US tax-cut bill nears Senate approval 

President Barack Obama makes a statement about the senate vote on middle class tax cuts in the Brady Press Briefing room of the White House in Washington, December 13, 2010.

President Barack Obama’s sweeping plan to extend expiring tax cuts for millions of Americans headed for overwhelming passage in the Senate on Wednesday, putting the measure’s fate in the hands of the House of Representatives.

As the Senate neared what appeared to be a rare bipartisan vote on the bill to renew all Bush-era income tax breaks and add some provisions designed to stimulate the US economy, House Democrats mulled ways to pull back on some of the measure’s tax breaks for the wealthy.

But even liberal House Democrats acknowledged there might not be enough support to significantly alter the legislation brokered by Obama and congressional Republicans that includes expanded tax breaks for wealthy estates.

“My guess is that the whole package passes,” said liberal Democratic Representative James Moran. “The Democratic caucus might not support it,” he said, but added, “I don’t know how much leverage there is” to significantly alter the bill.

Before the Senate votes, it will debate three initiatives that likely will fail: a Republican plan making all of the Bush-era tax cuts permanent, another Republican plan requiring that extended jobless benefits be paid for through spending cuts, and a Democratic proposal excluding the wealthiest 2 percent from tax cuts.

While there had been talk of trying to curtail tax breaks for ethanol blenders, no such amendment will be allowed in the Senate.

The package also got a boost in the House, where it faces its stiffest resistance, when a top Democrat said there are “compelling reasons” to pass it.

The bullish comments by House Democratic Majority Leader Steny Hoyer signaled opposition was dissipating among Democrats who believe Obama’s $858 billion tax deal, brokered with the opposition Republicans, is too generous to the wealthy.

The measure cleared a key Senate procedural hurdle on Monday, with 83 of the chamber’s 100 members voting in favor of moving the bill forward.

It extends for two years all Bush-era individual tax rates, prevents a spike in taxes on capital gains and dividends and renews long-term insurance for the jobless, while providing an assortment of new tax breaks for students, working families and businesses.

Economists have boosted growth forecasts based on the bill’s likely passage, citing in particular a one-year cut in the payroll tax and removal of uncertainty about taxes in general.

At the same time, deficit watchers fear the measure’s impact on the nearly $14 trillion federal debt.

Monday’s bipartisan vote was in sharp contrast to the gridlock that has tied the Democratic-led chamber in knots for much of the first two years of Obama’s presidency.

“The vote in the Senate indicates an urgency that is felt by a broad spectrum that the middle-income taxes not be increased come January 1,” Hoyer told reporters.

“Rarely do you see that big a number” in support of a bill, Hoyer said, also noting a swath from the very liberal to the very conservative backed it.

Obama and most of his fellow Democrats had pushed for extension of the tax cuts enacted by former President George W. Bush only on household income of up to $250,000.

Democrats lost control of the House and saw their margins shrink in the Senate in the November 2 elections, pushing Obama to strike the deal before the Republicans take more power in January.

Estate tax

A bid by some House Democrats to tighten an estate tax provision to make it less generous for the wealthy is expected to fail, but could slow down eventual passage.

On Monday, Moody’s Investors Service warned it was considering cutting the United States’ top-notch triple-A bond rating in the next two years if the package becomes law because it would push up debt levels.

Worries about the bill’s potential affect on the federal deficit prompted a two-day sell-off of US Treasury bonds last week.

Lawmakers have said they want to recess for the year by the end of the week, though that timeline is tentative.

Many House Democrats believe Obama struck an especially bad deal on the estate tax, conceding to Republican demands it exempt the first $5 million of inherited assets from taxes, with estates above that taxed at 35 percent.

Democrats favor a $3.5 million exemption and a 45 percent tax rate.

Hoyer said many Democrats want a separate amendment on the estate tax, but also said there is concern that debate over estate taxes could derail the whole deal and that no decision had been made.

“Given all of the problems facing this country, lowering taxes for people who are extraordinarily wealthy, whose incomes are soaring, whose tax rates are going down, should not be a major priority of the US Senate,” said Senator Bernie Sanders, an independent who helped lead the opposition.

Still, a senior House Democratic aide said he doubts there are enough members to back a weakened estate tax.

