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Tax cut bill heads to House

From left, Sen. James Risch, R-Idaho, Sen. George LeMieux, R-Fla., Sen. John Barrasso, R-Wyo., and Senate Minority Whip Jon Kyl of Arizona answer questions on Capitol Hill on Wednesday. Both Florida senators voted for the tax package Wednesday.

Associated Press

From left, Sen. James Risch, R-Idaho, Sen. George LeMieux, R-Fla., Sen. John Barrasso, R-Wyo., and Senate Minority Whip Jon Kyl of Arizona answer questions on Capitol Hill on Wednesday. Both Florida senators voted for the tax package Wednesday.

WASHINGTON — The extension of the Bush-era tax cuts, which the Senate approved 81-19 Wednesday, would dramatically increase already huge federal budget deficits, yet many of the same lawmakers who rail against deficits eagerly backed the tax breaks.

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The legislation would cost the Treasury an estimated $858 billion over 10 years, according to the nonpartisan Congressional Budget Office. Despite that, some prominent deficit hawks voted for it.

"I don't think that keeping the current tax rates raises deficit spending," said Sen. John Cornyn, R-Texas.

While $858 billion is "a bitter pill to swallow," said Sen. Bill Nelson, D-Fla., "I doubt that there is anybody in this chamber that wants the alternative."

The alternative: Unless the Bush-era tax rates are extended, tax rates will rise on Jan. 1 on all Americans, which could stifle the fragile economic recovery. In addition, the package extends benefits for an estimated 7 million jobless Americans for another 13 months.

Both Nelson and Sen. George LeMieux, R-Fla., voted for the measure.

The House of Representatives is expected to approve the package today, but unease over the deficit is growing.

Last year's deficit was $1.29 trillion. The Congressional Budget Office estimates that without extending the tax cuts, the deficit will top $1 trillion this fiscal year. The tax cuts would add another $374.1 billion to this year's deficit, CBO estimates, and $422.9 billion next year.

Rep. Peter Welch, D-Vt., a leader of liberal opposition to the plan, blasted it as "fiscally irresponsible," saying his colleagues have "forgotten quickly" the 12-day-old recommendations from the bipartisan deficit commission, which urged tough steps to cut deficits by $4 trillion during the next 10 years.

On the right, Rep. Mike Pence, R-Ind., said he plans to vote no even though the jobless benefits are needed.

"Frankly," he said, "we can provide assistance to families struggling in this economy by making the hard choices to pay for it without adding to the national debt."

Cries from the conservative heartland help steel such conviction.

An online petition circulated by Tea Party Patriots, a conservative grass roots group, says the bill has triggered "an anger that will not diminish." Conservative radio talk show host Hugh Hewitt protests that the deal "spends billions and billions of dollars that the country does not have in order to prevent a tax hike that the country voted against."

However, the public really likes this tax-cut deal — 60 percent approve and only 22 percent oppose it, according to a Pew Research Center poll released this week.

The bill would extend all Bush-era tax rates for another two years. It also would extend jobless benefits for the long-term unemployed for 13 months; cut 2 percentage points from the Social Security payroll tax next year; and extend dozens of special interest tax breaks, notably for energy, business and education.

Democrats oppose the provision granting a tax exemption to estates of up to $5 million per person, or $10 million per couple. Republicans have said they will not accept any change.

Independent analysts have offered grudging praise for the package. They argue that while the deficit is a serious concern, the economy needs a short-term stimulus.

Moody's Analytics, a leading forecaster, projects that the tax-cut deal will boost economic growth next year by a full percentage point and add 2.6 million jobs to payrolls, driving down the unemployment rate to 8.7 percent from 9.8 percent today.

A long-range deficit reduction plan is coming, lawmakers said.

Senate Budget Committee Chairman Kent Conrad, D-N.D., a deficit commission member, voted for its plan on Dec. 3 and voted for the tax cuts Wednesday. At the moment, he said, short-term stimulus is crucial. "All reputable economic analysis shows that this package is necessary to strengthen economic growth next year," he said.

That view is expected to prevail in the House, but many members have qualms.

Rep. Elijah Cummings, D-Md., who's considering voting no, said that Republicans will use the huge deficit to "justify cutting social programs." While he likes the idea of extending tax cuts for the poor and middle class, "the middle class in the end will pay big time for a loss of programs."

Meanwhile, the next fiscal fight in Congress has started. Government funding runs out Saturday night unless Congress acts, and Democrats are pushing a spending plan for the rest of fiscal 2011, which ends on Sept. 30, that Republicans say is too expensive.

The plan contains about 6,600 earmarks totaling about $8 billion, special local projects inserted by lawmakers, including some that Cornyn wanted. Republicans have vowed to end the practice — though some have earmarks in the bill.

Don't worry, Cornyn said. "We will reject any earmarks requested by us or anyone else," he said, "because that's what the American people told us they want."

Tax cut bill heads to House 12/15/10 [Last modified: Monday, November 7, 2011 1:41pm]

    

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