Senate approves tax cut deal; House Dems weigh amending estate tax

President Barack Obama says he is 'absolutely convinced' that the tax deal pending in Congress will create jobs and is calling on Congress to pass the bill.
By Lori Montgomery and Shailagh Murray
Washington Post Staff Writers
Wednesday, December 15, 2010; 2:46 PM

A sweeping tax package negotiated by the White House and Republican leaders sailed through the Senate on a 81-19 vote and now awaits action by the House as early as Thursday.

The Senate vote represented a rare moment of bipartisanship and underscored the depth of concern among lawmakers in both parties about the pace of the economic recovery. The legislation would extend for two years the income-tax cuts enacted 10 years ago under President George W. Bush. The cuts are set to expire on New Year's Eve. But the package also includes a variety of measures aimed at spurring new hiring and consumer spending.

The stimulus-related provisions include a one-year reduction in the payroll tax rate for individuals, to 4.2 percent from 6.2 percent; an expensing break that would allow businesses to write off new equipment purchases in the 2011 tax year; and continued funding for an emergency program that provides up to 99 weeks of benefits for jobless workers. Additional tax provisions would target businesses and individuals in narrower groups.

Prospects for House passage appeared to be brightening Wednesday after an initially poor reception, but House Democratic leaders said that liberals continue to insist on changes to the estate-tax provision in the bill.

"Middle class families need a boost in this economy, and that is exactly what this plan gives them," Senate Majority Leader Harry M. Reid (D-Nev.) said in a statement. "It is not perfect, but it will create 2 million jobs, cut taxes for middle class families and small businesses, and ensure that Americans who are still looking for work will continue to have the safety net they rely on to make ends meet."

Before senators began debating the $858 billion package in late morning, President Obama urged lawmakers in both houses to pass the tax package "as swiftly as possible." He called the plan "an essential ingredient in spurring economic growth over the short run."

Speaking before a meeting with business leaders, Obama said: "I am absolutely convinced that this tax cut plan, while not perfect, will help grow our economy and create jobs in the private sector." He acknowledged that lawmakers of both parties object to different aspects of the plan but said, "That's the nature of compromise." He added that "we can't afford to let it fall victim to either delay or defeat."

The Senate considered and rejected three amendments before approving the legislation. A proposal by Sen. Tom Coburn (R-Okla.) would have paid for the extension of jobless benefits and refundable tax credits included in the measure by cutting $156 billion in federal spending, as well as barring unemployment payments to millionaires.

Sen. Jim DeMint (R-S.C.) proposed a permanent extension of the Bush-era tax cuts, permanent repeal of the estate tax and a permanent fix for the expanding alternative minimum tax. And Sen. Bernard Sanders (I-Vt.) proposed to eliminate the Bush-era tax cuts for the wealthiest 2 percent of taxpayers, dedicating half the savings to deficit reduction and the other half to fresh infrastructure spending.

Despite the lopsided tally, many lawmakers were lukewarm about portions of the package. For Democrats, extending all the Bush tax breaks - if only temporarily - was a bitter concession, after many in the party, including Obama, had campaigned on a pledge to allow rate cuts for the wealthiest households to expire.

"This wasn't the bill I would have wanted," Sen. Al Franken (D-Minn.) said in a Senate floor speech. "If there were a better way, I would do that in a heartbeat. But today we are forced to decide between taking a stand against irresponsible tax cuts for millionaires versus helping struggling families. And given that choice, I simply can't turn my back on all the Minnesotans that desperately need the help this bill will provide."

Sen. Sherrod Brown (D-Ohio) voted against the advancing the package on Monday "to send a message to the House that there are allies here," but he supported it on final passage. Brown, one of the Senate's most liberal members who is up for reelection in 2012, said he changed his mind after speaking with his minister and reading letters from constituents who are struggling to find jobs in his hard-hit home state.

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