House Passes $858B Bill Extending Tax Cuts

WASHINGTON (CN) - The House at midnight on Friday passed an $858 billion tax-cut bill that will extend for two years Bush-era tax cuts slated to expire on Dec. 31. The bill now goes to President Barack Obama's desk for signature.

"We absolutely cannot allow taxes to go up come Jan. 1," House Speaker Nancy Pelosi, D-Calif., said on the House floor Thursday night before the vote.

The tax-cut bill sailed through the Senate on Wednesday with a 81-19 vote.

In the House, 139 Democrats and 138 Republicans voted in favor of the measure, and 112 Democrats and 36 Republicans voted against it.

In addition to extending tax cuts for both classes of income earners - those making $250,000 or less and those making $250,000 or more - the bill also extends unemployment insurance benefits for 13 months, adds a temporary 2 percent cut in payroll taxes and includes education and business tax cuts.

The measure was the result of last week's negotiations between Obama and congressional Republicans. Obama originally supported only extending tax cuts for the 98 percent of Americans making $250,000 or less. Obama called the bill "an essential ingredient in spurring economic growth over the short run."

Earlier this week, House Democrats expressed strong opposition to the bill, complaining that granting tax-cut extensions to the wealthiest 2 percent of Americans would add $700 billion to the deficit.

But on Thursday, Pelosi argued that the legislation does create jobs.

"We are fighting for the middle class," Pelosi said in a floor speech. "We are wanting to grow the economy and to create jobs and to reduce the deficit. So we must subject whatever legislation that comes before us as to how it meets those tests."

Pelosi also lamented the bill's estate tax provision, which lowers the estate tax to 35 percent after the first $5 million in assets.

"This is very difficult," she continued. "Nobody wants taxes to go up for the middle class. In fact, everybody gets a tax cut in this. We just don't see why we have to give an extra tax cut to the wealthiest and then an extra, extra estate tax benefit to the top one-quarter percent."

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