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Tax-Cut Compromise Clears Senate Hurdle; Vote Expected This Week

3 years ago
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Despite the objections of liberals and some conservatives, the Senate voted 83 to 15 Monday to begin the final debate on the tax-cut compromise struck between President Obama and Republican leaders last week. Among the coalition to vote no were liberal Sens. Russ Feingold (D-Wis.), Bernie Sanders (I-Vt.), and Sherrod Brown (D-Ohio), as well as conservative Republican Sens. Jim DeMint of South Carolina, Oklahoma's Tom Coburn and John Ensign of Nevada.

On the table was the legislation that Senate Majority Leader Harry Reid released late Thursday night, a massive package of extensions, cuts and increases to 2010 tax rates. As the president outlined last week, the bulk of the bill is dedicated to extending the expiring Bush tax cuts for all income levels for the next two years.

Monday evening, President Obama met briefly with reporters, taking no questions but urging the House to act quickly on the package.

In addition to extending the tax cuts, the deal also temporarily cuts the 6.2 percent payroll tax to 4.2 percent for all workers and extends unemployment benefits for 13 months for Americans out of work up to 99 weeks. Most objectionable to liberal Democrats, the bill also sets the estate tax at 35 percent for estates valued at more than $5 million, well below the 45 percent rate on estates over $3.5 million that most Democrats had been pushing for.

Senate Minority Leader Mitch McConnell negotiated the package with President Obama last week and called it a step in the right direction, but only a first step. He also explained to senators Monday afternoon that the vote was just the beginning of a Republican effort to shrink the size of the federal government.

"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. And until we did that, Democrats in Washington were never going to be serious about cutting spending or debt," McConnell said.

Sen. Max Baucus, chairman of the Senate Finance Committee, led a group of moderate Democrats who also voted for the bill, despite what they said were misgivings about the deal, out of worry that a lengthy standoff with Republicans would end up raising taxes on the middle class in January.

"While I strongly prefer acting in a way that focuses on the middle class, that focuses on creating jobs, and that gets us the most bang for our buck, inaction is not an option," Baucus said.

The bulk of the opposition to the compromise came from liberals, including Sen. Bernie Sanders, who has argued for a week that softening the effects of the estate tax and continuing the Bush tax cuts for the wealthy would be blatantly unfair.

Colorado's Sen. Udall also voted against the bill, but said his chief concern is over the effect the $900 billion in lost tax revenue will have on the ballooning deficit. Before the vote, he slammed the "irresponsible tax deal for wealthy Americans" and called the entire package "a step too far."

"I feel like we're operating in some kind of a parallel universe," he said.

Many of those who voted for the bill on Monday voiced their opposition to parts of it before supporting it. Sen. John McCain complained about the dozens of tax credits tacked onto the bill, which he called "unneeded, unnecessary, unwanted sweeteners."

"These credits are a form of special interest spending in the tax code, which is precisely the sort of business-as-usual behavior that Republicans told tea party voters they would not engage in," McCain said. "I'll vote for it, but it's not what the people said they wanted on Nov. 2nd."

Now that the Senate has voted to end debate, Senate Majority Leader Reid will schedule a final vote on the measure later this week, when senators are expected to approve it overwhelmingly. The it will head to the House of Representatives, where the bill will get a big dose of liberal opposition.

"I think the entire House of Representatives on the Democratic side has said we're not going for this deal," Rep. Anthony Weiner (D-N.Y.) said on NBC's "Meet the Press." "We're going to change this and hopefully the president's going to back us up as we try to take out the worst things that are in it."

Despite a clear message from Vice President Joe Biden to House Democrats last week that the compromise will not be changed, Speaker Nancy Pelosi defiantly indicated Thursday that she and her caucus are still working to modify the deal. She also said she had no immediate plans to bring the bill to the House floor until it's more palatable to her caucus.

House Majority Leader Steny Hoyer acknowledged the hostility to the package from some members of his caucus on Monday, but he told reporters at the National Press Club that passing the bill is probably inevitable. He would not, however, commit to passing a bill identical to the Senate-approved version.

"I think we're going to have a vote on the Senate bill, with possible changes," Hoyer said. "We may have it with amendments. We'll see what the process is," he said. "I think we will pass a bill."

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Tim

Person A Salary: $249,000
Person B Salary: $250,000

Person A Tax Rate: 10%, $24,900
Person B Tax Rate: 25%, $62,500

Person A Net Salary: $224,100
Person B Net Salary: $187,500

Let's cut taxes to a minimum, create a flat tax, and make it permanent.

December 22 2010 at 9:35 AM Report abuse rate up rate down Reply
John Vilvens

Democrats holding the tax cuts hostage?

December 15 2010 at 9:25 AM Report abuse +1 rate up rate down Reply
gaspartx

The two-party system isn't working. It is absolutely crazy for us to borrow another $1 TRILLION dollars from China to pay for this. Americans should demand that spending cuts of $1 TRILLION go immediately into effect. Start by getting the hell out of Iraq, Afghanistan and Pakistan.

