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Obama signs bill to extend Bush-era tax cuts for two more years
Boehner hailed the "strong bipartisan vote" in favor of the package but argued that extending the Bush tax cuts for two years "will not end the uncertainty." He also vowed that the new Republican majority in the House next year would soon turn its attention to "killing the job-killing health-care law" that Obama signed in March.
Speaking on the House floor Thursday night before voting on the tax-cut package, Majority Leader Steny H. Hoyer (D-Md.) said, "This bill, the president of the United States believes and I believe, will have a positive effect on the economy." He said he was voting for it "because I don't want to see middle-income working people in America get a tax increase, because I think that will be a depressant on an economy that needs to be lifted up."
The package breezed through the Senate earlier this week on a vote of 81 to 19, giving Obama his strongest bipartisan victory on a major initiative since he took office. Opposition in the House crumpled in the face of that overwhelming showing, though House liberals insisted on offering an alternative that would levy a higher tax on estates than the Obama-GOP compromise will impose. That effort failed shortly before midnight, 194 to 233.
Obama administration officials Thursday night hailed the bill's passage. "We had a responsibility to protect middle class families from a tax increase that would have hit their paychecks and harmed the recovery," Treasury Secretary Timothy F. Geithner said in a statement. "And while we do not agree on everything in this legislation . . . this legislation is good for growth, good for jobs, good for working and middle class families, and good for businesses looking to invest and expand their workforce."
Liberals opposed the deal in part because they believe the temporary extension of the Bush breaks would eventually become permanent, setting lower tax rates far into the future. That would increase pressure on lawmakers to cut spending as a way of reducing record federal budget deficits, placing a host of cherished social programs in jeopardy.
But for Obama, the two-year window represents an opportunity to tackle the ambitious task of overhauling the federal tax code. By sunsetting current policies immediately after the 2012 presidential election, lawmakers in both parties said the measure sets a natural timetable for developing a tax-reform plan - an essential step toward reining in the rising national debt.
Obama placed numerous calls to House Democrats this week to urge their support for the deal, and got an earful in return. Rep. Elijah Cummings (D-Md.) said he told the president that one of his concerns was that "these tax cuts would not end in 2012, because in an election year, I think it's very, very difficult" to raise taxes.
Obama replied that the fate of the Bush tax cuts "would be part of his platform when he ran," Cummings said. "So it should be very interesting."
Republicans, too, have been pressing for a temporary extension of the Bush tax cuts as a bridge to tax reform. Like the last major tax overhaul in 1986, a new rewrite is likely to take years to draft and push through Congress. But White House officials have been encouraged by the level of engagement from Republicans, who will hold 47 seats in the Senate and take control of the House in January.
Key lawmakers in both parties have embraced a deficit-reduction plan produced by Obama's fiscal commission, which includes a tax overhaul that would lower rates across the board but raise additional revenue by closing dozens of long-standing loopholes, such as the mortgage-interest deduction claimed by many homeowners. Meanwhile, the relative ease with which Obama and the GOP were able to strike a deal over the Bush cuts has raised hopes on both sides for productive talks in the future.
"This is consensus on a very intractable issue: What do we do about expiring tax policy?" said Rep. Dave Camp (R-Mich.), the incoming chairman of the tax-writing House Ways and Means Committee, who was party to the tax negotiations. Camp, who has made comprehensive tax reform a top priority, said the talks were significant not only because of the policy that emerged "but also because of the process of coming together and reaching an agreement."
"I am very encouraged by what the president has been saying publicly. They do want to begin," Camp said. "And that is a big thing."