The Senate voted early Tuesday morning 89-8 in favor of the scaled-down bipartisan package that would halt historic tax hikes for many Americans and postpone automatic spending cuts for two months. The bill will now go to the House, which is expected to be back in session at noon today.
The outlines of the deal Mr. McConnell and Mr. Biden worked out included raising tax rates for individuals making more than $400,000 and families with incomes more than $450,000, and extended unemployment benefits for the long-term jobless. It also continued a number of programs from Mr. Obama’s 2009 stimulus law, including tax credits for college tuition and for green-energy programs.
The deal included no net spending cuts, however, which left conservative Republicans complaining. Meanwhile, liberal Democrats balked at not holding firm on tax increases for families making more than $250,000 — a stance on which Mr. Obama campaigned.
Regardless of their income, all taxpayers will still see at least some tax increases with the expiration of the payroll tax holiday, which was worth about $1,000 to the average family in 2012. […]
The deal on the table late Monday included a patch to prevent millions of taxpayers from being hit by the Alternative Minimum Tax, and also included an extension of full payments to doctors treating Medicare patients.
The tax rate agreement would see the top marginal rate rise from 35 percent to 39.6 percent — the rate during the Clinton years — for individuals with incomes more than $400,000 and for households with incomes more than $450,000.
The bill is a far cry from ideal. Earlier in the day, Sen. Mike Lee said that what needs to be kept in mind is that even if a deal happens “we will be leaving intact 99 percent of a dysfunctional system – 99 percent of a tax code that’s unstable - that produces an inconsistent revenue stream and that’s gotten us $16 trillion in debt and has been producing trillion dollar annual deficits.” Lee voted against the bill, as did Republican Sens. Rand Paul, Richard Shelby, Chuck Grassley and Marco Rubio.
The question now is whether the bill can pass the House. Breitbart points out that the deal reached “cuts only $15 billion in spending while increasing tax revenues by $620 billion—a 41:1 ratio of tax increases to spending cuts,” according to the CBO. Commenting on the lopsided ratio, one House Republican said, “I can’t imagine a ratio such as that warming our fiscal hearts.”