“It would give members a chance to vent to vote against it,” the aide said. “But I doubt” there are enough votes to change it.

Obama names Clinton, Gates to lead foreign policy


President-elect Barack Obama named former rival Hillary Clinton as secretary of state on Monday.

He also said Robert Gates would remain defense secretary in a national security team charged with recasting America’s leadership role in the world

Clinton and Gates, who have been at odds with Obama in the past over foreign policy and defense issues, will implement Obama’s vision of rebuilding the U.S. image abroad while overseeing wars in Iraq and Afghanistan.

Obama played down differences with the woman he narrowly beat for the Democratic presidential nomination and said he would welcome vigorous debate among his opinionated team.

“I assembled this team because I am a strong believer in strong personalities and strong opinions. I think that’s how the best decisions are made,” Obama said, calling the former first lady a “dear friend.”

“I will be responsible for the vision that this team carries out and I expect them to implement that vision once decisions are made,” Obama added. “So as Harry Truman said, the buck will stop with me.”

On one of the biggest foreign policy issues his administration will face, Obama repeated his belief that U.S. troops could be out of Iraq within 16 months of his taking office, though he said he would consult advisers on that.

Clinton, standing next to her former opponent, said the United States must rely on its friends to help confront threats like global warming and terrorism — an implicit rebuke to the go-it-alone approach of President George W. Bush.

“While we are determined to defend our freedoms and liberties at all costs, we also reach out to the world again, seeking common cause and higher ground,” she said.

“By electing Barack Obama our next president, the American people have demanded not just a new direction at home but a new effort to renew America’s standing in the world as a force for positive change.”

The New York senator said it would be hard for her to leave the U.S. Senate but believed taking over the nation’s top diplomatic role was the best way for her to serve the country.

Along with Clinton and Gates, Obama named retired Marine Gen. James Jones as national security adviser and Arizona Gov. Janet Napolitano as head of the homeland security department.

He also named former Justice Department official Eric Holder as attorney general and Susan Rice, a foreign policy adviser to his presidential campaign, as U.N. ambassador, which he will make a Cabinet-level position.

All the nominees are expected to win quick confirmation by the Democratic-controlled Senate, although the Cabinet itself may be a more fractious place.

“No doubt there will be frictions at times,” said Stephen Flanagan of the Center for Strategic and International Studies think tank.

INDIA RESONATES

The announcements have been given added emphasis by last week’s rampage in Mumbai, India, where gunmen killed nearly 200 people, including at least five U.S. citizens. India has blamed the attacks on militants from Pakistan, which has denied any complicity with the terror plot.

Obama said he had spoken to Indian Prime Minister Manmohan Singh and offered American support. Obama said that while sovereign nations “obviously have the right to defend themselves,” he did not want to comment on the specifics surrounding the Mumbai attack.

Gates has said he wanted to leave at the end of Bush’s last term and it is unclear how long he plans to serve in Obama’s administration.

While he avoided direct criticism of Obama during the election campaign, Gates has argued against setting timetables for a U.S. pullout from Iraq, saying it could jeopardize security gains made over the past year.

But Democrats and Republicans both praised Gates since he took over the Pentagon from Donald Rumsfeld in 2006 and he will provide continuity as the United States fights two wars.

Obama clashed with Clinton during a bitter campaign for the Democratic presidential nomination. Clinton famously ran an advertisement depicting a 3 a.m. crisis call at the White House to argue that Obama, a first-term Illinois senator, was not ready to be commander-in-chief.

Clinton also tended to talk tougher, once saying she would “obliterate” Iran if it attacked Israel. She criticized as “naive” Obama’s call for direct presidential-level engagement with foes like Iran and North Korea.

Obama played down those differences on Monday, saying the two shared a vision for U.S. foreign policy and wouldn’t have joined forces if they didn’t believe they could work together.

Clinton’s husband, former President Bill Clinton, agreed to make public the names of more than 200,000 donors to his foundation as part of a deal with Obama to clear the way for his wife’s nomination and avoid any appearance of conflict of interest with her duties as secretary of state.

Bill Clinton issued a statement praising his wife. “As an American, I am thankful,” Clinton said. “As her husband, I am deeply proud.”

Source: Reuters