Taking a major step toward staving off the largest tax increase in history, the Senate voted overwhelmingly Wednesday to pass the tax cut compromise deal President Obama and congressional Republicans struck last week.
The House, where lawmakers are more divided over the measure, is expected to vote Thursday. But the Senate's strong 81-19 vote, combined with yet another plea from Mr. Obama, could help push the measure over the finish line with wavering Democrats.
"I am absolutely convinced that this tax cut plan, while not perfect, will help grow our economy and create jobs in the private sector," Mr. Obama said Wednesday morning. "We worked hard to negotiations an agreement that's a win for middle-class families and a win for our economy, and we can't let it fall victim to either delay or defeat."
If Congress stalemates over the tax cut, Republicans said the resulting tax increases would total $3.8 trillion over 10 years. The lower tax rates, first passed under President George W. Bush, will expire on January 1 if Congress fails to act.
The deal Mr. Obama and Republicans struck would extend for another two years the income tax rates under the Bush-era tax cuts; would extend unemployment benefits for the long-term jobless; would re-establish the lapsed estate tax at a rate of 35 percent on estates worth more than $5 million for an individual or $10 million for a couple; and would give a short-term payroll tax cut to all workers.
Lawmakers and Mr. Obama reached the deal after a Republican-led filibuster blocked his preferred option of raising income tax rates only for higher-income earners. By contrast, Wednesday's vote was an impressive show of bipartisanship.
"Whether you agree with all the contents or not, everybody should understand this is one of the major accomplishments of any Congress," said Senate Majority Leader Harry Reid, Nevada Democrat.
The bill was opposed by liberal Democrats, who didn't like the tax cuts for high-income taxpayers, and some conservative Republicans, who wanted to see the new unemployment spending paid for.
But the Senate voted 52-47 to block Sen. Tom Coburn's attempt to pay for the new spending through offsetting cuts elsewhere in the federal budget.
Mr. Coburn's amendment would have cut programs that Mr. Obama has already identified as wasteful, or that the independent deficit commission said should be axed.
It also would have insisted that millionaires not be allowed to collect unemployment benefits. Bloomberg News reported earlier this year that the government paid out nearly $20 million in 2008 on unemployment benefits to taxpayers whose annual incomes had topped $1 million.
The Senate also rejected two other changes: South Carolina Republican Sen. Jim DeMint's proposal to make all the tax cuts permanent, rather than the two-year extension and estate tax rewrite included in the bill; and Vermont independent Sen. Bernard Sanders's proposal to let tax rates rise for upper-income taxpayers and to impose a higher estate tax.
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