–After Tax and Spending Plan Clears Senate, Bill Goes To House
–House Democratic Leaders Will Allow For Vote On Estate Tax Revision
–Senate Majority Leader Reid: Need To ‘Take Action’ on FY’11 Spend Bill
–Senate Minority Leader McConnell: Suggests New Stop-Gap Until Feb 18

By John Shaw

WASHINGTON (MNI) – The House Thursday will take up the $858 billion
tax cut and spending package that was negotiated by President Obama and
congressional Republicans and approved by the Senate Wednesday.

The Senate passed the bill on a strong 81 to 19 vote, sending it to
the House with considerable momentum.

The package is based on the agreement that President Obama reached
with Republican leaders last week. It extends all of the Bush era tax
cuts for two years and extends unemployment insurance benefits for 13
months. It includes the extension of a host of expiring or expired tax
credits, including business tax expensing provisions that are designed
to spur growth.

The agreement provides for a 2 percentage point reduction in the
employee share of payroll taxes in 2011.

The agreement also sets the estate tax at 35% above a $5 million
per person threshold.

Of the bill’s $858 billion cost, about $364 billion is spent on
extending the Bush tax cuts of 2001 and 2003, $137 billion is for AMT
relief, $111 billion for the payroll tax holiday, $68 billion for the
estate tax changes, and $56 billion for the unemployment insurance
extension.

House Democratic leaders have softened their opposition to the
underlying tax and spending bill, but are still displeased with the
package’s estate tax provisions.

House Democrats are proposing a rule Thursday, which must be
approved, that would allow a vote on the package with one change to
estate tax provision: the estate tax for the next two years would apply
a 45% tax on estates worth $3.5 million or more for individuals, or $7
million for a couple.

If this votes fails, the House would take up and vote on the Senate
passed plan.

If the House changes the Senate-passed bill, the Senate would have
to re-vote on the measure, possibly delaying or derailing its passage.

Congress must also pass a measure to fund the government by the end
of the week. The current stop-gap spending bill, which is funding the
government, expires Saturday.

The House passed a year-long stop gap spending bill last week.
Senate Democrats have drafted a $1.1 trillion omnibus spending bill that
includes all 12 of the regular spending bills for FY’11.

Senate Minority Leader Mitch McConnell repeated Thursday that
Republicans object to this bill and want Congress to pass a spending
bill that funds the government until Feb. 18, rather than a year-long
bill.

Such a vote, McConnell said, would keep the government operating
until the next Congress convenes and works develops a plan to complete
funding for FY11.

** Market News International Washington Bureau: (202) 371-2121 **

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