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Senate Tax Cut Package Filled With Sweeteners, Obama Predicts Passage

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Senate Majority Leader Harry Reid gestures during a news conference on Capitol Hill Dec. 8. (AP Photo)

The sweeping tax cut bill introduced Thursday night by Senate Majority Leader Harry Reid is chock-full of sweeteners which could serve as a legislative pacifier for Democrats outraged over the concessions President Obama has handed to Republicans. 

The stimulus-sized package includes about $55 billion worth of short-term tax extensions for businesses and individuals. They cover a host of alternative energy credits, a potential salve for environmentally conscious lawmakers, as well as targeted benefits for everything from the film and television industry to mining companies to rum producers. 

Reid has set up a test vote on the package for Monday, which could clear the way for a final vote as early as Wednesday. The bill stands a good chance of passage in the Senate, but the House is less predictable as rebellious Democrats accuse the president of caving and clamor for changes. 

Obama, in an interview with NPR News, predicted Congress would ultimately approve the tax-cut compromise, though he would not rule out more changes in the bill. 

"Here's what I'm confident about -- that nobody, Democrat or Republican, wants to see people's paychecks smaller on Jan. 1 because Congress didn't act," Obama said. 

The compromise package extends the Bush tax cuts for everybody for two years. It extends long-term unemployment aid for one year, as well as implements a one-year reduction in the Social Security payroll tax on employees. 

Democrats have objected that the bill is too generous to the rich, especially its provisions cutting estate taxes for the wealthiest Americans. House Democrats voted in a closed-door meeting Thursday not to allow the package to reach the floor for a vote without changes to scale back tax relief for the rich. 

It's unclear how the sweeteners in the Senate bill will affect the debate on the House side. 

Among the extra provisions are a tax credit for biodiesel, a tax credit for ethanol, extensions of tax credits for energy-efficient homes and appliances, and credits for training mine rescue teams. 

It would allow millions of dollars worth of expensing for film and production companies doing work in the United States, give breaks for the rum trade in Puerto Rico and the Virgin Islands, provide incentives for investment in the District of Columbia and provide other benefits for the battered Gulf coast. 

The 45-cent-per-gallon ethanol subsidy alone, extended through 2011, was estimated to cost about $5 billion. The issue is of particular interest to lawmakers from Midwestern states with grain crops. 

"This bill is not perfect, but it provides the economic boost middle-class families and small businesses in Nevada and across America need," Reid said. "Middle-class families and small businesses will see their taxes go down." 

At the insistence of Republicans, the measure includes a more generous estate tax provision. That infuriated Democrats already unhappy with Obama for agreeing to extend tax cuts at incomes of more than $200,000 for individuals and $250,000 for couples. 

In all, the package would cost about $855 billion, according to a preliminary congressional estimate. 

Vice President Joe Biden has told Democrats in closed-door meetings this week that they are free to oppose the agreement but it might unravel if they do. 

"If it's take it or leave it, we'll leave it," said Rep. Lloyd Doggett, D-Texas, after a closed-door meeting in which rank-and-file Democrats chanted, "Just say no." 

Senate GOP leader Mitch McConnell has said he expects most Senate Republicans to support the tax bill. Prominent House Republicans back it, too, though some conservatives have balked over the sheer size of the package and particularly over the unemployment aid. 

The Associated Press contributed to this report.