Middle-Class Tax Cuts Preserved For A Year In Bill Passed By Senate (UPDATE)

Senate Passes Bill To Preserve Middle Class Tax Cuts

WASHINGTON -- Senators blinked in the political standoff over how much of the Bush-era tax cuts to extend for another year and voted Wednesday to keep current rates for people with incomes of less than $250,000.

Tax rates would rise by 4 percent on incomes above $250,000 for couples and $200,000 for single filers. Popular breaks like the child tax credit would be preserved.

The extension, passed on a vote of 51 to 48, represents a short-term win, at least, for President Barack Obama, who has been pushing for a similar plan. But it appeared unlikely that the House would embrace a similar measure before the election, having proposed its own bill to extend all the Bush-era cuts. The House hasn't proposed extending Obama's breaks for millions of middle-class families.

Democrats estimated the GOP version would add an extra $155 billion to the deficit. They also argued that the GOP plan raises taxes on some 25 million Americans by not renewing the child tax credit, the earned income tax credit and a college tuition break.

The GOP version failed in the Senate, 45 to 54, with GOP Sens. Scott Brown (Mass.) and Susan Collins (Maine) against it, and Democratic Sen. Mark Pryor (Ark.) voting for it.

Senate Minority Leader Mitch McConnell (R-Ky.) slammed the votes, saying they represented an irresponsible attack on the weak economy.

"Here's the Democratic plan for the economy: We'll get this thing going again; we'll get it going again by raising taxes," McConnell said. "Let us create the jobs, instead of small businesses out in America."

He also picked up on Obama's recent "you didn't build that" argument, taken out of context, that successful business owners didn't build the nation's infrastructure that supports those businesses. "This is the legislative equivalent of 'you didn't build that,'" McConnell said. "You are not responsible for your success. Washington is. So give us your money and we'll handle for you. That's their tax plan."

But Democrats argued that the Bush-era tax rates coincided with an economy that collapsed at the end of George W. Bush's presidency, which showed some of the weakest job growth in modern history. And they said the GOP tax plan would be another giveaway to the wealthy, while taking away middle-class breaks.

"The wealthiest taxpayers in America would get back $160,000 a year from the Republican tax plan," said Sen. Barbara Boxer (D-Calif.), chiding McConnell that his suggestion to "do no harm" for a year was not a sensible middle ground, considering the cost.

"It's not a compromise," Boxer said. "It's going right back to the problems that led us to this in the first place."

The House is expected to vote on its bill next week. Although revenue measures are supposed to start in the House, Democrats said they should take up the Senate plan, rather than raise a so-called "blue slip" procedural block.

The Senate vote was by a rare simple majority, which Sen. Chuck Schumer (D-N.Y.) said McConnell allowed because it was the only way he would get a vote on the GOP plan, and his caucus didn't want to be stuck only voting "no" on the Democratic plan.

Schumer suggested the political reality of needing to back the middle class would prompt action by House Speaker John Boehner (R-Ohio).

"I am sure that Speaker Boehner does not appreciate the uncomfortable position that Sen. McConnell has put him in," Schumer said. "The speaker knows that if he puts this bill on the floor, his members will have trouble voting against it."

Schumer argued that Congress has already passed two revenue bills that started in the Senate -- the recent highway and Federal Aviation Administration bills.

He also suggested the politics would be good for Democrats if the GOP balks.

"If House Republicans insist on blocking our middle class tax cuts ... that is a debate we are willing to have," Schumer said. "Democrats will be happy to bring this argument to the American people and ask them whether they think obscure procedural rules are reason enough to let over 100 million families face a tax hike of $1,600 next year," he said, referring to what happens if the cuts expire, as they are scheduled to in 2013.

UPDATE: 6:03 p.m. --


Boehner signaled that he would not go along with Schumer's suggestions.

“Here in the House, where tax legislation originates under the Constitution, we're going to vote to stop the tax hike. That much is clear," Boehner said in a statement. "The only questions are these: How many House Democrats are going to side with [Minority] Leader [Nancy] Pelosi and President Obama and vote against stopping a small business tax hike that will cost 700,000 American jobs? Will any House Democrat offer the president's tax hike proposal as an amendment, so that it can be brought to a vote?"

UPDATE: 6:25 p.m. --

The Senate vote means "House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98 percent of Americans and nearly every small business owner," Obama said in a statement. He continued:

"The last thing a typical middle-class family can afford is a $2,200 tax hike at the beginning of next year. It’s time for House Republicans to drop their demand for another $1 trillion giveaway to the wealthiest Americans and give our families and small businesses the financial security and certainty that they need. Our economy isn’t built from the top-down, it’s built from a strong and growing middle class, and that’s who we should be fighting for."

Michael McAuliff covers Congress and politics for The Huffington Post. Talk to him on Facebook.

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