WASHINGTON — Senators blinked in the political standoff over how much of the Bush-era tax cuts to extend for another year and voted Wednesday to keep current rates for people with incomes of less than $250,000.
Tax rates would rise by 4 percent on incomes above $250,000 for couples and $200,000 for single filers. Popular breaks like the child tax credit would be preserved.
The extension, passed on a vote of 51 to 48, represents a short-term win, at least, for President Barack Obama, who has been pushing for a similar plan. But it appeared unlikely that the House would embrace a similar measure before the election, having proposed its own bill to extend all the Bush-era cuts. The House hasn’t proposed new breaks for millions of middle-class families.
Democrats estimated the GOP version would add an extra $155 billion to the deficit. They also argued that the GOP plan raises taxes on some 25 million Americans by not renewing the child tax credit, the earned income tax credit and a college tuition break.
The GOP version failed in the Senate, 45 to 54, with GOP Sens. Scott Brown (Mass.) and Susan Collins (Maine) against it, and Democratic Sen. Mark Pryor voting for it.
Republican Leader Sen. Mitch McConnell of Kentucky slammed the votes, saying they represented an irresponsible attack on the weak economy.
But Democrats argued that the Bush-era tax rates coincided with an economy that collapsed at the end of George W. Bush’s presidency, which showed some of the weakest job growth in modern history. And they said it would be another giveaway to the wealthy, while taking away middle-class breaks.
“The wealthiest taxpayers in America would get back $160,000 a year from the Republican tax plan,” said Sen. Barbara Boxer (D-Calif.), chiding McConnell that his suggestion to “do no harm” for a year was not a sensible middle ground, considering the cost.
“It’s not a compromise,” Boxer said. “It’s going right back to the problems that led us to this in the first place.”
The House is expected to vote on its bill next week. Although revenue measures are supposed to start in the House, Democrats said they should take up the Senate plan, rather than raise a so-called “blue slip” procedural block.
The Senate vote was by a rare simple majority, which Sen. Chuck Schumer (D-N.Y.) said McConnell allowed because it was the only way he would get a vote on the GOP plan, and his caucus didn’t want to be stuck only voting “no” on the Democratic plan.
Schumer suggested the political reality of needing to back the middle class would prompt action by House Speaker John Boehner (R-Ohio).