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Senate enthusiastically approves tax-cut deal

Bush-era rates extended for all; Foes in House may back off

LINGERING WORRIES Markey remains concerned the package “contains excessively generous tax breaks for millionaires and billionaires.” LINGERING WORRIES
Markey remains concerned the package “contains excessively generous tax breaks for millionaires and billionaires.”
By Mark Arsenault and Matt Viser
Globe Staff / December 16, 2010

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WASHINGTON — The Senate yesterday overwhelmingly passed a sweeping tax-cut package that extends lower tax rates for all Americans and tries to jolt a sluggish economy. The $858 billion compromise now moves to the House, where opposition appears to be waning.

President Obama urged the House to pass the deal quickly despite threats by some Democrats to amend it and pockets of resistance from conservative Republicans. The House could vote on the package as soon as today.

Democrats are expected to hold one or more votes on amendments to the package, allowing unhappy members to record their opposition to certain provisions, such as its generous treatment of the estate tax.

In the end, however, yesterday’s bipartisan 81-to-19 vote in the Senate brings great pressure to bear on the House, and key Democrats predict that the compromise will ultimately be approved.

“Do I think it’s going to pass? Yes,’’ said Representative Richard E. Neal, a Springfield Democrat and member of the Ways and Means Committee. Neal wants assurances the package won’t undermine the health of Social Security before he would support it, he said.

Such a prediction would have seemed far-fetched just a week ago. House Democrats had objected — to chants of “Just say no!’’ — to even holding a vote on the tax bill until it was significantly changed. But those objections came in a nonbinding voice vote amid accusations that the White House had ignored their concerns.

Since that voice vote, Senate leaders added $55 billion in additional business incentives, including tax credits for alternative energy projects, as an inducement and the White House has assertively lobbied for support in the House. In the past two days, House Democrats have begun predicting that the compromise would survive.

House Republican leader John Boehner believes his members “are generally supportive’’ of the deal “and will not insist on amendments,’’ Boehner’s spokesman Michael Steel said yesterday.

The legislation, the result of a compromise hammered out by Obama and congressional Republicans, would extend all of the Bush-era income tax cuts for two years, renew a federal program to extend unemployment benefits for the longtime jobless, and retain or create a series of other tax cuts for businesses and individuals. Many Democrats object to extending the tax cuts to families with income above $250,000 per year and have criticized Obama for yielding to Republican demands that all Americans receive the lower rates.

House Democrats have lately focused their anger on the estate tax, saying the deal’s proposed rate of 35 percent is too low and the threshold for protected assets — $5 million for individuals — is too high. Many Democrats prefer 2009 rates: a 45 percent tax on assets above $3.5 million.

Representative Edward J. Markey, a Malden Democrat, said in a statement that he remains concerned that the package “contains excessively generous tax breaks for millionaires and billionaires,’’ and said he supports an effort led by Representative Chris Van Hollen, a Maryland Democrat, to impose a higher estate tax.

“I will vote to improve the package,’’ Markey said in a statement, though his office declined to say whether the congressman will oppose the deal if efforts to amend it fail.

Senate Republicans have warned they will not accept any major changes, including altering the estate tax.

The bipartisan vote in the Senate yesterday spawned opposition from polar ends of the political spectrum. Senator Bernie Sanders, the Vermont socialist and political independent, and Republican Senator Jim DeMint, a Tea Party movement conservative from South Carolina, both voted no.

Sanders and DeMint each tried to drastically change the tax package, though with contradictory goals. Sanders wanted to strip temporary tax breaks for the wealthy from the deal, while DeMint wanted to make all the tax cuts permanent. Both proposals were knocked down, as proponents of the deal understood that any major changes probably would scuttle it.

The senators from Massachusetts, Democrat John F. Kerry and Republican Scott Brown, supported the compromise.

The parties had an incentive to work together to reach the deal: If Congress does not pass a bill before Dec. 31, taxes will rise for most Americans.

Representative Barney Frank, a Newton Democrat, will vote against the deal unless there are major changes, he said in an interview yesterday.

Frank said he is not wedded to a $250,000 limit for extending the tax cuts but does not believe the lower rates should be extended to all income. He also objects to the deal’s treatment of the estate tax and wants assurances that Social Security will not suffer — the deal includes a temporary 2 percentage point cut in the payroll tax, which will put more than $100 billion into the pockets of workers but leave Social Security with a shortfall to be made up through borrowing.

Representative Stephen F. Lynch, a South Boston Democrat, said yesterday he remains a “no’’ vote. Representative William Delahunt, a Quincy Democrat, this week became the first in the 10-member Massachusetts delegation to endorse the plan.

Mark Arsenault can be reached at marsenault@globe.com.