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Tax Cut Package Clears Key Senate Hurdle

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Senate Minority Leader Mitch McConnell, second from left, gestures during a news conference on Capitol Hill Dec. 7. (AP Photo)

A controversial bill to renew tax cuts for all Americans cleared a crucial, procedural hurdle in the Senate Monday, setting the stage for a vote on final passage later this week.

The vote was 83 to 15.

Senate rules require at least 60 votes to defeat a filibuster and advance the legislation to a final vote.

A majority of House Democrats will likely oppose the $858 billion bill when it reaches the House later this week. But House Majority Leader Steny Hoyer, D-Md., still believes that it will ultimately pass if they can increase some of the rates assessed on multimillion-dollar estates.

But Monday's roll call marked a key step in advancing the legislation after its rocky debut a week ago, in a compromise between the Obama administration and congressional Republicans.

"I am pleased to announce at this hour the United States Senate is moving forward on a package of tax cuts that has strong bipartisan support," President Obama said Monday evening. "And this proves that both parties can in fact work together to grow our economy and look out for the American people."

He urged the House to quickly pass the measure.

Senators on both sides of the aisle expressed support for the compromise package ahead of the vote. They generally described the bill as a less-than-perfect deal that was nevertheless necessary to avert a massive tax increase on all Americans come Jan. 1, when the Bush-era tax cuts are set to expire. 

Senate Republican Leader Mitch McConnell, in a speech on the Senate floor Monday, called the package a "step in the right direction." 

Any attempt to alter the deal could cause congressional Republicans to walk away from the compromise legislation, since they have said that they will not accept changes to the deal. If the House changes to the legislation, it will have to go back to the Senate for another round of votes.

Democrats and Republicans alike have insisted that tax rates not rise for the middle class. The two parties diverged over whether tax rates for the wealthy should be extended at the same time, a provision Republicans eventually won. 

Few lawmakers were completely satisfied with the compromise package unveiled last week. Democrats, already unhappy about the across-the-board tax cut extension, slammed the package for including lower-than-expected estate tax rates. 

Republicans, meanwhile, were not pleased with a temporary extension of long-term unemployment benefits. 

McConnell lamented Monday that the government would have to finance the extension with deficit spending. But despite concerns about the sheer size of the package, McConnell reasoned that the bill could actually mark a first step in tackling the debt by holding tax rates steady and "cutting off the spigot" of revenue to the federal government. 

But Sen. John Kerry, D-Mass., while announcing his support for the package, continued to argue that tax cuts for the wealthy drive an "enormous hole in the deficit" while failing to trigger job creation. 

Still, Kerry said the alternative to approving the package would be to cut off long-term aid for the nation's unemployed. "This isn't the choice we should have to make, but it is the choice we do have to make, and governing is always about choices," Kerry said in a written statement. 

A new Washington Post-ABC News poll showed that about seven in 10 Americans support the tax deal -- though a much smaller percentage support all of its major provisions. 

Despite the bipartisanship in the Senate, disgruntled House Democrats have vowed to block a final vote unless the legislation is changed to scale back billions in relief ticketed to the wealthy. 

"I think we're going to have a vote on the Senate bill, with possible changes," House Majority Leader Steny Hoyer, D-Md., said. "We may have it with amendments, we'll see what the process is." 

Many House Democrats objected strongly to a change in the estate tax that Republicans won as part of the deal. The first $5 million of a couple's estate could pass to heirs without taxation, and an additional $5 million could be passed along for the spouse. The balance would be subject to a 35 percent tax rate. 

The estate tax was repealed for 2010. But under current law, it is scheduled to return next year with a top rate of 55 percent on the portion above $1 million, $2 million for couples. 

The bill would also provide a two-year reprieve in the tax increases scheduled to take effect on Jan. 1 at all income levels, reduce Social Security taxes for every wage earner in 2001 and extend an expiring program of jobless benefits for the long-term unemployed. The estimated cost, $858 billion over two years, would be added to already-huge federal deficits. 

The compromise emerged a week ago after private talks involving the White House and top leaders in Congress, including Republicans who emerged from midterm elections with significantly increased strength. 

The Associated Press contributed to this report.