House OKs tax-cut compromise

  • Article by: DAVID ESPO , Associated Press
  • Updated: December 16, 2010 - 11:21 PM

Democrats were given a chance to vote on changes to the bill's estate-tax provisions, but that was rejected.

WASHINGTON - The House on Thursday night approved sweeping, bipartisan legislation to avoid a Jan. 1 spike in income taxes for millions and renew jobless benefits for victims of the worst recession in 80 years.

The measure also will cut Social Security taxes for nearly every wage earner and pump billions of dollars into the still-sluggish economy.

The legislation was the result of a reach across party lines by President Obama and Republican leaders in Congress -- stubborn adversaries during two years of political combat that took a turn when the GOP emerged the winner in midterm elections on Nov. 2.

The vote was 277-148, with 112 Democrats and 36 Republicans opposed.

After forcing a delay in the House early in the day, Democratic critics settled for a separate vote in their bid to roll back an estate-tax provision they attacked as a giveaway to the very rich. That measure was rejected.

"The president will be able to sign it as soon as he likes," said Rep. Rob Andrews, D-N.J., who added later on the House floor he would support "an imperfect bill" in hopes of stimulating job creation.

The Senate passed the legislation 81-19 on Wednesday.

'Pay the ransom'

House Republicans, who will move into powerful posts when the GOP takes control in January, urged passage of the bill.

Rep. Eric Cantor of Virginia, in line to become majority leader, said the measure, while not perfect, marked a "first step" toward economic recovery.

Largely marginalized in the negotiations leading to the bill, Democrats emphasized their unhappiness with Obama.

"We stand today with only one choice: Pay the ransom now or pay more ransom later," said Rep. Brad Sherman of California. "This is not a place Democrats want to be. But, ultimately, it is better to pay the ransom today than to watch the president pay even more, and I think he'd be willing to pay a bit more next month."

Rep. Elijah Cummings, D-Md., said the White House "could have gotten a better deal."

Policy differences aside, the legislation stood on the brink of enactment an astonishingly quick 10 days after the president announced at the White House he had agreed on a framework with Republicans.

With the economy performing poorly and a year-end tax increase looming, there were none of the customary congressional hearings that normally precede debate on major legislation.

Extending tax cuts

The bill provides a two-year extension of tax cuts enacted when George W. Bush was president, avoiding an increase at all income levels that would otherwise occur on New Year's Day.

It would also renew an expiring program of benefits for the long-term unemployed, and enact a reduction in Social Security taxes for 2011 that would amount to $1,000 for an individual earning $50,000 a year. The bill's cost, $858 billion over two years, would be tacked on to the federal deficit, a sore spot with deficit hawks in both parties.

Obama urged the House to approved the measure unchanged, calling the bill a good compromise with Republicans that would help the economy recover from the worst recession in decades.

But his pleas failed to satisfy critics in the House who adamantly opposed a provision that would allow $5 million of each spouse's estate to pass to heirs without taxation, with the balance subjected to a 35 percent rate.

Democratic leaders spent the past few days trying to satisfy liberals in the party who wanted to kill -- or at least change -- the bill, without running the risk of having taxes rise for millions on Jan. 1.

Republicans left them little maneuvering room, warning they might walk away from their agreement with Obama if the measure was changed.

The bill also would extend other tax cuts, enacted in the past decade, including a child tax credit, breaks for college students, lower taxes on capital gains and dividends and a series of business tax breaks designed to encourage investment. The jobless benefits that would be renewed would go to individuals who have been laid off more than 26 weeks but less than 99. Checks average about $300 a week.

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