Lawmakers Can’t Resist Voting to Extend Bush’s Tax Cuts
A bill extending three of President Bush’s popular tax cuts sailed through Congress on Thursday, underscoring the political maxim that nothing can move legislative machinery like reducing taxes during an election year.
The legislation passed the House, 339 to 65, and the Senate, 92 to 3, less than 24 hours after negotiators from both chambers agreed on a final bill. Bush has pledged to sign the measure.
The legislation would extend three income tax cuts that were to expire this year: an increased child tax credit, expansion of the 10% income tax bracket, and relief from the tax code’s “marriage penalty.” It also would extend a number of business tax breaks.
Democrats expressed concern that extending the tax cuts, which have been popular with many middle-income voters, would deepen the federal budget deficit, projected to reach $422 billion this year.
But most lawmakers found it politically impossible to oppose the measure. The bill’s sponsors argued that a vote against the measure was equivalent to a vote to raise taxes.
Rep. Charles B. Rangel of New York, the top Democrat on the tax-writing House Ways and Means Committee, accused Republicans of a cynical ploy to get Democrats to vote against tax cuts on the eve of an election.
“We would vote no, not because we are against the tax cuts, but because we have some sense of responsibility ... to believe in what Republicans used to believe in, and that is a balanced budget,” said Rangel, who voted in favor of the bill.
One of the few Republicans to publicly express concerns about the bill’s price tag was Sen. John McCain of Arizona, who voted for the measure but said, “We have got to start making some tough choices around here.”
The legislation provided no reductions in spending or increases in other taxes to offset the expected loss to the Treasury of almost $146 billion.
Greg Valliere, chief strategist at Schwab Washington Research Group, said, “No one worries much about the deficit when there are federal goodies to be doled out ahead of an election.”
The action came amid heightened partisan tensions on Capitol Hill as the elections for control of Congress and the White House grow near.
Just before the vote, Democrats highlighted a new Congressional Budget Office projection that, while the deficit is expected to drop over the next several years, it will rise to an estimated $439 billion in 2014.
The $422-billion deficit forecast for this fiscal year, ending Thursday, is a record in dollar terms, but is smaller than the deficits of the mid-1980s and early 1990s relative to the economy, according to the CBO. Republicans accused Democrats of using the nonpartisan CBO for political purposes, arguing that the new projections were based on Democratic assumptions and saying that if Democrats were so concerned about the deficit, they should support spending cuts.
Bush has said that continuing the tax cuts will stimulate economic growth and in turn increase tax revenue and reduce the deficit. He is expected to spotlight the bill’s benefits to middle-income taxpayers in the final weeks of the presidential campaign.
In a statement issued by the White House, Bush said the legislation would “keep us on the path to greater prosperity, and it brings us one step closer to making the tax relief permanent.”
Bush’s Democratic rival, Sen. John F. Kerry of Massachusetts, supported the tax package, his campaign said. Kerry favors extending most of the tax cuts for middle-income taxpayers but wants to rescind those for taxpayers with incomes of $200,000 and more. Kerry and his running mate, Sen. John Edwards of North Carolina, were campaigning and did not vote.
“Millions of American families are being squeezed by the weak Bush economy, falling incomes and rising health costs, and we should extend middle-class tax breaks to help them,” the Kerry campaign said in a statement.
Kerry and other Democrats, however, have complained that the measure failed to do enough to help 4 million low-income families.
Democrats argued that expanding the availability of the child tax credit to low-income families who do not pay income taxes -- and thus do not file a tax return that would allow them to claim the credit -- would cost $4 billion over 10 years, a third of the $12 billion in tax breaks for businesses in the bill. But conservative lawmakers objected to using the tax code to aid people who do not pay income taxes.
Democratic congressional leaders said they made no effort to influence Democrats’ votes, instead leaving it to individuals to decide how their votes would play in their districts.
In the House, 125 Democrats and one independent joined 213 Republicans in voting for the measure. Sixty-five Democrats voted against it.
In the California delegation, Democrats Xavier Becerra of Los Angeles; Lois Capps of Santa Barbara; Jane Harman of Venice; Barbara Lee of Oakland; Juanita Millender-McDonald of Carson; George Miller of Martinez; Nancy Pelosi of San Francisco; Pete Stark of Hayward; Mike Thompson of St. Helena; and Maxine Waters, Diane Watson and Henry A. Waxman, all of Los Angeles, voted against the bill. All other California Democrats and all California Republicans voted in favor, except for Devin Nunes of Tulare, who did not vote.
In the Senate, California Democrats Barbara Boxer and Dianne Feinstein voted yes. Voting no were Republicans Lincoln Chafee of Rhode Island and Olympia J. Snowe of Maine and Democratic Sen. Ernest F. Hollings of South Carolina.
The measure would extend the per-child tax credit of $1,000 through 2009, keep an expanded 10% tax rate through 2010, and provide relief from the tax code’s “marriage penalty” through 2008. The bill also would extend, for one year, relief from the alternative minimum tax, which was designed to keep wealthy individuals from sheltering income but which increasingly affects middle-income taxpayers. It also would extend the tax credit for research and development.
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Adding it up
The House and the Senate on Thursday approved extending some popular tax cuts as part of a package that would cost about $146 billion. T he cuts were to have expired at the end of the year.
Extended Estimated 10-year Provision through cost (in millions) $1,000 child tax credit 2009 $61.57 Expanded 10% tax bracket 2010 $29.36 Relief from alternative minimum tax 2005 $22.58 Marriage penalty relief 2008 $15.69
Sources: Joint Committee on Taxation, Associated Press