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As anticipated, the U.S. Senate overwhelmingly approved the Obama-GOP tax plan Wednesday in a vote of 81 to 19. Today, the bill is expected to be brought to the House floor, where it will face more significant opposition from ideological purists on both the Left and the Right. Yet the outlook for House passage of the bill is favorable, thanks, in large measure, to broad-based centrist support and active executive campaigning. Instead, what the lingering tax debate has seemed to imperil are other items on Congress’s ambitious lame duck agenda, particularly, the massive “omnibus” spending bill needed to avoid a government shut-down.
The $858 billion tax plan negotiated between the Obama administration and Congressional Republican leadership has been adamantly opposed by far-left House Democrats, who object primarily to extending Bush-era tax rates for the wealthy. The issue, they say, is that the tax rate extension “adds” to the deficit by failing to appropriate funds that must otherwise be borrowed. The argument is one of selective fiscal hawkishness directed toward a measure that accounts for a fraction of the total plan.
Democratic opposition to the plan is in sharp contradistinction to House Republican opposition. Although House Republicans are predominantly behind the bill, external pressure has been mounting, arguing that the prodigious concessions to left-wing demands are far too costly, for far too little gain. Critics cite the precipitous 35% estate tax hike (now at 0%) and the unprecedented extension of unemployment benefits, for instance. This, following a midterm election largely interpreted to be a referendum on deficit spending and raising taxes, has many believing that Republicans failed to fully consider both their mandate and their advantage.
A slight miscalculation perhaps it was. Some analysts, in fact, are urging House Republicans to vote against the tax plan in the hopes that, once Republicans assume the majority in the House in January, they will be able to permanently extend the current tax rates without the addition of what is essentially (yet) another unfunded economic stimulus package. This hope rests on the complicity of a conservative-leaning — though not conservative-dominated — Senate and a hamstrung president. Both would presumably be facing a “double-dip” recession if action was not taken, as warned by White House economic advisor Larry Summers. Far too much uncertainty for such a move, unfortunately.
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