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Republicans Filibuster Dem Tax Cut Plan, Compromise Now Imminent

December 4, 2010 - by Donny Shaw

Even as details leak out about a deal in the works between President Obama and both parties in Congress to temporarily extend all of the Bush tax cuts, the Senate was in session Saturday to hold votes on two Democratic proposals on how to deal with the issue. Needless to say, they both failed. But the roll call results tell us a good deal about where the debate over taxes and, more generally, the deficit stands, so let’s have a look.

The first vote was on the plan preferred by Obama and most Democrats. It would have permanently extended the tax cuts for everyone on income earned up to $200,000, or $250,000 for couples (extending the tax cuts for all income for 98% of Americans). It also would have extended unemployment benefits for one year, scaled back the alternative minimum tax for two years, and extended dozens of other tax provisions from the stimulus bill and elsewhere. Full details here.

The first plan failed to overcome a Republican filibuster by a vote of 53-36. Sixty votes are needed to break a filibuster under current Senate rules. Every single Republican that voted (11 abstained), voted against it. Four Democrats joined the Republicans in voting no, they are Sen. Russ Feingold [D, WI], Sen. Joe Manchin [D, WV], Sen. Ben Nelson [D, NE] and Sen. Jim Webb [D, VA]. Independent Sen. Joe Lieberman [CT] also voted no.

The second vote was on essentially the same plan, except that it raised the income cut-off receiving the tax cuts to $1 million (extending the tax cuts for all of income for more than 99% of Americans). It’s important to note that both these plans would cut taxes for everyone. Even if you earn above $250,000 or $1,000,000, as it were, you would receive the tax cuts on all income up to that cut-off point. Anything above that would go back to being taxed at the higher pre-2001 rate.

The second plan failed as well, this time on a 53-37 vote. All Republicans still voted no, and four Democrats, plus Lieberman, still voted no as well. However, a few Dems flipped. Machin, Webb and Nelson all decided that the million-dollar cut-off was the right compromise and voted yes, but Sen. Richard Durbin [D, IL], Sen. Thomas Harkin [D, IA] and Sen. Jay Rockefeller [D, WV] objected because they thought the $1 million limit was too high.

At the end of the day, nothing got done besides getting senators down on the record — except the 11 Republicans who abstained — and solidifying, as Politico’s headline reads, that it’s now all or nothing on the Bush tax cuts. They either get extend for all levels of income, or they expire for everybody.

Nobody really expects the Democrats to let them expire at this point. If they did, the first thing Republicans would do when they took over the House in January would be to pass a permanent extension of the tax cuts for all income levels. With the 5 seats the Democrats are losing in the Senate, they probably wouldn’t have the 40 votes they would need to stop the bill from being sent to Obama. Obama could veto it, of course, but then he’d be the one taking the final action that would cause all Americans’ paychecks to go down because of increased federal withholdings. That’s not the position he wants to be in as 2012 approaches.

Plus, if the Democrats agree to do a temporary extension now, they have a bit of leverage to use with Republicans so they can pass an unemployment benefits extension and some of the other targeted middle-class and small-business tax cuts that were in the bills voted on today. As I’ve noted in the past, the irony here is that everyone in Congress is supposedly concerned about the deficit, yet the most likely compromise on this seems to be to put all the pet deficit-increasing tax cuts and spending items together into one bill and pass it based on the fact that it’s got a little bit for a lot of people. There will be objections from the left and the right, but when all is said and done, there will be a deal that pulls together 60+ votes from both sides of the aisles, and adds about $500 billion to the federal deficit each year it’s in effect.

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