Tax deal passes Senate test vote

Lopsided support pushes bill closer to face-off in House

Senate Minority Leader Mitch McConnell of Kentucky said in a speech yesterday that the tax compromise was an essential first step toward addressing the nation’s deficit, by “cutting off the spigot” of tax income to the federal government to force Congress to make spending cuts. Senate Minority Leader Mitch McConnell of Kentucky said in a speech yesterday that the tax compromise was an essential first step toward addressing the nation’s deficit, by “cutting off the spigot” of tax income to the federal government to force Congress to make spending cuts. (Alex Brandon/ Associated Press)
By Mark Arsenault
Globe Staff / December 14, 2010

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WASHINGTON — A bipartisan bloc of senators easily propelled President Obama’s tax cut compromise over a key procedural hurdle yesterday, clearing the way for a final Senate vote as early as today, and setting the stage for a potential showdown later this week among divided Democrats in the House.

A looming Jan. 1 deadline — when Bush-era tax cuts are set to expire, raising taxes for most Americans — brought Democrats and Republicans together in the Senate to advance Obama’s compromise over the objection of liberals. The lopsided vote of 83 to 15 easily cleared a 60-vote threshold to prevent a filibuster and generated momentum for the Obama-GOP alliance on the contentious issue.

The agreement would extend the tax cuts at all income levels for two years, though most Democrats, including the president, had wanted the cuts to extend only to families with incomes less than $250,000 a year.

“I just can’t see adding hundreds of billions of dollars to the deficit to give some multimillionaires a tax break, and that’s all there is to it,’’ said Senator Patrick Leahy, a Vermont Democrat who joined a group of liberal senators and a smattering of conservative Republicans in voting no.

But the Senate’s minority leader, Mitch McConnell, a Republican from Kentucky, said in a floor speech that the compromise was an essential first step toward addressing the nation’s deficit, by “cutting off the spigot’’ of tax income to the federal government to force Congress to make spending cuts.

In the House, debate is expected not only on the income tax, but on the estate tax. The current estate tax is zero, but it is due to be reset Jan. 1 at 10-year-old levels that members of both parties say are too high.

The president’s deal calls for a 35 percent tax on the value of an estate above $5 million — terms some Democrats in both chambers say is too generous to the wealthy.

“The estate tax is way too rich,’’ said Senator Kent Conrad, a North Dakota Democrat who supported the overall deal on yesterday’s procedural vote. Conrad said he will try to amend the package before it is passed.

Many Democrats prefer setting the estate tax at 2009 levels: a 45 percent tax on value above $3.5 million.

“There’s much consternation in the House about the estate tax,’’ majority leader Steny Hoyer, Democrat of Maryland, said yesterday, suggesting the House could try to amend that if Conrad’s attempt fails.

The White House has warned there is little room for changes. Senator Richard Shelby, Republican of Alabama, said yesterday that his party would not accept a significantly different bill.

“I would think that what we agreed on will probably prevail,’’ he said in an interview. He noted that “the size of the vote, the showing of a lot of bipartisanship over here,’’ should create momentum that will make it hard for the House to resist.

Several political analysts agreed. “Considering all the criticism this package got from the right and the left, this vote is remarkable,’’ said a University of Virginia political analyst, Larry Sabato.

The wide margin is a blow to opponents of the deal, he said, adding, “it’s hard to see now how this is stopped.’’

Some of the angry rhetoric from liberal Democrats against the package has dissipated. Last week, Democrats, including several from Massachusetts, had bitterly denounced the deal, and the House Democratic caucus objected in a nonbinding voice vote.

Yesterday, Hoyer spoke of compromise: “You know, my experience in life, I haven’t gotten everything I wanted. That’s life. That’s the way we work with one another.

“I think we’ll pass a bill,’’ Hoyer said in a speech before the National Press Club. “As opposed to simply not passing anything.’’

Still, Massachusetts House members had not warmed to it by yesterday, despite the overwhelming support in the Senate.

“I just don’t get borrowing $855 billion from the Chinese to help families making more than $250,000,’’ said Representative Stephen Lynch, a South Boston Democrat.

The deal, negotiated by the president and congressional Republicans, also extends for 13 months an expiring program to provide federal unemployment benefits to those who have exhausted their 26 weeks of state benefits. The compromise would also create or continue a variety of tax breaks for individuals and businesses, including the establishment of a cut of 2 percentage points in the payroll tax and an extension of alternative energy credits that were part of the federal stimulus bill.

Lawrence Summers, in his last speech as head of President Obama’s National Economic Council, said the tax cut plan “averts what could have been a serious collapse in purchasing power.’’ He also said it delivers more in stimulus spending than most Democrats had thought politically possible.

Both Bay State senators supported the compromise. Democratic Senator John Kerry said it was hard to accept the tax cuts for the wealthy, but that was the price for extending unemployment benefits and preventing a tax increase on the middle class.

“Is it the deal I wanted? No,’’ Kerry said in a statement. “But the reality is we don’t have 60 senators who oppose the Bush tax policies the way I do, and the way Barack Obama and Joe Biden do, and this compromise provides many critical benefits for middle class folks that we’ve been fighting for and haven’t been able to win any other way.’’

Republican Senator Scott Brown said in a statement that the deal “is good for American families, for small businesses, and for individuals in Massachusetts and across the country.’’

Obama, who has weathered heavy criticism from liberals who complain he gave up too much in the deal, said yesterday that the Senate vote “proves that both parties can in fact work together to grow our economy and look out for the American people.’’ He urged the House to act quickly.

Representative James McGovern, a Worcester Democrat who continues to oppose the deal, acknowledged that a number of House Democrats support the current package, and with Republican support there may be enough votes to pass it.

Jeffrey Berry, a Tufts University political science professor, agreed.

“House Democrats need some symbolic compromise to make the medicine go down easier,’’ he said, “but this will pass because Democrats can’t afford to hold it up’’ and be blamed for higher middle-class taxes.

Material from the Associated Press was used in this report. Mark Arsenault can be reached at