Sat, Dec 18, 2010 - Page 7 News List

US Congress passes contentious tax deal

AFP, WASHINGTON

Lawmakers on Thursday gave final approval to US President Barack Obama’s contentious deal with Republicans to avert a New Year’s tax hike and extend aid to the jobless, despite a Democratic rebellion.

A day after the Senate passed the package by an 81-19 margin, the House of Representatives followed suit 277-148, sending the measure to Obama to sign and reap a restorative bipartisan victory six weeks after an elections rout.

The US$858 billion measure was expected to give the US economy a much-needed boost while digging the country’s deficit and debt deeper, as the world’s richest country emerges from the worst downturn since the 1930s.

Obama had stressed the package extends middle class tax cuts for two years and jobless benefits for 13 months.

However, angry Democrats from the party’s left flank opposed the plan for including an identical extension for the richest sliver of US earners and rolling back the inheritance tax that affects only the wealthiest estates.

“This measure does not create a single job or stimulate the economy in any way,” said No. 3 Democratic Representative James Clyburn, who urged lawmakers to “restore some fairness to the tax code.”

Immediately prior to passage, which came shortly before midnight, lawmakers defeated a Democratic amendment to toughen the estate tax provisions in the package by a 194-233 margin.

The White House compromise sets the inheritance tax rate at 35 percent and exempts estates under US$5 million, compared to 45 percent and US$3.5 million in a House-passed bill earlier this year.

Obama — who campaigned on a vow to let tax cuts lapse on income over US$250,000 for families or US$200,000 for individuals — dropped that insistence after the elections and urged fellow Democrats to do the same.

Right after the Senate passed the plan, Obama called on skeptical Democrats in the House to pass the bill unchanged, in one of their last acts before Republicans take control of the chamber in January.

Republican House speaker-designate John Boehner said “failing to stop all the tax hikes would have destroyed more jobs and deepened the uncertainty in our economy” and called the bill “a good first step.”

“But much more needs to be done, including cutting spending, permanently eliminating the threat of job-killing tax hikes and repealing the job-killing healthcare law,” he said.

At the same time, the US Senate forged ahead on Obama’s top foreign policy, the New Strategic Arms Reduction Treaty (START) with Russia, as Republicans worked to kill the nuclear arms control accord or at least put off a final vote until next year.

Top US military officials rebuffed Republicans charges that the pact will cripple US missile defense plans, as Democratic Senate Majority Leader Harry Reid set the stage for a likely ratification vote next week.

“We need START and we need it badly,” General James Cartwright, the vice chairman of the Joint Chiefs of Staff, told reporters, stressing the treaty included “no prohibitions to our ability to move forward in missile defense.”

“This treaty in no way limits anything we have in mind or want to do on missile defense,” agreed Defense Secretary Robert Gates. “I think that there were some legitimate concerns. But, frankly, I think they’ve been addressed.”

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