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Senate Clears Tax Cut Bill

13:44PM Dec 15, 2010

The U.S. Senate has approved the $858 billion tax cut/stimulus package, sending the measure to the House on an 81-19 vote.

The centerpieces of the plan include a two-year extension of the expiring 2001 and 2003 tax cuts, a one year reduction in the payroll tax (from the current 6.2% to 4.2%), an extension of unemployment benefits, a two-year estate tax with a $5 million per person ($10 million per couple) exemption and a 35% rate beyond that and provisions relative to biofuels -- a one-year extension of the ethanol blender credit at 45 cents and the biodiesel tax credit would be made retroactive to Jan. 1, 2010, and extended through the end of 2011.

President Obama hailed the Senate action and called on the House to follow suit. "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. So I urge members of Congress to pass these tax cuts as swiftly as possible."

Biofuels interests were clearly pleased by the vote today. "The National Biodiesel Board (NBB) is pleased by the Senate’s vote to retroactively extend the biodiesel tax incentive," said Manning Feraci, NBB Vice President of Federal Affairs. "This will help ensure that the nation reaps the job creation, energy security, and environmental benefits associated with the expanded domestic production and use of biodiesel in the coming year."

Bob Dinneen, head of the Renewable Fuels Association (RFA), also welcomed the Senate action. "The Senate appropriately recognized the economic value of domestic ethanol production. Extending these key incentives for American ethanol production and use will help save American jobs and provide the market stability allowing the industry to continue to grow," Dinneen said. "Members of the RFA greatly appreciate the work of ethanol advocates, led by Sen. Charles Grassley and the Obama Administration, to ensure these important job-creating provisions were included. We strongly urge the House to take up the measure as soon as is possible and to pass it before adjourning for the year."

Breaking down the vote in the Senate, 43 Democrats, 37 Republicans and one independent, Sen. Joe Lieberman (ID-Ct.) voted in favor. Voting against the plan were 13 Democrats, five Republicans and one independent, Bernie Sanders (I-Vt.). Compared to Monday's procedural vote which was approved on an 83-15 vote, three Democrats switched from voting yes to no -- Tom Harkin (Iowa), Byron Dorgan (N.D.), and Tom Udall (N.M.). Sen. Sherrod Brown (D-Ohio) voted no in Monday's vote, but switched to a yes vote today.

Three amendments were allowed to the plan and all three were rejected.

The attention now shifts to the House where some Democrats have resisted the estate tax provisions in particular. They would prefer to see a $3.5 million exemption per person and a 45% rate beyond that. But it's not clear that if they would make such a change that the Senate would still approve the measure. If the House makes changes to the bill, it has to be sent back to the Senate for another vote.

But we'll probably get a good idea of what may happen in the House as the measure will come up for consideration on Thursday, according to Majority Leader Steny Hoyer (D-Md.).

And prospects for passage also improved somewhat with 31 Blue Dog Democrats penning a letter to Speaker Nancy Pelosi (D-Caliif.) pledging their support for the package.