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Tax-cut deal clears big hurdle in Senate

Showdown set in the House

- The Washington Times - Monday, December 13, 2010

In an overwhelming bipartisan vote, the Senate on Monday cleared a path for the tax-cut deal President Obama struck with congressional Republicans last week, with even former staunch opponents of the Bush-era tax cuts voting for their extension.

The 83-15 vote ends a filibuster attempt by liberal Democrats and gives a boost to the deal ahead of an expected showdown in the House this week, where Democratic leaders have said they will try to alter the $857 billion package.

"This proves that both parties can, in fact, work together to grow our economy and look out for the American people," said Mr. Obama, who staked his ability to deal with the newly ascendent Republicans on this battle. He urged House lawmakers to follow the Senate's lead and approve the package quickly.

If Congress fails to act, taxes will go up across the board Jan. 1. If Congress passes the Obama-GOP deal, it will benefit many taxpayers, thanks to a short-term payroll-tax cut.

The Senate will hold a final vote this week, but action now shifts to the House, where Democratic leaders are wrestling with rank-and-file members who are enraged over the deal. Last week, House Democrats held a nonbinding caucus vote to urge their leaders not to bring the deal to the floor as written.

"There certainly seems to me to be some room for a change," House Majority Leader Steny H. Hoyer, Maryland Democrat, said Monday morning.

The Senate outcome seemed set after a Republican-led filibuster earlier this month blocked Mr. Obama's preferred plan of extending the tax cuts only for individuals making less than $200,000 a year and couples making less than $250,000.

Two days after that filibuster, the president and congressional Republicans reached agreement on the framework for the deal that the Senate is now considering.

It would extend the Bush income-tax cuts for another two years, would establish an estate tax of 35 percent for inherited wealth above a $5 million threshold, would include Mr. Obama's proposed payroll-tax cut and would extend unemployment benefits for 13 months.

"This bill is about stopping the biggest tax increase in the history of the country," said Sen. Charles E. Grassley, Iowa Republican.

But other lawmakers said the price tag — $857 billion in deeper deficits over the next several years — is too steep at a time when the debt is already nearing $14 trillion and the government's annual deficit has topped $1 trillion for the past two years.

"I will not, after working my butt off from the day I got here to address a broken tax and entitlement system, have one of my final votes as a United States senator be to kick the can down the road by extending these tax provisions," said Sen. George V. Voinovich, Ohio Republican.

He joined four other Republicans, nine Democrats and independent Sen. Bernard Sanders of Vermont in voting to block the bill.

House Democrats said they will try to alter the estate-tax provisions, returning them to the 2009 level of 45 percent, with the first $3.5 million of individual estates ($7 million of couples') exempt from taxation. Under the Bush tax cuts, the estate tax is zero in 2010, meaning both parties are advocating a higher rate, but wrangling over just how high.

Supporting the tax-cut extension was a major switch for some lawmakers, including Sen. John Kerry, Massachusetts Democrat, who in 2004 campaigned for president on trying to undo some of the cuts.

"Is it the deal I wanted? No. But the reality is, we don't have 60 senators who oppose the Bush tax policies the way I do," Mr. Kerry said. "This compromise provides many critical benefits for middle-class folks that we've been fighting for and haven't been able to win any other way."

While saying he doesn't agree with all elements of the deal, Mr. Obama has steadfastly defended the agreement against criticism from his own party that it concedes too much to Republicans.

Numbers from the Center on Budget and Policy Priorities suggest that while the sides agree on most of the elements in the package, the president struck a good deal for his priorities when judged by dollar value. CBPP said the high-income and high-level estate-tax cuts Republicans secured total $129 billion, while the tax credits, payroll-tax cut and 13-month extension of unemployment benefits sought by Mr. Obama are worth $213 billion.

Mr. Obama's top economic adviser, Lawrence H. Summers, in a final major speech before he leaves the White House at the end of the year, said the deal will help stave off another crippling economic downturn.

He said the deal "averts what could have been a serious collapse in purchasing power."

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