The House voted overwhelmingly yesterday to permanently extend the 10 percent income tax bracket that President Bush and Congress created in 2001, approving its third significant tax cut in as many weeks despite concerns over a record budget deficit.
The measure, approved 344 to 76, enjoys broad support because it is aimed at low-income Americans.
Last year, Congress expanded the lowest 10 percent tax bracket to cover more income than when the bracket was created in 2001. But to save money, the expansion of the bracket was set to expire at the end of the year, effectively raising taxes on 73 million people, including 22 million low-income workers. The House voted yesterday to make permanent that expansion and also to make permanent the 10 percent bracket, which is set to expire after 2010.
"We cannot snuff out this recovery by yanking out the tax relief that was so central to getting the economy back on track," said Rep. Paul Ryan (R-Wis.).
Both parties support an extension. But the House bill's 10-year cost -- $218 billion -- prompted heated rebukes from Democrats, who proposed paying for the tax cut extension by raising taxes on couples earning $1 million and singles earning $500,000, or more. The Democrats would also have extended the bottom bracket beyond 2010 only if a plan was in place by then to balance the budget by 2014.
The debate was sharpened by Deputy Defense Secretary Paul D. Wolfowitz's formal request yesterday for $25 billion more to finance the wars in Iraq and Afghanistan.
"We have to pay for this war," Rep. Richard E. Neal (D-Mass.) said during the tax debate. "There ought to be some truth in what we do here."
Nevertheless, the Democratic measure was rejected largely along party lines, 227 to 190.
In the face of rising war costs and a deficit likely to top $400 billion this year, the House has passed tax measures worth $510 billion over the next decade. More are coming. Next week, the House is likely to vote to permanently extend the $1,000 child credit, originally passed in 2001, then accelerated last year. The cost: about $172 billion over 10 years. The cuts would follow three successive tax cuts since 2001, totaling $1.7 trillion.
"Every American is responsible for the mortgage that has been laid on them in the last 36 months," said Rep. John S. Tanner (D-Tenn.), who labeled the House's actions "breathtaking fiscal irresponsibility" and "financial madness."
But the Bush administration is strongly pushing the tax cuts. After yesterday's House vote, Treasury Secretary John W. Snow implored the Senate to "quickly follow suit." He said that "preventing a tax increase is essential for taxpayers at all income levels, especially those in the lower 10 percent bracket."
Most Republicans argued that the tax cuts so far have provided a much-needed economic stimulus that is beginning to put people to work and to generate more tax revenue. Republicans used yesterday's debate to counter charges that the tax cuts enacted since Bush took office have primarily benefited the rich.
"When we hear time and time again that the Republican Party only stands for the wealthy, well, today's the test," said Rep. Mark Green (R-Wis.). "Let's see who stands up for working families."