that, but we didn't create that crisis. We let them off the hook, in my opinion, and so they were able to not only get away with extending these 2001 (and) 2003 tax cuts, Bush tax cuts. They were able to get this estate tax thing in there as well, which is just too much. Do you realize, Tom, that only about 6,600 families are going to benefit? 6,600 families' interests are being placed in front of over 4 million individuals who stand to lose unemployment insurance by February.

Crann: Only 6,600 families would benefit? Are you saying, Congressman, only 6,600 families would benefit from this tax cut compromise?

Ellison: From the estate tax portion of it ... I'm saying that I encourage you as a journalist to investigate the number of people who are going to benefit, the minute and tiny number of people who are going to benefit from this estate tax and the literally billions of dollars that are going to be flowing in their direction. ... I think compromise is essential, and I think it's important.

And I don't blame the president ... I think they exploited the president's compassion for people who are facing a very grim holiday with no unemployment insurance extension, but I think that we should have bargained harder because what we're doing is we're going to fundamentally shift the income spread in this country.

We already have been seeing the income distribution widen year after year. This is going to accelerate that. And let me just tell you, it's when people at the top income levels get more money, they don't just use it to buy yachts and boats and more houses. They'd use it to buy Congress people.

And I'm afraid that we're at one point going to have ... very few people who are going to be speaking up for the best interests of the American worker out there if we continue to do these very, very difficult bargains because, you know, the president thought he had a gun to his head.

Crann: Let me ask another aspect of this ... You've undoubtedly heard the arguments from economists who say that a recession and a recovery is never a good time and it's not a good time now to raise taxes.

Ellison: On who? Tom, the question is, 'On who?' You know what? I think we should be trying to get more money in the hands of the average citizen, but cutting taxes for top income earners does not do anything. It simply doesn't matter.

Crann: But doesn't this package also include some middle class tax cuts that will put money in the hands of middle class Minnesotans?

Ellison: Yes, it does. And that's why what I'm telling you is that I think this package needs to be changed, needs to be amended.

Crann: What does that change look like, as far as you're concerned, practically?

Ellison: I'm glad you asked me that. First of all, we cannot tolerate this estate tax. It needs to be excluded from the package.

Crann: It has to be stripped out, as far as you're concerned?

Ellison: Yes, and then the other thing that we need to do is we need to ... make sure that there is some equality here. If we're going to have one year for the extension of unemployment benefits, there should be one year for the extension of these tax cuts. There should be some equality and balance here. And even if we did that, the bulk of the ... dollar benefit would still be going to the top ... of the income scale, but still, it would be a compromise I could contemplate.

Crann: Do you see that happening by the end of the year?

Ellison: Any compromise that we do is going to have some aspects of it that one side is not going to like ... I don't want to have the tax break go all the way up to a million dollars, but you know if it was for a limited duration, I would hold my nose and support it as long as we got the things that we needed like (unemployment insurance) and other stimulation things. But the fact is that this bill is just too far. It's just too much, and so I can tell you right now, there's a lot of energy in the House of Representatives for reworking this thing.

Crann: Let me ask about that and the practicalities of that because it's clear here that you and many of your colleagues want to see this reworked, although I'm sure there's not broad agreement on actually how, right? There never would be, but by the end of the year the president says he wants this done. How do you see this happening? Because if it isn't done, then taxes will go up.

Ellison: It is Dec. 9, and so as far as I'm concerned, we have at least 22 days to get this done. And I'm ready to be here every single day.

Crann: What's the next step here? Because your House leadership doesn't necessarily, they said earlier they're not quite sure what the next step is.

Ellison: But the thing about not knowing exactly what the next step is shouldn't cause you any discomfort because democracy is messy ... and things do unfold sometimes in an uncertain way, but I will tell you this. The next step is for us to make it clear that the bill as it exists now, the compromise as it exists now, is not okay and that there's going to have to be some changes to it. And so, in my view, I think that is the next step ...

The president needs to get back in the room, and we need to come up with something that we all can live with, that a majority of the Congress can live with. That's what I think needs to happen.

So, I'm just telling you I'm very concerned about the debt and the deficit. As a liberal, it may even surprise some people to hear me say that, but I've been consistent in saying that as we expand the debt and the deficit, what we do is the interest payments on it squeeze out all those things that people who are liberal like myself want to spend money on, like early childhood education, like job retraining, like worker readjustment, things like that. So I've always been concerned about that. And so I'm very concerned about what this does to the debt.

And I can tell you if we spend this money, it's going to cost more than the stimulus did. It's going to cost more than TARP did. It's going to cost about $980 billion ... And people talk about what's right to do or wrong to do in a recession. I can tell you adding that much to our deficit is not a good thing right now. For me, I am absolutely committed to extending unemployment insurance benefits. I've argued on the floor for it. I voted for it. I will continue to fight for it, but I'm not ready to empower--.

Crann: Not at this cost, you're saying.

Ellison: Not at this cost. It's too high of a cost, and I encourage all Americans to say to this president, 'This deal needs to be reworked." We do know there's going to have to be a deal. I do want people to know that I am open to compromise, but this one is one too far.

Crann: I want to ask you a question about the tax cuts, if it's possible to define a line you might draw that you'd say, 'All right, extend them up to" what level of income, and then no longer?

Ellison: It's not that good of an idea to give away your bargaining position before you go into a negotiation. But I will tell you I would be willing to go higher than 250, if it would get by, but I'm not willing to do all of the things that have been done in this deal.

Crann: But you want a line drawn somewhere there?

Ellison: Yes.

Crann: And you could get behind it?

Ellison: I would, yes, if we get within some realm of reasonability, I can do it, but we're not there.

(Interview edited and transcribed by MPR News reporter Madeleine Baran.)