Tax-Compromise Test Vote

Tax-Compromise Test Vote Scheduled in Senate Amid Criticism by Democrats

By Richard Rubin -

Representative Paul Ryan, a Republican from Wisconsin, said, “We have an agreement and that ought to be honored and it should pass soon so we don’t create this volatility in the economy.” Photographer: Joshua Roberts/Bloomberg

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Dec. 13 (Bloomberg) -- Brian Gardner, senior vice president for Washington research at Keefe Bruyette & Woods Inc., discusses the outlook for U.S. President Barack Obama's planned meeting Dec. 15 with about 20 corporate chief executive officers. Gardner speaks from Washington with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

The U.S. Senate is set to hold a procedural vote today on the $858 billion tax-cut package that President Barack Obama and congressional Republicans announced last week.

The vote, which requires 60 senators’ approval, would clear the way for final passage of the bill on Tuesday.

The bill would extend all existing income tax rates for two more years beyond their scheduled Dec. 31 expiration. It also would extend expanded unemployment insurance benefits through 2011, cut payroll taxes by 2 percentage points, and set the estate tax with a $5 million per-person exemption and 35 percent top rate.

The biggest hurdle may come in the House, where Democratic leaders are discussing potential changes to the bill, which could threaten the compromise between Obama and Republicans.

“A deal is a deal. We have an agreement and that ought to be honored and it should pass soon so we don’t create this volatility in the economy,” Representative Paul Ryan, a Wisconsin Republican, told Bloomberg Television’s “Political Capital with Al Hunt.”

House members won’t return to Washington until Tuesday evening, and House leaders haven’t said whether they will allow the bill to reach the floor in its current form or whether they will seek changes.

Changes Sought

Democratic leaders have been particularly critical of the estate tax provisions in the agreement. They would prefer a 45 percent top rate and a $3.5 million exemption per person. They also wanted to limit the extension of lower income tax rates to incomes below $200,000 for individuals and below $250,000 for married couples.

“We just can’t afford that kind of giveaway to the very wealthiest among us,” said Senate Budget Chairman Kent Conrad, a North Dakota Democrat who appeared with Ryan on Bloomberg Television.

Conrad, who has endorsed the agreement between Obama and Republicans, said he expects the bill to pass. Republicans, including Senator Jon Kyl of Arizona, have said changes to the estate tax provisions would threaten the entire bill.