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Obama Signs Tax Cut Bill, Partisan Debate Rages On

  • obama_taxcuts_signing

    President Barack Obama, joined by Republican and Democratic lawmakers, signs the bipartisan tax package that extends tax cuts for families at all income levels, during a signing ceremony at the Eisenhower Executive Office Building in the White House complex, Friday, Dec. 17, 2010. (AP)

  • McConnell, Boehner, Cantor all smiles

    Nov. 30: Senate GOP Leader Mitch McConnell of Ky., left, House Speaker-designate John Boehner of Ohio, and House Majority Leader-elect Eric Cantor of Va., discuss their meeting with President Obama.AP

WASHINGTON -- As President Obama signed into law Friday the massive bipartisan tax package that delighted most Republicans but divided his own party, the debate over its implications raged on.

Obama found himself surrounded by Democrats and Republicans eager to take advantage of a photo opportunity that illustrates their effort to prevent a big New Year's Day tax hike for millions of Americans.

Obama called the deal "real money that's going to make a real difference in people's lives."

But others continue to criticize the deal.

Rep. Anthony Weiner, D-N.Y., said Obama and lawmakers will face enormous election-year pressure in 2012 to extend the cuts again or make them permanent. Weiner said the Republicans turned out to be "better poker players" than Obama.

The White House continued to defend the deal on Friday, saying there was no viable alternative plan.

"There was a lot of heat generated around this, but I will point out that a majority of Democrats in the House supported," White House chief spokesman Robert Gibbs said.

Incoming House Speaker John Boehner hailed the deal but said there's still room for improvement.

"It's a good first step, but let's be clear," he said. "If we actually want to help our economy get back on track and to begin creating jobs, we need to end the job-killing spending binge. We need to cut spending significantly, and we need to provide more certainty to small businesses around America."

The measure would extend existing tax cuts for families at every income level, renew jobless benefits for the long-term unemployed and enact a new one-year cut in Social Security taxes that would benefit nearly every worker who earns a wage.

The bill was passed just before midnight Thursday in a remarkable show of bipartisanship in the House, despite objections from some Democrats, who wanted to impose a higher estate tax than the one Obama agreed to. The vote was 277-148, with each party contributing an almost identical number of votes in favor -- the Democrats 139 and the Republicans 138.

In a rare reach across party lines, Obama negotiated the $858 billion package with Senate Republicans. The White House then spent the past 10 days persuading congressional Democrats to go along, providing a possible blueprint for the next two years, when Republicans will control the House and hold more seats in the Senate.

"There probably is nobody on this floor who likes this bill," said House Majority Leader Steny Hoyer, D-Md. "The judgment is, is it better than doing nothing? Some of the business groups believe it will help. I hope they're right."

Rep. Dave Camp, R-Mich., said that with unemployment hovering just under 10 percent and the deadline for avoiding a big tax hike fast approaching, lawmakers had little choice but to support the bill.

"This is just no time to be playing games with our economy," said Camp, who will become chairman of the tax-writing House Ways and Means Committee in January. "The failure to block these tax increases would be a direct hit to families and small businesses."

Sweeping tax cuts enacted when George W. Bush was president are scheduled to expire Jan. 1 -- a little more than two weeks away. The bill extends them for two years, placing the issue squarely in the middle of the next presidential election, in 2012.

The extended tax cuts include lower rates for the rich, the middle class and the working poor, a $1,000-per-child tax credit, tax breaks for college students and lower taxes on capital gains and dividends. The bill also extends through 2011, a series of business tax breaks designed to encourage investment that expired at the end of 2009.

Workers' Social Security taxes would be cut by nearly a third, going from 6.2 percent to 4.2 percent, for 2011. A worker making $50,000 in wages would save $1,000; one making $100,000 would save $2,000.

"This legislation is good for growth, good for jobs, good for working and middle class families, and good for businesses looking to invest and expand their work force," said Treasury Secretary Timothy Geithner.

Some Democrats complained that the package is too generous to the wealthy; Republicans complained that it doesn't make all the tax cuts permanent.

Rep. Ginny Brown-Waite, R-Fla., called it "a bipartisan moment of clarity."

The bill's cost, $858 billion, would be added to the deficit, a sore spot among budget hawks in both parties.

"I know that we are going to borrow every nickel in this bill," Hoyer lamented.

At the insistence of Republicans, the plan includes an estate tax that would allow the first $10 million of a couple's estate to pass to heirs without taxation. The balance would be subject to a 35 percent tax rate.

Many House Democrats wanted a higher estate tax, one that would allow couples to pass only $7 million tax-free, taxing anything above that amount at a 45 percent rate. They argued that the higher estate tax would affect only 6,600 of the wealthiest estates in 2011 and would save $23 billion over two years.

House Speaker Nancy Pelosi, D-Calif., called the estate tax the "most egregious provision" in the bill and held a vote that would have imposed the higher estate tax. It failed, 194-233.

Rep. Elijah Cummings, D-Md., said he thought the White House could have gotten a better deal.

"When I talk to the Republicans they are giddy about this bill," he said.

The Associated Press contributed to this report.