Obama signs tax-cut legislation

President Obama on Friday signed the bill that extends the George W. Bush-era tax cuts, while Congress moved to wind up its lame-duck deliberations in a session marked by the changing nature of politics and power.

Speaking at the signing ceremony, Obama again defended his compromise, worked out with Republicans. Minority Leader Mitch McConnell (R-Ky.) was prominent at the ceremony, as was Vice President Joe Biden, who bargained with the Republican leader

“This is real money that is going to make a real difference in peoples’ lives,” Obama said. Without the bill, the tax cuts would have expired at the end of the year.

The measure won final approval in the House late Thursday night. In addition to extending the tax cuts for two years, the bill adds 13 months of jobless benefits and cuts the payroll tax by 2 percentage points for a year.

Republicans were crucial to pushing the package through both chambers of Congress, but especially in the House, where liberals staged a losing rebellion over some provisions of the estate tax.

The agreement may be a harbinger of the White House’s pivot to the right as it seeks to work with the suddenly more powerful Republicans, who take over the House in January and grow in numbers and influence in the Senate. But it is the remaining issues that most clearly show the GOP’s new muscle.

Late Thursday, Senate Majority Leader Harry Reid withdrew the $1.2-trillion omnibus spending bill needed to keep the government funded. He dropped the bill when it became clear that the necessary Republican votes were no longer available, in part because of pressure from the “tea party” movement against the more than $8 billion in earmarks included in the legislation.

Democrats made political capital out of the many earmarks sought by GOP leaders. But sensing the direction of the political winds, Republicans in the Senate stood firm against the broader bill, a recognition that the tea party success in the last election had shifted the Washington party’s agenda.

Noting that Reid’s move came on the anniversary of the 1773 Boston Tea party, the Heritage Foundation, a conservative think tank, congratulated the latest incarnations of the tea party movement for their victory.

Speaking on the Senate floor Friday morning, McConnell took note of the shifting political sentiments.

“Yesterday, Republicans united against a 2,000-page, $1.2-trillion dollar spending bill that Democrats were trying to ram through Congress in the final hours of the session,” McConnell said. “Its purpose was to lock in another year of the same big-government policies voters overwhelmingly rejected on November 2.”

Reid also took note of the new politics, but from the other side.

“I am disappointed that the bipartisan efforts … to put together a sensible, responsible funding bill have been hijacked by partisan politics,” the majority leader said in a prepared statement “The American people deserve leaders who will put the best interests of their constituents ahead of political posturing.”

Reid told the Senate on Friday morning that there was a route to winding up the session by dealing with some of the major issues. The chamber continued its debate on the New START arms pact with Russia. Republicans have opposed considering the treaty in the lame-duck session, but that could change.

Reid said he expected cloture votes on allowing gays to serve openly in the military and on the proposed Dream Act, a bill to legalize some undocumented immigrants who were raised in the United States. The House has already passed both of those measures.

And with the omnibus spending bill dead, both houses need to pass a continuing resolution so that the government doesn’t run out of money at midnight Saturday.

michael.muskal@latimes.com

lisa.mascaro@latimes.com