House passes bipartisan tax cut deal, first of Obama administration
Though many House Democrats balked at extending Bush-era tax cuts, House lawmakers late Thursday approved the $858 billion tax cut deal intact, with 139 Democrats and 138 Republicans.
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Senate Republican leader Mitch McConnell threatened to scuttle the deal if the House altered the package.Skip to next paragraph
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“I’m going to vote for this bill because I do think it helps the economy, but we’re paying too great a price for it,” said majority leader Steny Hoyer (D) of Maryland. “There’s probably nobody on this floor who likes this bill. The question is: Is it better than doing nothing?” Business groups like this bill, he added. “I hope they now go on and create the jobs,” said Mr. Hoyer.
The measure helps investors and businesses, including allowing companies to write off 100 percent of capital investments for a year. It maintains the popular research-and-development tax credit of the Bush era. It also extends the refundable earned-income tax credit, as well as college tuition and child tax credits for two years and reins in the scope of the alternative minimum tax, indexed for the first time for inflation.
It also resets rates for the estate tax at 35 percent and exempts inherited wealth up to $10 million for couples, down from the 55 percent rate and $1 million exemption set to take effect on Jan. 1. Opposition to this feature of the bill was so intense in Democratic ranks that leaders were forced to suspend floor debate to regroup.
With this year’s federal deficit standing at $1.4 trillion, the tax-cut legislation is all paid for with borrowed money – an outcome that pushed 36 Republicans to vote against the package, though it reflected many of their values on tax issues.
“I don’t like this measure that is before us, but I like even less the idea of our imposing a tax increase on every single American who pays their income taxes,” said Rep. David Dreier (R) of California, the top Republican on the Rules Committee. “Unemployment benefits are extended without being paid for, but we are in the midst of a very fragile economic recovery.
“Beginning January, we are going to focus on cutting spending,” he added. “We are determined to focus on that. That’s why it is imperative to today recognize that the issue before us is going to be helpful in dealing with job creation and economic growth.”
Democrats, too, often commented on the battles ahead set in motion by this deal, especially over looming cuts to entitlements such as Social Security. “This bill will take $114 billion out of Social Security, helping [Republicans] to make the case in a self-fulfilling prophecy that we can’t pay for the things that we want,” said Rep. Barney Frank (D) of Massachusetts, who chairs the House Finance Committee.
In the end, the package passed 277 to 148, with 112 Democrats and 36 Republicans voting no. The Senate approved the bill earlier this week, 81 to 19.