In a break with gridlock, the Senate voted 83 to 15 Monday to move ahead with a bipartisan deal – first proposed by President Obama and Republican leaders – on extending the Bush tax cuts for two years, including for those in the top income brackets.
The $858 billion measure – which also extends unemployment benefits for 13 months, gives a one-year reduction in Social Security payroll taxes, curbs the alternative minimum tax, and exempts estates up to $5 million from the estate tax – is now on track to pass the Senate early this week.
But it must also clear the House, where the majority Democratic caucus last week declared strong opposition to elements of the package, especially the unexpected fix for the estate tax, now set to revive next year. Instead of the pre-Bush era 55 percent rate for estates valued at over $1 million, the deal proposes a 35 percent rate for estates over $5 million.
While the rift between liberal Democrats and President Obama over the compromise deal has led to heated exchanges, analysts suggest the deal’s popularity with the public will make it difficult for critics to block passage in the House.
Mr. Obama praised the vote Monday as proof that “both parties can, in fact, work together to grow our economy and look out for the American people.” In brief remarks during the Senate vote, he called on the House to act quickly to pass the package in the interest of growing the economy and creating jobs.
Much of the criticism of the deal in both houses of Congress has come from liberal Democrats, who see tax breaks for the wealthiest Americans as a violation of campaign pledges to focus tax relief on the middle class.
In the Senate, Bernard Sanders (I) of Vermont held the floor for more than eight hours on Friday in opposition to the bill. At issue, he said, is “whether we continue the process by which the richest people in this country become richer, at a time when we have the most unequal distribution of income and wealth of any major country on earth.”
Nine Democrats – but none of the top Democratic leaders – joined Sanders in opposing Monday’s procedural vote on the tax deal. These included: Sens. Jeff Bingaman of New Mexico, Sherrod Brown of Ohio, Russ Feingold of Wisconsin, Kirsten Gillibrand of New York, Kay Hagan of North Carolina, Frank Lautenberg of New Jersey, Patrick Leahy of Vermont, Carl Levin of Michigan, and Mark Udall of Colorado.
House majority leader Steny Hoyer (D) of Maryland said that he expects the House to consider revisions to the estate tax, when the bill hits the House floor, as early as Wednesday. “There's much consternation in the House about the estate tax,” he said, responding to questions after a speech at the Press Club today. “I know a number of us believe that there is a compromise available, but we'll have to see where the votes lie,” he added.
But in a statement after the vote, Senate Republican leader Mitch McConnell of Kentucky said that if the House opts to make “partisan changes” in the bill, “they will ensure that every American taxpayer will see a job-killing tax hike on January 1st .”
Tension between Obama and his base in the Congress has been simmering for some time, especially after losses sustained in the Nov. 2 election. Another issue that makes the tax deal especially toxic for many party liberals is that it compromises on an issue for which Democrats felt they had strong public support: no tax cuts for millionaires.
“The liberal base realized they were at a disadvantage on health care with the public as a whole. The one issue where they believed they had traction was tax cuts for millionaires. To see it fall apart this way – and the president seem to cave – created a lot of heartburn,” says Norman Ornstein, a resident scholar at the American Enterprise Institute in Washington.
“But if this deal went down it would be a real disaster for them, especially as we’re seeing poll after poll that show that 60 to 70 percent of Americans like this deal. If it goes down – and it’s blamed on petulant Democrats, what could be worse?” he adds.
But conservatives, too, had strong concerns about voting for a tax deal with billions in additional spending that were not offset. “We’re digging the hole deeper,” said Sen. Tom Coburn (R) of Oklahoma, after the vote.
Four other Republicans joined Coburn in opposing the vote. These included Sens. John Ensign of Nevada and George Voinovich of Ohio, who will not be returning in the 112th Congress; and Sens. Jim DeMint of South Carolina and Jeff Sessions of Alabama.
Other conservatives who voted for the bill said they expect strong measures on cutting the deficit and entitlement spending this spring, when Congress must vote on extending the national debt limit. “This was a painful vote for me,” said Sen. Bob Corker (R) of Tennessee, who voted for the measure. But he says that the upcoming vote on the debt is going to require Congress to pass “stringent measures on the deficit” this spring. “Having this vote so close was a great solace,” he added.