Senate passes package extending Bush tax cuts - CBS News 8 - San Diego, CA News Station - KFMB Channel 8

Senate passes package extending Bush tax cuts

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Senate Majority Leader Harry Reid of Nev., talks to the media after their caucus luncheon on Capitol Hill in Washington, Tuesday, Dec. 14, 2010. (AP Photo) Senate Majority Leader Harry Reid of Nev., talks to the media after their caucus luncheon on Capitol Hill in Washington, Tuesday, Dec. 14, 2010. (AP Photo)

WASHINGTON (AP) — The Senate has passed a sweeping tax package that would save millions of Americans thousands of dollars in higher taxes for the next two years while also reducing their Social Security taxes and extending jobless benefits.

The $858 billion package now goes to the House, where many Democrats are unhappy with a provision that allows estates as large as $10 million to pass to heirs tax-free. Democratic leaders, however, say they expect the bill to ultimately pass and become law.

A wide array of tax cuts enacted under President George W. Bush is scheduled to expire on Jan. 1 — just two weeks away — affecting taxpayers at every income level. The bill, which was passed by the Senate on a 81-19 vote would extend the cuts for two years.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

WASHINGTON (AP) — The Senate cleared the decks Wednesday for a final vote on a sweeping tax package that would save millions of Americans thousands of dollars in higher taxes next year while also reducing their Social Security taxes and extending jobless benefits.

The package will then go to the House, where Democrats are fuming over extended tax breaks for the wealthy that President Barack Obama negotiated with Senate Republicans. House Democrats are considering possible changes, perhaps holding a vote to enact a higher estate tax than Obama negotiated.

A wide range of tax cuts enacted under President George W. Bush is scheduled to expire in just two weeks. The bill being voted on in the Senate would extend them for two years.

The Senate, which is expected to pass the bill with broad bipartisan support, debated several amendments Wednesday morning. One would make the tax cuts permanent, one would pay for part of the package by cutting spending elsewhere, and one would replace a proposed payroll tax cut with an extension of Obama's Making Work Pay tax credit. All the amendments were expected to fail, as the final details of the package were worked out days ago.

Nevertheless, many House Democrats continue to oppose the estate tax provision, though leaders in that chamber say they expect the bill to ultimately pass.

"Let's find out if Republicans really want to jeopardize income tax, payroll tax and estate tax relief for every American in order to provide a budget-busting bonanza to the country's richest estates," Rep. Chris Van Hollen, D-Md., wrote in an op-ed in Wednesday's Washington Post. "House Democrats think this trade-off should be debated and voted on in the light of day."

Rep. Bill Pascrell Jr., D-N.J., said, "We can jump up and down all we want about the higher-end estate taxes, and I don't think anything's going to change because the Senate isn't going to change it."

Obama on Wednesday urged Congress to pass the plan quickly.

"I know there are different aspects of this plan to which members of Congress on both sides of the aisle object. That's the nature of compromise," the president said before meeting with business leaders. "But we worked to negotiate an agreement that's a win for middle-class families and a win for our economy, and we can't afford to let it fall victim to either delay or defeat."

House Democratic leaders say the bill could come for a vote in that chamber as early as Wednesday evening.

"I think the Senate is going to pass this measure ensuring that no one's taxes go up by a very significant margin, and I hope that our friends in the House will understand that that's the best way to go forward — simply pass the Senate bill, get it down to a president who supports the understanding," said Senate GOP leader Mitch McConnell of Kentucky.

McConnell warned House Democrats that any changes could derail the entire package.

"This agreement is not subject to being reopened," McConnell said.

The bill would extend expiring tax cuts at every income level. It also would renew a program of jobless benefits for the long-term unemployed that is due to lapse, and enact a one-year cut in Social Security taxes. The bill's cost, $858 billion, would be added to the deficit.

Some Senate Republicans are balking at the price tag, noting that Obama's deficit commission recently outlined the massive fiscal problems facing the nation. Most Senate Republicans, however, are expected to support the bill.

"The American people are going to be looking, and they're going to say, does the Senate get it? Do they understand the severity and the urgency of the problems that face our fiscal future?" Sen. Tom Coburn, R-Okla., said Wednesday.

At the insistence of Republicans, the plan includes a more generous estate tax provision: The first $10 million of a couple's estate could pass to heirs without taxation. The balance would be subject to a 35 percent tax rate.

The lower estate tax infuriated some Democrats who were already unhappy with Obama for agreeing to extend tax cuts for individuals making more than $200,000 and couples making more than $250,000.

"This administration fights for nothing," said Rep. David Wu, D-Ore.

The estate tax was repealed for 2010. But under current law, it is scheduled to return next year with a top rate of 55 percent on the portion estates above $1 million — $2 million for couples.

House Democratic leaders want to bring back the 2009 estate tax levels. That year, individuals could pass $3.5 million to their heirs, tax-free. Couples could pass $7 million, with a little tax planning, and the balance was taxed at a top rate of 45 percent.

House Democrats met in a closed-door session Tuesday evening in which member after member stood up and vented about various aspects of the bill. Other House Democrats, however, said they were eager to pass the package.

Thirty-one members of the conservative Blue Dog Democrats sent a letter to House Speaker Nancy Pelosi urging quick passage of the bill.

"It is time for us to put aside the partisan talking points and accomplish what the American people sent us here to do," said the letter.

Copyright 2010 The Associated Press.

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