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Senate passes Democratic tax plan, rejects GOP version

By Ted Barrett and Alan Silverleib, CNN
updated 6:47 PM EDT, Wed July 25, 2012
The Senate passed a Democratic plan to extend Bush era tax cuts and rejected a Republican proposal Wednesday.
The Senate passed a Democratic plan to extend Bush era tax cuts and rejected a Republican proposal Wednesday.
STORY HIGHLIGHTS
  • NEW: Obama praises Senate vote while top Republicans blast it
  • Senate passes a Democratic tax plan while rejecting the GOP alternative
  • GOP wants to extend Bush-era tax cuts for all; Democrats want $250,000 income ceiling
  • Neither plan is expected to win full congressional approval

Washington (CNN) -- The U.S. Senate on Wednesday passed a Democratic plan to extend the Bush-era tax cuts for middle income Americans while rejecting a Republican alternative to continue all of the cuts -- twin votes that help to crystallize the position of the two parties on a critical issue heading into the fall campaign.

The Democratic proposal passed in a sharply polarized 51-48 vote, while the Republican plan was defeated 45-54.

Vice President Joe Biden, the constitutional presiding officer of the Senate, was on hand to cast a tie-breaking vote if necessary.

Strategists on both sides of the aisle acknowledge that neither plan has a chance of passing both the Democratic-controlled Senate and the Republican-controlled House of Representatives. GOP leaders in the House have indicated they have no intention of bringing the Democrats' plan to a vote.

House Speaker John Boehner, R-Ohio, pledged in a written statement after the votes to "stop the tax hike," and insisted Republicans are the only ones addressing the "threat to our economy."

Republican National Committee Chairman Reince Priebus blasted Democrats for backing a "disastrous plan to raise taxes on small businesses and job creators" while putting "their tax-and-spend agenda ahead of creating jobs."

President Barack Obama, however, said, "House Republicans are now the only people left in Washington holding hostage the middle-class tax cuts for 98% of Americans."

The U.S. economy "isn't built from the top down, it's built from a strong and growing middle class, and that's who we should be fighting for," he declared.

Lee: Congress should extend tax cuts
Sen. Blumenthal: Extend tax cuts

Rival Bush tax plans

Wednesday's votes were primarily about political positioning in the heat of the 2012 election season, as well each party's opening bid in what is sure to be a frenzied legislative negotiating session this autumn. The economy is approaching a so-called "fiscal cliff" brought on by the looming expiration of several tax cuts as well as the approach of a series of mandatory spending cuts.

"At the end of the day this (legislative maneuvering) isn't going to solve the problem. It's going to be political posturing all the way up to the November election," said Sen. Bill Nelson, D-Florida.

The Democratic bill approved by the Senate on Wednesday would extend the Bush tax cuts -- now set to expire at the end of the year -- just on incomes under $250,000 for a couple and $200,000 for an individual. The GOP bill would extend the tax cuts for all taxpayers -- including the wealthiest Americans -- and includes a requirement that Congress tackle comprehensive tax reform within a year.

Republicans argue that any tax hikes could derail what is already considered a weak recovery.

Opinion: Taxmageddon is headed our way

After Senate leaders jockeyed for days over procedural issues tied to consideration of the bills, Senate Minority Leader Mitch McConnell, R-Kentucky, unexpectedly announced Wednesday morning that Republicans would agree to Democratic demands and hold back-to-back votes requiring neither side to garner a filibuster-proof 60-vote margin.

McConnell's decision gave the Democrats bragging rights, allowing them to tout the fact that their bill is capable of passing the Senate. But it also gave Republicans the ability to put several centrist Democratic senators on the spot, forcing those Democrats to vote for a politically contentious plan that raises taxes on certain Americans.

"We owe it to the American people to let them know whether we actually think it is a good idea to double down on the failed economic policies of the past few years or whether we support a new approach," McConnell said before the vote. "By setting these votes at a 50-vote threshold, nobody on the other side can hide behind a procedural vote while leaving their views on the actual bill itself a mystery."

For their part, Democrats point to polling that shows a majority of Americans support their approach.

"Our bill has the support of President Obama, has the support of the Democratic caucus and has the support of the American people. A majority of Americans, including a significant majority of Republicans, agree taxes should remain low for the middle class and the top 2% should pay their fair share to reduce the deficit," said Senate Majority Leader Harry Reid, D-Nevada.

"The only place there is no agreement is with Republicans in Congress."

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Opinion: Give hardworking Americans a break

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