House passes 20% tax cut for businesses
WASHINGTON — Despite a veto threat from President Obama, the Republican-led House approved a 20% election-year tax cut for most companies intended to entice them to pick up the pace of hiring and, thus, boost the economy.
Critics said the tax cuts for companies with fewer than 500 employees would add $46 billion to the deficit and do little to create jobs. Obama and Democrats attacked the legislation as unfairly favoring wealthier small-business owners, celebrities and sports teams.
The bill, passed on a near-party-line vote of 235 to 173, has a dim future in the Senate, where Democrats have other business tax measures in mind.
The showdown caps a week of politically charged votes on Capitol Hill as the parties offered competing visions for how to address the nation’s fiscal and economic issues heading into the November election.
At times, the floor debates sounded like a prolonged campaign ad as the parties sought to sway voters, particularly the sought-after independents not aligned with either party.
Economic issues remain the core concern among voters.
The Labor Department reported Thursday that new claims for jobless benefits hit their highest level in nearly three months, with 386,000 first-time claims last week. Although that was down 2,000 from the prior week, filings for that first week of April were revised sharply higher. And that bumped up the more reliable four-week moving average to 374,750 — the most since late January.
November’s election could influence the course of action on crucial year-end budget decisions, including mandatory federal spending reductions and theGeorge W. Bush-era tax breaks for wealthier households that Obama wants to let expire.
Earlier in the week, Obama’s proposed “Buffett rule” that would set a new tax rate on millionaires was blocked by Republicans in the Senate.
“We need to stop and think about what kind of country we want to be,” said House Majority Leader Eric Cantor (R-Va.), the business bill’s author. “One with lower taxes, more growth and more jobs? Or do we want to be one of more government control?”
Democrats, though, said the 20% tax-cut measure comes as Republicans work to revamp Medicare and slash domestic programs, including the Meals on Wheels program for seniors.
“Where’s your conscience?” asked Rep. Sander Levin of Michigan, the top Democrat on the tax committee. “This bill isn’t going anywhere. But it says everything about the majority’s priorities.”
The White House, in threatening a veto, said almost half of the tax benefits from the bill would go to businesses with annual revenue of more than $1 million each. The legislation would cut 20% of a company’s taxable revenue for the 2012 tax year.
In releasing the employment data Thursday, Labor Department officials didn’t explain what led to the unexpectedly big upward adjustments for early April. But the recent reversal of improving claims data lines up with other reports from business groups and the government that suggest a loss of some momentum in the job market.
Employers nationwide added 120,000 net jobs in March, only about half of the average number in the preceding three months.
“The string of disappointing data releases continues this morning with a higher-than-expected claims report,” Steven Ricchiuto, chief economist at Mizuho Securities, said in a note to clients.
He predicted that April’s employment gains, to be disclosed in early May, probably would be 125,000 to 175,000 jobs — numbers that aren’t likely to bring down the unemployment rate or build a lot of confidence in the economy.
