Under Wire, House Passes Big Package of Tax Cuts
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Speaker Paul D. Ryan expressed annoyance on Thursday at the $1.1 trillion year-end spending bill now on the House floor. “You know I don’t like this process, right?” he told reporters. “I mean you know we inherited a process, a cake that was pretty much more than half-baked.”
The accompanying $650 million tax-cut measure is another matter. Until becoming speaker, Mr. Ryan was chairman of the tax-writing Ways and Means Committee, and he remains his party’s leader on tax policy.
By a vote of 318 to 109, the House on Thursday approved the tax-cut package, which will add more than a half-trillion dollars to the deficit, and supporters and critics alike said that the bill represented Mr. Ryan’s deeply held belief that tax cuts ultimately pay for themselves by fostering economic growth.
The approach also fits with his long-term vision for a more sweeping overhaul of the tax code that would lower rates for corporations and individuals and, according to some skeptics, would leave less money in the budget to spend on government programs.
“That’s been Paul Ryan’s long-term plan,” said Representative Sander Levin of Michigan, the senior Democrat on the Ways and Means Committee, where he was a longtime adversary of Mr. Ryan. “He really believes in supply-side economics.”
The tax measure, which is expected to be approved by the Senate on Friday, would permanently extend several tax breaks that have been renewed repeatedly on a temporary basis, including a popular business tax credit for research expenses and a benefit for certain capital investments. It would also permanently extend an enhanced child tax credit, a $2,500 college tax credit and a more robust earned-income tax credit for low-income families.
Other provisions in the bill include a small-but-symbolic tax deduction for teachers who spend their own money on books, supplies and computer equipment used in the classroom; and a separate deduction for state and local sales taxes. The measure would also postpone some key components of the Affordable Care Act, by delaying, for example, the so-called Cadillac tax on high-cost, employer-sponsored health plans.
In a statement after the vote, Mr. Ryan called the bill “a pivotal step towards rewriting our broken tax code by ending Washington’s days of extending tax policies one year at a time.” Mr. Ryan added, “This package of permanent extenders will shield families from a tax hike and provide businesses with greater economic certainty to grow and prosper, which means higher wages and more full-time jobs for American workers.”
Some senior Democrats, however, have railed against the measure, saying it favored big corporate interests over the middle class.
The House Democratic leader, Representative Nancy Pelosi of California, who voted against the measure, said that it was wrong of Republicans not to offset the cost of the tax breaks. “Having all that unpaid for, in my view, is unconscionable,” Ms. Pelosi said at a news conference.
Mr. Levin said that Democratic leaders strongly supported the child tax credit, earned-income tax credit and college tax credit, but that they could not support the bill because it would serve a larger Republican goal in further shrinking the resources available for discretionary domestic spending on government programs.
Other Democrats said the opportunity to extend permanently the tax breaks for middle-class and working-poor Americans was too important to pass up.
“We have been trying forever to get something good for the middle class and the working poor — and this is a jackpot,” the Senate Democratic leader, Harry Reid of Nevada, said in an interview.
With negotiations over the huge year-end deal down to the wire, Mr. Reid said he spent all day Sunday at home fielding calls from senators eager to secure their priorities. “I never took off my pajamas — 65 phone calls,” Mr. Reid said, adding, “It would have been nice if I had showered.”
Mr. Reid praised Mr. Ryan for taking a practical approach, comparing him to the former Senate Republican leader, Trent Lott of Mississippi. “He was a pragmatic man; he wanted to get things done,” Mr. Reid said. “That’s how Paul Ryan approaches me. No one can question his conservative credentials, but if there were ever an example of pragmatism, it’s what we have done in the last few days.”
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