Big Obama-GOP tax bill passes first Senate hurdle

By David Espo

Associated Press

Published: Monday, Dec. 13 2010 12:00 a.m. MST

In this image provided by CBS, White House Senior Advisor David Axelrod talks about tax cuts on CBS's Face the Nation in Washington Sunday.

CBS, Associated Press

WASHINGTON — Far-reaching legislation to avert a Jan. 1 income-tax increase for millions won overwhelming support in a Senate test vote on Monday, propelled by an uneasy and unusual alliance between the White House and lawmakers in both parties.

Eager to trumpet the 83-15 vote, President Barack Obama said even before it was announced it proved "that both parties can in fact work together to grow our economy and look out for the American people."

Senate passage of the bill is expected as early as today, and in a brief appearance at the White House, Obama called on the House to follow suit quickly. He spoke amid indications that a revolt among House Democratic liberals was ebbing, further improving prospects for quick enactment.

The legislation would provide a two-year reprieve in the tax increases scheduled to take effect on Jan. 1 at all income levels, reduce Social Security taxes for every wage earner in 2011 and extend an expiring program of jobless benefits for the long-term unemployed.

It also includes a scaled back estate tax that Republicans support and has become a source of Democrats' discontent. The bill's overall cost, estimated at $858 billion over two years, would be added to already huge federal deficits.

The legislation presents a postelection reach across party lines after two years of gridlock. Republicans wanted a permanent extension of all the tax cuts enacted when George W. Bush was president, while Democrats insisted rates be permitted to rise on incomes over $200,000 for individuals and $250,000 for couples.

In his remarks, Obama gave no indication he was willing to accept further changes to the plan he negotiated with senior Republicans.

"I understand those concerns," he said of objections from some of his usual allies in Congress. "I share some of them. But that's the nature of compromise, sacrificing something that each of us cares about to move forward on what matters to all of us."

The remarks were directed largely at Democratic critics who last week vowed to prevent the bill from coming to the floor unless it was changed to scale back the billions in relief ticketed to the wealthy.

But with lawmakers eager to adjourn for the year, officials said that demand appeared to be fading. Under discussion is an alternative approach that would bring the bill up for debate as drafted, with opponents of the estate tax provision given a chance to change it if they can gain the necessary votes.

Despite strong criticism from fellow Democrats, Obama has made passage of the bill a key year-end priority, calling it essential for the economy as it struggles to recover from the worst recession in decades.

The Senate vote was never in doubt, and the total was well above the 60 needed for the legislation to advance. Nine Democrats and five Republicans voted to block the bill, as did Sen. Bernie Sanders, a Vermont independent.

McConnell cited "the Democrats' insistence that we borrow the money we need to pay for a further extension of unemployment insurance. In my view, 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."

Sen. John McCain, R-Ariz., highlighted a series of energy tax breaks added to the bill late last week, including an extension of the federal subsidy for ethanol.

Baucus singled out the decision to leave tax rates unchanged on upper income earners.In fact, even supporters of the bill were at pains to point out parts they found objectionable.

On the other end of the political spectrum, some conservatives have spoken out against the bill, saying that the renewal of jobless benefits should be offset by spending cuts elsewhere in the budget.

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