December 14 2010 at 5:44 PM Report abuse rate up rate down Reply
cmdrmom2

Any government with the power to take away 90% of a person's income, no matter what the amount, is a government that needs to get the heck gone.

December 14 2010 at 4:35 PM Report abuse +2 rate up rate down Reply
fromthisdesk

I read a comment here that Democrats oppose on matter of principle and morality any extension of tax cuts for our wealthier Americans...As a non-wealthy American I should be on board with these types of comments but find it hard to follow that direction when it is the American way to work hard with the intent of bettering your families lives. To stifle this American dream by diminishing their accomplishments and taking away their gains just doesn't sit well. With any luck, my hard work will reward me with something better than someone trying to get into my pocket to fund someone else's life failure. My thoughts - instead of even discussing the raising of taxes let's discuss - raising retirement age, tariff inequities, size of government, replacement of pensions with 401k's. Tax and spend policies never have and never will work.

December 14 2010 at 9:52 AM Report abuse +7 rate up rate down Reply
1 reply to fromthisdesk's comment
Kenneth

The only jobs government spending has created are government jobs.Government interference with free trade in the private sector has always created a negative to our economy and job growth. Common sense labor is the only expense a company can control to maintain a profitable status.

December 14 2010 at 10:57 AM Report abuse +5 rate up rate down Reply
bopaan

First off there are NO TAX CUTS. The bill is only extending the existing tax rates. In my opinion all the rates should be extended permanently. The federal government has more then enough revenues to run this Country and giving them any more money just encourages them to spend more. They have already spent trillions by taking from hardworking Americans and giving to non productive people and corporate welfare. This bill extends unemployment benefits, which has the perverse effect of subsidizing unemployment keeping it high. The deal is also filled with all sorts of corrupt provisions for various interest groups such as ethanol producers.
I think it is amazing Obama and the Dems promised no new taxes on the middle class yet so far they have passed $357 billion in new taxes on the middle class(excise taxes new tax's on healthcare etc...) and if they don't extend the tax rates, the middle class will see billions more in higher taxes. Raising taxes on the wealthy would not even pay the interest on our loans from China. Besides the wealthy already pay the majority of tax revenue and much higher tax rates then the middle class. I'd rather see Congress simplify the tax code with a flat tax and save billion by eliminating the IRS. Instead we will have a even more complicated tax code and under Obamacare a vast expansion of the IRS. As far as Estate tax I believe it is your lifes savings that you paid taxes on for an average of 50 or 60 years you have the right to leave it to whoever you want and no more tax should fall upon it. Congress loves to tax everything. Ask yourself why should there be an extra federal tax on fuel, tobacco, liquor, telephone, airline tickets, etc... We pay income, payrole,taxes on interest, dividends, taxes, taxes taxes. How much more do you want to give them to waste? Personally if they can balance the budget and cut the waste fraud and abuse, simplify the tax code, cut out corporate welfare, cut inefficient programs why do they deserve one more dime.

December 14 2010 at 9:43 AM Report abuse +3 rate up rate down Reply
dalwsman

It seems to me Congress needs to grow up and face the problems at hand. We cant spend more than we take in We dont even own our own country anymore as we have borrowed from the world and soon they will say pay us and when we cant ..... so long USA

December 14 2010 at 9:27 AM Report abuse +2 rate up rate down Reply
1 reply to dalwsman's comment
Kenneth

I agree they need to stop spending as for your comment that we do not own our own country is stupid. My name is still on my deed and their are no liens registered from china. The point the people and businesses own this country. We are not in debt our government is. If China wants to call in the loan we can put all the politicians on a boat and ship them their . Let them deal with the fools plus then the loan is paid in full. I did not guarantee the loan they did.

December 14 2010 at 9:51 AM Report abuse rate up rate down Reply
HOW MAY WE SERVE

why do the rich hide their money? In the 1930s the highest bracket was 90%.As late as 1979 it was 78%. If you live New York with the city tax and state tax you are paying over 50% with the federal tax.People will not hand over more than half their
money without a fight.

December 14 2010 at 8:59 AM Report abuse rate up rate down Reply
GEORGE

Now this tax plan most likely will pass even if it creates more government debt.. Nothing was said about the many tax loopholes business and investors use that should be ended. Democrats would gain back some respect if they brought these tax loopholes to the publics attention and ended them.

See full article from DailyFinance: http://srph.it/f1GhuL

December 14 2010 at 8:36 AM Report abuse +1 rate up rate down Reply
GEORGE

Now this tax plan most likely will pass even if it creates more government debt.. Nothing was said about the many tax loopholes business and investors use that should be ended. Democrats would gain back some respect if they brought these tax loopholes to the publics attention and ended them.

See full article from DailyFinance: http://srph.it/f1GhuL

December 14 2010 at 8:35 AM Report abuse rate up rate down Reply

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