Senate passes bill to keep tax cuts for the middle class

The Senate on Wednesday narrowly approved a plan to preserve tax cuts for the middle class while letting them expire for the wealthy, a powerful if largely symbolic victory for Democrats who have been pushing to raise taxes on the rich for more than a decade.

The measure is dead on arrival in the Republican-controlled House, where leaders are preparing to vote next week on their own plan to extend the George W. Bush-era tax cuts for households at every income level through 2013.

But Democratic lawmakers said the Senate’s 51-48 vote is a political breakthrough that strengthens their election-year argument that Republicans are holding tax cuts for the middle class hostage in order to maintain breaks worth $160,000 a year to the average millionaire.

“If House Republicans insist on blocking our middle-class tax cuts, that is a debate we are willing to have. That is a debate we welcome,” Sen. Charles Schumer (D-N.Y.) said in a speech on the Senate floor. For more than a decade, Republicans “have conflated tax cuts for the middle class and tax cuts for the very wealthy. This bill breaks that vice.”

Vice President Biden presided over the late-afternoon vote, though with only 99 senators present, there was never much chance that he would be called upon to break a tie. His appearance highlighted the importance of the issue for President Obama, who has made tax “fairness” a centerpiece of his reelection campaign against GOP challenger Mitt Romney.

Senate Minority Leader Mitch McConnell (R-Ky.) accused Democrats of playing politics with the nation’s tax code. Noting Biden’s presence, McConnell recalled that the last time the Bush tax cuts were set to expire, Biden asked McConnell to help the White House extend all of them, even breaks on income over $250,000 a year, to avoid harming a fragile economy.

“Today, the economy is growing slower than it was in December 2010,” McConnell said. “This is more about the election than it is the economy. And I’m sure a few arms have been twisted in order to get a result.”

Only two of 53 senators who caucus with Democrats voted against the measure. Sen. Joseph Lieberman (I-Conn.) said he opposes any extension of the tax cuts, preferring that lawmakers take up far-reaching tax reform this year. Sen. Jim Webb (D-Va.) had the opposite complaint; aides said Webb “opposes raising taxes on ordinary earned income.”

But Sen. Kay Hagen (D-N.C.) flew back to Washington from a funeral to cast her vote to support the measure. And several Democrats in tight races, including Sen. Claire McCaskill (Mo.), voted yes despite Republican arguments that the bill would permit the tax rates on inheritances worth more than $1 million to shoot up to 55 percent, striking millions of family farms and small businesses.

On an earlier vote, the Senate rejected a GOP plan to extend all the Bush tax cuts, 45 to 54. Senators from both sides crossed party lines, with Republicans Scott Brown (Mass.) and Susan Collins (Me.) rejecting the extension and Democrat Mark Pryor (Ark.) supporting it.

The votes capped a surprising day that began with McConnell announcing that he would waive procedural hurdles and permit the Senate to hold an up-or-down vote on the measure, in exchange for an agreement by Senate Majority Leader Harry Reid (D-Nev.) to call a vote on the Republican bill, as well.

McConnell acknowledged the unusual nature of his decision — Democratic aides could not recall another occasion when McConnell permitted a simple majority vote on a contentious issue. McConnell said his goal was to force vulnerable Democrats to support a plan to raise taxes less than four months before the Nov. 6 ballot.

“By setting these votes at a 50-vote threshold, nobody on the other side can hide behind a procedural vote while leaving their views on the actual bill itself a mystery to the people who sent them here,” McConnell said.

Moreover, McConnell said, the tax bill cannot advance because it is a Senate-originated tax measure. The Constitution requires all tax measures to originate in the House.

“The only reason we won’t block it today is that we know it doesn’t pass constitutional muster and won’t become law,” McConnell said. “What today’s votes are all about,” he said, is “showing the people who sent us here where we stand.”

The ideological stalemate between the House and Senate leaves the nation facing what Federal Reserve Chairman Ben S. Bernanke has called a “fiscal cliff” in January, when a payroll tax cut and other temporary tax breaks are set to expire, along with the Bush tax cuts. Factoring in automatic cuts set to hit the Pentagon and other federal agencies, the fiscal cliff threatens to siphon $600 billion out of the economy next year, potentially throwing the nation back into recession.

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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