Test vote shows Senate is ready to pass tax-cut plan

McClatchy NewspapersDecember 13, 2010 

WASHINGTON — The Senate voted overwhelmingly Monday to limit debate on the White House/Republican tax-cut deal, a test vote that virtually assures Senate passage in a day or two of the plan to extend Bush-era tax cuts for two years.

Sixty votes were needed to shut off debate, and Monday's vote was 83-15. A final vote is expected Tuesday or Wednesday on the tax-cut compromise crafted by President Barack Obama and congressional Republicans.

Obama, in a brief statement after the Senate outcome became clear, said he understood the uneasy mood on Capitol Hill.

"I recognize that folks on both sides of the political spectrum are unhappy with certain parts of the package. And I understand those concerns. I share some of them," he said.

However, he said, "Taken as a whole, the bill that the Senate will allow to proceed does some very good things for America's economy and the American people."

The plan would continue benefits for the long-term unemployed for 13 months, reduce the Social Security payroll tax by 2 percentage points next year, set a 35 percent tax on estates of $5 million or more, and extend dozens of special tax breaks for businesses, energy and education interests.

Despite the vote, many senators displayed little enthusiasm for the package. Some senators were reluctant to extend the lowered rates for the wealthy, others didn't like extending jobless benefits without paying for them and most were unhappy that the deal would balloon the federal budget deficit.

But the deal ultimately got bipartisan support because without the plan, tax rates would rise for everyone on Jan. 1, unemployment benefits would be denied to 2 million jobless Americans, and the fragile economy might well slip back into recession.

Reluctant Democrats said they most wanted to restore only the pre-Bush rates of 36 percent and 39.6 percent for those earning more than $250,000 a year. Those rates were set to rise from 33 percent and 35 percent on Jan. 1 without congressional action.

"Tax breaks for millionaires and billionaires are not the best way to create jobs," said Senate Finance Committee Chairman Max Baucus, D-Mont.

However, he said that accepting the lower rates for top earners was the price of getting extended aid for the jobless.

"Emergency unemployment benefits particularly help middle-class families," Baucus said. "These are folks with a work history. They lost their jobs through no fault of their own."

The bill's estimated price tag of $857.8 billion over 10 years was too much for Sen. Mark Udall, D-Colo.

"Our apparent inability to squarely address the problem in a bipartisan way is a signal to the American people, as if they needed more proof, that our democracy is not working," he said. "And that is as dangerous as any attack on our country. It is a time bomb in our midst."

Republicans, who long have championed extending all the Bush-era tax rates, voiced some reluctance, too.

"There are parts of this agreement I don't like, such as the Democrats' insistence that we borrow the money we need to pay for a further extension of unemployment insurance," said Senate Republican leader Mitch McConnell of Kentucky. "If both parties agree that the debt is a serious problem, we shouldn't be writing checks that we don't have the money to cover."

The jobless benefits would cost $56.5 billion, according to the nonpartisan Congressional Budget Office, a small fraction of the tax cuts' cost. McConnell, though, argued that the tax cuts would promote fiscal discipline. He called the deal "an essential first step in tackling the debt — because in keeping taxes where they are, we are officially cutting off the spigot . . . As long as more revenue was coming in, (Democrats) would always have an excuse to spend more."

The Senate is expected to consider some changes to the bill, but they're unlikely to pass. Congressional leaders warn that tinkering even slightly with the carefully crafted compromise could make it unravel.

The bigger bump in the plan's path is expected to be the House of Representatives, where rebellious Democrats voted last week against even bringing it up for a vote. Still, it will come up for a vote later this week, and House Majority Leader Steny Hoyer, D-Md., said flatly Monday that, "I think we'll pass a bill."

The suspense is over whether Democrats can add changes, notably to the estate tax provision, added at Republican insistence. Without the provision, the estate tax would rise to 55 percent on estates of more than $1 million, and many Democrats have been pushing for a 45 percent tax.

"There's much consternation in the House about the estate tax. I expect there to be some consideration of that," Hoyer said.

Pressure to leave the bill alone is growing. Obama has been calling lawmakers, and Monday gave interviews to four television stations in Ohio, Colorado, Iowa and Florida. Those states have swing voters, and could be key to Obama's 2012 re-election effort.

The interviews, said White House spokeswoman Amy Brundage, aimed "to communicate with the American people about how this bipartisan agreement will ensure that taxes don't go up on millions of American families at the end of the year."

A new Pew Research Center poll showed that people approve the deal by a nearly 3-to-1 margin; 63 percent of Democrats, 62 percent of Republicans and 60 percent of independents like the compromise.

The poll also showed that liberals support the bill as much as conservative and moderate Democrats. The survey was conducted Dec. 9-12 among 1,011 adults. The agreement was announced on Dec. 6. The error margin for the survey is plus or minus 4 percentage points.

(Margaret Talev contributed to this article.)

ON THE WEB

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