Tax-Cut Package Passes Crucial Senate Test

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The New York Times
By: David M. Herszenhorn
December 13, 2010

WASHINGTON -- With robust bipartisan support, the Senate on Monday advanced the tax-cut package negotiated by President Obama and Congressional Republicans, increasing pressure on House Democrats to set aside their opposition.

The vote, to cut off debate and end any filibuster, assured that the Senate would approve the $858 billion package on Tuesday and send it to the House, where Democrats are still demanding changes to a provision granting a generous tax exemption to wealthy estates.

The Senate vote was 83 to 15, with 45 Democrats and 37 Republicans in favor. Opposed were nine Democrats, five Republicans and Senator Bernard Sanders, independent of Vermont.

Many Democrats had initially reacted furiously to the plan, but the rage seems to have yielded to resignation. Even House Democrats who remain opposed to the deal say they expect it to be approved within days, though they are still weighing plans to force votes on proposals to impose a steeper federal tax on large estates.

In a brief appearance in the White House briefing room, Mr. Obama did not directly address the desire of House Democrats for changes, and urged them to pass the legislation quickly, saying it would help create jobs while helping the middle class.

For Mr. Obama, the Senate vote offered affirmation that his administration had made the most of what seemed to be a rough political predicament, in which it was forced to negotiate a tax agreement with the Bush-era tax cuts set to expire at the end of the month and Congressional Republicans empowered by their big victory in the midterm elections.

"This proves that both parties can in fact work together to grow our economy and look out for the American people," Mr. Obama said.

The agreement would extend all of the Bush-era tax rates, even on the highest incomes, maintain the reduced rate of 15 percent on capital gains and dividends and set new estate tax parameters, all for the next two years.

The bill would also keep jobless aid flowing to the long-term unemployed for an additional 13 months, provide a one-year payroll tax cut to most American workers and continue an array of other tax breaks for individuals and businesses intended to help the economy.

Mr. Obama said he understood that there were lawmakers unhappy with parts of the plan on both sides of the aisle, and he and his aides have made clear in recent days that he still fiercely disagrees with the Republicans over extending the lower tax rates on annual incomes above $250,000 per couple or $200,000 per individual.

Senator Mitch McConnell of Kentucky, the Republican minority leader, said that he, too, was unhappy with aspects of the deal, including the provision to continue jobless benefits for the long-term unemployed without offsetting the $56.5 billion cost with spending cuts elsewhere. But Mr. McConnell praised the overall agreement and insisted that by cutting taxes it would force Democrats to restrain spending.

"This bipartisan compromise represents an essential first step in tackling the debt -- because in keeping taxes where they are, we are officially cutting off the spigot," Mr. McConnell said in a floor speech. "And until we did that, Democrats in Washington were never going to be serious about cutting spending or debt. As long as more revenue was coming in, they would always have an excuse to spend more."

Senator Sheldon Whitehouse, Democrat of Rhode Island, said he decided to back the plan because of the provision on jobless aid, which will maintain extended limits that now range from 60 weeks in states with less than 6 percent joblessness to 99 weeks in states where the unemployment rate is more than 8.5 percent.

"Today I voted in favor of badly needed relief for Rhode Islanders struggling in this tough economy," Mr. Whitehouse said in a statement.

The senators who voted against the plan included Democrats who said it did not do enough for the middle class and Republicans who said they worried that the plan would vastly increase the deficit.

House Democrats seem intent on making an effort to change the estate tax language in the bill, which would set an exemption of $5 million per person and a maximum rate of 35 percent for two years.

They would prefer an estate tax provision with parameters that were in place in 2009 -- an exemption of $3.5 million per person and a maximum rate of 45 percent.

Aides said one possibility would be to propose the change as an amendment.

But even if Democrats succeed in approving a change to the estate tax provision in the House version of the bill, the Senate is virtually certain to reject it.

Senate Republicans strongly support the estate tax provision agreed to by the White House, and some Democrats also favor it, including Senator Blanche Lincoln of Arkansas, who has previously co-sponsored similar legislation on it.

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