–Senate Resumes Debate on Compromise Bill; Cloture Vote On Monday
–Bill’s Inclusion of Energy Tax Provisions May Placate Some House Dems
–Senate Must Decide Next Week How To Deal With FY11 Spending Bill

By John Shaw

WASHINGTON (MNI) – The Senate has resumed debating Friday the
two-year $861 billion tax cut and spending package that was negotiated
by President Obama and congressional Republican leaders, and has been
adjusted slightly to assuage Democratic concerns.

Senate leaders scheduled a critical vote Monday afternoon at 3 p.m.
ET to end debate on the package.

The tax package was offered by Senate Majority Leader Harry Reid
and Senate Minority Leader Mitch McConnell and appears to be in good
shape in the Senate.

Bernie Sanders of Vermont began to make his case for defeating the
bill Thursday night and has continued it Friday.

Sanders has called the bill a “bad deal” that should be rejected
and is trying to filibuster the bill.

Ending this filibuster will require 60 votes when the Senate votes
Monday.

If the 60 votes are secured, the Senate could debate the bill for
another 30 hours, delaying the final Senate vote until Tuesday or
Wednesday.

The Senate bill reflects the agreement that Obama announced Monday
evening. 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.

A critical part of the agreement from Obama’s perspective is 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.

The inclusion of a renewable energy grant program and a one-year
extension of subsidies for the ethanol industry is likely to ease the
concerns of some House Democrats.

As the Senate goes forward with the package, it remains unclear how
House Democrats will proceed next week.

It appears likely that Senate passage of the bill would create
enough momentum for the bill so that a coalition of virtually all House
Republicans and at least 50 Democrats will pass the bill in the lower
chamber next week.

Senate leaders must also decide how to handle funding legislation
for fiscal year 2011.

The House approved Wednesday a stop-gap spending bill that would
fund the federal government for the rest of the 2011 fiscal year.

The $1.1 trillion bill was approved by the House on a 212 to 206
vote. No Republican supported the bill and 35 House Democrats also voted
against the measure.

The bill now goes to the Senate where it faces an uncertain fate.

Several Senate Republicans have said they prefer a stop-gap bill
that only runs until February rather than the measure for the rest of
the FY11 fiscal year. This would give the GOP a chance to cut back
spending in the new Congress in which there will be 6 more Republicans
in the Senate and a substantial Republican majority in the House.

The current stop-gap spending bill extends until Dec. 18. None of
the 12 regular spending bills have been yet passed by Congress for the
fiscal year that began Oct. 1.

The stop-gap bill passed by the House would fund the federal
government in FY11 at the same level as FY10. It shifts some funds
around. For example, the bill includes $513 billion for defense, which
is about $5 billion more than in FY10. It also includes $159 billion for
funding the wars in Iraq and Afghanistan.

The bill also includes $5.7 billion in additional funds for Pell
grants and more than $500 million for a new education program that
President Obama has touted, the Race to the Top program.

The stop-gap bill includes no earmarks and freezes federal pay,
except for the military, for two years.

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

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