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Senate sends tax-rate bill to House

| December 16, 2010 8:00 PM

WASHINGTON (AP) - In a reach across party lines, the Senate overwhelmingly passed sweeping legislation Wednesday to prevent a Jan. 1 income tax increase for millions and renew jobless benefits for the long-term unemployed.

The 81-19 roll call cleared the way for a suspenseful vote in the House on Thursday, where rebellious liberals announced plans to try and stiffen an estate tax provision they oppose as too generous to the rich.

President Barack Obama quickly told reporters he wants the bill passed unchanged, so it can reach his desk quickly for a signature. And Senate Republicans have warned any modification could doom the bill's prospects for passage in time to head off the tax hikes.

"I know there are different aspects of this plan to which members of Congress, on both sides of the aisle, object," Obama said. "That's the nature of compromise. But we worked hard to negotiate an agreement that's a win for middle-class families and a win for our economy. And we can't afford to let it fall victim to either delay or defeat."

But House Democrats argued their proposed change would shave $23 billion off the cost of the bill and ease the impact on deficits. "It doesn't create jobs, it adds to the deficit," Rep. Chris Van Hollen, D-Md., said of the more generous estate tax included in the bill. "Is that the message this Congress wants to send at a time of high deficits?"

At its core, the legislation provides a two-year extension of the tax cuts at all income levels that Congress approved while George W. Bush was president. Without action, they will expire on Dec. 31.

The bill also would cut 2011 Social Security taxes for all wage earners, a reduction that will mean an extra $1,000 in take home pay for an individual earning $50,000.

In addition, the legislation renews a program of jobless benefits for millions who were laid off more than six months ago. Officials said that without the bill, government checks will be cut off for two million Americans over the holidays, and millions more over the next year.

Energy tax provisions, including extension of a government subsidy for ethanol and breaks for producers of other alternatives to oil, were added in recent days to strengthen lawmakers' support for the measure.

The legislation amounted to the first fruits of a new era of divided government, a deal sealed a little more than a week ago by Obama, who is nursing a fragile economic recovery midway through his term, and Republicans whose position was greatly strengthened in last month's elections.

Concessions made by the president sparked criticism from liberals who were angered at tax cuts for the wealthy that he had long criticized. Some provisions agreed to by Republican leaders brought objections from conservatives unhappy that the cost of the jobless benefits would swell the federal budget deficit.

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