The Senate voted mostly along party lines to pass a Democratic bill to extend the Bush tax cuts for household incomes below $250,000 a year after rejecting a Republican bill to extend them for taxpayers at all income levels.
In a surprise move before Wednesday’s vote, Senate leaders allowed up-or-down votes on the competing legislation instead of filibustering either bill. The Democratic proposal, the Middle Class Tax Cut Act of 2012, was approved by the Senate by a 51 to 48 margin. The Republican proposal failed by a 45 to 54 vote. However, the Republican-dominated House is not expected to pass the Democrats’ bill. Instead they plan to vote next week on their own legislation to extend the tax cuts for all income levels (see House Republicans Introduce Bush Tax Cuts Extension Bill).
The Senate vote nevertheless put lawmakers on record before the November elections on where they stand on the tax cut extension. A final agreement on extending the current tax rates, which expire at the end of the year, is not expected until after the elections, during a lame-duck session of Congress.
Senate Finance Committee Chairman Max Baucus, D-Mont., decried the party-line nature of the votes. “While I applaud the passage of this bill, I am disappointed that it was approved along party lines,” he said in a statement. “There should have been no question here. Extending these tax cuts should have been an issue all of us agree on. We need to get serious and find a way to work together. We can start with the House taking up the Senate bill to extend middle-class tax cuts. We can then work together in conference committee to reach a compromise, providing an opportunity to avoid the fiscal cliff. Hard choices need to be made and everyone needs to contribute.”
Senate Minority Leader Mitch McConnell, R-Ken., predicted on the Senate floor before the vote Wednesday that it would barely get enough votes. Vice President Joe Biden was on hand in case he was needed to cast a tie-breaking vote. McConnell also pointed out that tax legislation needs to originate in the Republican-dominated House in order to become law, and that the Democrats' bill differed from President Obama's original proposal. Democrats, for example, changed the estate tax limits to bring more of their members on board.
“The vote we’re about to take on the Democrat plan to raise taxes is interesting for a few reasons: first, it’s a revenue measure that didn’t originate in the House, so it’s got no chance whatsoever of becoming law,” said McConnell. “Second, it’s a perfect example of what you get when you put politics over the people who sent you here. If the Democrats truly believed what the President’s been saying out on the stump, they’d vote on his plan. But, as the vote tally will show, they can barely muster 50 votes on their own plan—let alone his. So for the entire President’s talk about supporting a balanced approach to taxes, he evidently can’t even get 50 votes for it in a Democrat-controlled Senate when we all know he’d need 60 votes to get it to his desk. Instead of voting on the President’s plan, Democrats have cobbled together the only thing they can come up with that would muster more than 50 votes—a purely political exercise, and a total waste of time. But I can’t imagine why they want to vote for either one—since both proposals raise taxes on about a million business owners, and both raise taxes on investment, at a time when the economy’s in paralysis.”
Senate Majority Leader Harry Reid, D-Nev., countered that the Republican-sponsored bill would have given millionaires a $160,000 tax break. “The Senate passed a plan that will cut taxes for 98 percent of Americans and protect middle-class families in Nevada and across the country from the fiscal cliff,” he said. “The Senate plan is the only solution that stands a chance of being signed into law to provide middle-class families security. Our colleagues in the House should take up our plan and pass it immediately. There is absolutely nothing stopping House Republicans from passing the Senate’s plan, if they possessed the courage to do the right thing for middle-class families.”
The action moves next week to the House, where Republicans are expected to approve their bill for extending the current tax rates for all income levels. The White House issued a statement from President Obama urging them to follow the Senate’s lead by extending tax cuts only for adjusted gross income below $250,000 for couples and $200,000 for individuals. “With the Senate’s vote, the 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. “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.”
Speaker of the House John Boehner, R-Ohio, indicated that the House would pass the Republican proposal, but he left open the question of whether House Democrats might try to add their proposal as an amendment. “With unemployment still above 8 percent, the only vote on taxes that matters to the American people is a vote to stop the small business tax hike the President wants that Ernst & Young says will cost our economy 700,000 jobs,” Boehner said in a statement Wednesday prior to the Senate vote. “The House will vote next week to stop that tax hike, and until the Senate does the same, the threat to our economy remains. 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. The only questions are these: How many House Democrats are going to side with Leader 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?”
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