Thread: Senate passes tax package 81-19, sending deal to the House

Senate passes tax package 81-19, sending Obama deal to the House

By Alexander Bolton
12/15/10 01:23 PM ET
Comments 4

The Senate voted overwhelmingly Wednesday to pass an $858 billion tax relief and benefits package, giving the bipartisan deal political momentum as it heads to the House.

The Senate voted 81 to 19 in favor of the deal struck by President Obama and Senate Republican Leader Mitch McConnell (R-Ky.).

“Middle class families need a boost in this economy, and that is exactly what this plan gives them," Senate Majority Leader Harry Reid (D-Nev.) said in a statement after the vote. "It is not perfect, but it will create 2 million jobs, cut taxes for middle class families and small businesses, and ensure that Americans who are still looking for work will continue to have they safety net they rely on to make ends meet."

The legislation now heads to the House, where Democrats are debating whether to rewrite the estate tax provision and substitute a 45-percent tax on estates over $3.5 million.

A House Democratic aide said the bill would be posted on the Rules Committee site by mid-afternoon Wednesday. Leadership aides in the House said it is not expected to receive a vote until Thursday.

The package extends almost all of the Bush tax cuts, including income tax cuts for the nation’s wealthiest families, for two years and sets the estate tax at 35 percent for individual inheritances of more than $5 million.

It extends federal unemployment benefits for 13 months at a cost of $56.5 billion and cuts the Social Security payroll tax 2 percent, giving workers a $120 billion tax break for 2011.

Senate passage of the tax deal was all but assured after 83 senators voted on Monday evening to end an effort to delay it.

Sens. Ron Wyden (D-Ore.) and Jeff Merkley (D-Ore.), who missed Monday’s vote, opposed final passage.

“My concern is that what happens in the Senate often is the short term becomes the enemy of the long term,â€

Moody's says tax cut deal risks U.S. credit rating

By Erik Wasson
12/13/10 04:34 PM ET
Comments 15

Moody's Investors Service said in a Monday report that the tax-cut deal hammered out between President Obama and congressional Republicans jeopardizes the Aaa credit rating enjoyed by U.S. Treasury bonds. The package could add $900 billion to the national debt, if it is made permanent, and this increases the chances the U.S. would one day default on its debt.

"From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth. Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years," Moody's analyst Steven Hess writes.

Hess writes that the higher economic growth from the tax cuts and unemployment benefits might be substantial, but the effect of the growth on budget deficits will be less than the effect of the foregone revenue and increased spending.

He notes that the Congressional Budget Office has found that the package would raise the ratio of debt-to-gross domestic product from 61.6 percent to 68.5 percent by 2012.

This ratio would be worsened if the tax cut package is extended in 2012, something that is highly possible in an election year, the report notes. It says that the president's debt commission developed a plan to deal with the budget crisis but adoption of the plan is "uncertain."

http://thehill.com/blogs/on-the-money/b ... dit-rating

They were also talking about the new spending bill coming and it was said to have over 2000 pages with 6000 ear marks in it costing taxpayers over 8 BILLION dollars.

evidentally they still have not heard the people this past election