US Congress passes contentious Obama tax deal

17th December 2010, Comments 0 comments

US lawmakers gave final approval Thursday to 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 858-billion-dollar 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, seeking a restorative bipartisan victory six weeks after Republicans routed his Democrats in November 2 elections, had stressed the package extends middle-class tax cuts for two years and jobless benefits for 13 months.

But 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 number-three 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 five million dollars, compared to 45 percent and 3.5 million dollars in a House-passed bill earlier this year.

Obama -- who campaigned on a vow to let tax cuts lapse on income over 250,000 dollars for families or 200,000 dollars 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 health care 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."

The agreement -- which has the support of virtually every present and past US foreign policy or national security heavyweight -- restricts each nation to a maximum of 1,550 deployed warheads, a cut of about 30 percent from a limit set in 2002, and 800 launchers and bombers.

The accord would also return US inspectors who have been unable to monitor Russia's arsenal since the treaty's predecessor lapsed in December 2009.

Obama won a critical victory when lawmakers voted 66-32 Wednesday to take up the pact, showing Democrats within striking distance of the 67 votes needed to ratify START if all 100 Senators are present.

© 2010 AFP

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