Politics & Government

SENATE: Controversial package could be sent to the House as early as midweek

WASHINGTON – The Senate overwhelmingly advanced President Barack Obama's $848 billion tax-cut package Monday in a vote that heightened pressure on reluctant House Democrats and enhanced the likelihood of congressional approval for the compromise.

The Senate could send the package to the House by midweek and turn to remaining legislative priorities, including a nuclear arms reduction treaty with Russia, a repeal of the ban on openly gay and lesbian military personnel and a youth immigration bill.

Still, House Democrats have yet to relent in their opposition to the tax-cut deal between the White House and GOP leaders, and are expected to demand changes to the bill’s estate tax provision, which liberal lawmakers charged was skewed to the wealthy.

Yet as the Senate voted 83-15 to cross a key procedural hurdle, it became increasingly clear that altering the package in either chamber could delay final votes and risk accomplishing other top goals before the Democratic-controlled Congress comes to a close.

Obama urged a speedy resolution. “This proves that both parties can in fact work together to grow our economy and look out for the American people,” Obama said as the Senate vote was under way.

The tax breaks passed during the administration of President George W. Bush. They expire Dec. 31, and failure by Congress to extend them would lead to a tax hike on nearly every American worker.

Republicans watched the feud between Obama and congressional Democrats, confident they have little at stake if a resolution is not reached in the days ahead. If taxes go up Jan. 1, Republicans are convinced the president and his party would be blamed.

Then, with a GOP majority in the House and greater numbers in the Senate, Republicans could swiftly pass their preferred tax cuts. Sen. Mitch McConnell, R-Ky., the Senate GOP leader, said the bipartisan package underscores the new direction in Washington after the fall elections. “This is an important shift, and the White House should be applauded for agreeing to it,” McConnell said Monday.

A Pew poll released Monday showed that Americans are largely on board with the package, with 60 percent in favor and 22 percent opposed.

The package extends the Bush tax cuts for two years on families at all income levels, including the wealthiest 2 percent who have incomes above $250,000. Obama once campaigned against tax cuts for those earners.

The package also continues unemployment insurance through 2011 for up to 7 million Americans who otherwise would see their extended jobless aid expire.

One key change for most taxpayers will be a new, 2-point reduction in payroll tax worth up to $2,000. It replaces the so-called Making Work Pay tax cut for 95 percent of Americans, a break that expires Dec. 31.

The package also reinstates the estate tax that lapsed this year under a quirk of law. It establishes a 35 percent rate on inheritances beyond $5 million for singles and $10 million for families.

In many ways, the package is a quintessential Washington compromise that leaves lawmakers pleased by some provisions and infuriated by others.

“For all of us, it’s (a) balancing act,” said Sen. Charles Grassley, RIowa, who voted yes. “We want to stay true to our ideals, and we also want to deliver practical results to our constituents.”

For example, the Senate added $10 billion in energy assistance, including nearly $5 billion in ethanol and coal credits that environmentalists oppose. But it also included an extension of grants for renewable energy developers, which supporters credit with having doubled solar plant production in 2010.

The package also includes a long, $55 billion list of specialty tax breaks that tend to be extended each year – help for Puerto Rican rum makers, race track developers and Los Angeles film producers.

Because of the “Christmas tree” assortment of benefits, an increasingly vocal group of conservatives has publicly rejected the plan in recent days. Senate Republicans are seeking an amendment to require spending cuts elsewhere to pay for the $56 billion in jobless benefits.

Tea Party Patriots, a major online network of activists, circulated a petition urging senators to vote against “The Deal,” because it violates Republican campaign promises to block tax increases, craft legislation in the open and stop adding to the deficit.

“It was a painful vote,” said Sen. Bob Corker, R-Tenn., who voted yes. “It was not a no-brainer for me. I’m very concerned about the deficit.”

The five Republicans who voted no largely were opposed to adding the $848 billion package to the national debt.

“My time in public office has run out, and from my perspective, so has the country’s,” said retiring Sen. George Voinovich, R-Ohio. “Our national debt is one of the most important problems we face.”

Democrats remained concerned that the package is too heavily tilted toward the wealthy, particularly the $68 billion estate tax provision.

Sen. Carl Levin, D-Mich., voted against advancing the bill, saying the tax cuts “would exacerbate a growing trend of income inequality in our country.”

Democrats noted that that new 2-point payroll tax break does little for families earning less than $40,000, who had received an $800 credit under the expiring Making Work Pay provision.

“My stomach’s in a knot,” said Sen. Dianne Feinstein, D-Calif., who voted yes. “It’s far from a perfect bill, but it’s what we have.”

Among Democrats, 10 voted against the package, while five Republicans voted no.