Congress sends tax legislation to White House

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 have 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.

Many Democrats favor an alternative to reduce the amount that can be inherited tax free to $3.5 million, and tax the balance at 45 percent.

Supporters said that, if approved, the change would expose an additional 6,600 estates to taxes in 2011, and the government would collect $23 billion over two years as a result.

Democratic leaders have spent the past few days trying to satisfy liberals inside 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 have left them little maneuvering room, warning they may walk away from their agreement with Obama if the measure is changed.

Nor was the tax bill the only priority that the White House and congressional leaders worked on as the year — and their control of both houses of Congress — neared an end.

Temporary funding for the federal government expires over the weekend, and Democrats want to enact a pork barrel-stuffed spending measure before conservatives take over the House in January.

Obama still hopes to push ratification of a new arms control treaty with Russia through the Senate, and the White House and party leaders seek legislation to let openly gay servicemen and servicewomen remain in the military.

Rep. Peter DeFazio, D-Ore., one of the critics of the Obama-GOP agreement, said it is important for opponents to have the opportunity to vote on alternatives, even if they have no chance of passing.

"This is the last opportunity we have," he said, noting that Congress will soon adjourn for the year and Republicans will control the House in January.

Other tax cuts, enacted in the past decade, include a more generous 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. All would be extended if the legislation passes.

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.

Numerous business tax breaks that are due to expire would also be extended, as would a series of provisions relating to energy taxes.

Among them is the federal subsidy for ethanol, supported by many veteran lawmakers from Midwestern states but targeted for cuts or possible extinction by conservatives who will take office in January.