THE US Senate yesterday passed President Barack Obama’s controversial tax deal with the Republicans by a wide margin, opening the way for a rapid vote in the House.
The Senate voted 81 to 19 to enact the short, 74-page piece of legislation, which raised an outcry among liberal Democrats when its contents were announced at the beginning of last week.
The Bill is expected to pass in the House, despite vociferous opposition by liberal Democrats and up to 20 Republican Representatives. It will extend tax cuts first made by President George W Bush in 2001 for another two years, prolong long-term unemployment benefits for 13 months and reduce the payroll tax paid by workers. It will also establish a more lenient estate tax than wished by Democrats.
Speaking before the vote on the $858 billion (€648 billion)package, Mr Obama admitted the tax cut plan was “not perfect” but predicted it “will help grow our economy and create jobs”.
Independent Senator Bernie Sanders earlier called the Bill “a moral outrage” because it continues tax cuts for the richest Americans.
Liberal opponents of the Bill have made strange bedfellows with a growing number of conservative Republicans who are surprisingly frank about their fears that the Bill could help Mr Obama gain re-election in 2012.
“The package will add as much as 1 per cent to GDP and lower the unemployment rate by about 1.5 percentage points,” the conservative columnist Charles Krauthammer predicted in an article entitled “Swindle of the Year”.
“That could easily be the difference between victory and defeat in 2012.”
Mr Krauthammer said the deal amounted to a second stimulus package. “It will pump a trillion borrowed Chinese dollars into the economy over the next two years – which just happen to be the two years of the run-up to the next presidential election,” he wrote.
Conservative objections to the deal have been a godsend to Mr Obama. Former president Bill Clinton and the outgoing House majority leader Steny Hoyer both quoted Mr Krauthammer’s article as proof the president did the right thing.
Die-hard Republicans would have preferred to allow the Bush-era tax cuts to expire on December 31st, then pass a permanent extension when the new Republican majority convenes in the House in January.
The GOP presidential hopefuls Mitt Romney and Mike Pence are prominent opponents of the deal. Mr Romney, a former governor of Massachusetts, wrote in USA Today: “Given the unambiguous message that the American people sent to Washington [in midterm elections] in November, it is difficult to understand how our political leaders could have reached such a disappointing agreement.”
Passage of the two-year extension makes it likely the cuts will become permanent, but Mr Romney said the temporary nature of the extension created “uncertainty about tax rates” which “translates directly into a reduced propensity to invest and to hire”. Sarah Palin, radio hosts Glen Beck and Rush Limbaugh, Senator Jim DeMint, Representatives Michele Bachmann and Darrell Issa and groups affiliated with the Tea Party expressed opposition to the tax-cut deal.
While House Democrats demanded a higher tax than the 35 per cent to be charged on estates over $5 million, some Republicans objected to any form of what they call “death tax”. Republican opponents also want the $56 billion in unemployment benefits to be offset by spending cuts elsewhere in the budget.
The Senate will now take up the New Start arms control agreement with Russia, which needs 67 votes for ratification.
The White House yesterday issued a statement condemning Mr DeMint’s intention “to waste 12 hours to read the text of a treaty that has been available to every member of the Senate and the public for more than eight months”.