Senate Dems pass $250K tax plan

Senate Democrats on Wednesday narrowly passed President Obama’s plan that would extend Bush-era tax rates for family income up to $250,000 a year.

The surprising passage of the bill was a victory for Senate Majority Leader Harry ReidHarry Mason ReidHarry Reid: Early voting states Iowa, New Hampshire 'not representative of the country anymore' The Memo: Democrats confront prospect of long primary Bottom Line MORE (D-Nev.) and the White House, though the highly contentious vote will undoubtedly be used by Republicans as political ammunition this election year. They ripped Democrats for seeking to raise taxes in an ailing economy.

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By a 51-48 tally, Democrats overcame two defections to win passage of the measure, which would also raise the top rate on capital gains and dividends, as well as continue several targeted tax provisions that Democrats say help the middle class.

Earlier in the afternoon, the Senate turned aside a Republican proposal, by a mostly party-line vote of 45-54, that would have extended all current rates on income, capital gains, dividends and the estate tax, also for a year. Two Republicans, Sens. Susan CollinsSusan Margaret Collins2020 Republicans accuse Schumer of snubbing legislation Key Republicans say Biden can break Washington gridlock Feehery: Pivoting to infrastructure could help heal post-impeachment wounds MORE (Maine) and Scott Brown (Mass.), voted against both plans, and Sen. Mark PryorMark Lunsford PryorTom Cotton's only Democratic rival quits race in Arkansas Medicaid rollback looms for GOP senators in 2020 Cotton pitches anti-Democrat message to SC delegation MORE (D-Ark.) voted for the two proposals. Pryor is up for reelection in 2014.

The dramatic roll calls came as Vice President Biden presided over the tally. He was in the chamber in case his vote, as president of the Senate, was needed to break a tie.

Although the Republican bill was unlikely to pass the Senate and the Democratic bill faces grim prospects in the Republican-controlled House, leaders of both parties sought to send an election-year message on tax rates and display party unity.

In the second roll call, Senate Democrats lost the votes of the two members of their caucus who had already indicated they would vote no — retiring Sens. Joe Lieberman (I-Conn.) and Jim Webb (D-Va.).

Lieberman said on the Senate floor that both the Republican and the Democratic plan amount to a punt at a time of trillion-dollar annual deficits. Webb, meanwhile, said that he would not support increasing taxes on ordinary income, but believed that rates for capital gains could go higher. 

But Democrats were able to hang on to votes from other potential fence-sitters, including Sens. Joe ManchinJoseph (Joe) ManchinPolitical purity tests are for losers Former coal exec Don Blankenship launches third-party presidential bid Centrist Democrats seize on state election wins to rail against Warren's agenda MORE (D-W.Va.) and Ben Nelson (D-Neb.), who both voted against a similar proposal in 2010. Manchin is up for reelection this fall, while Nelson is retiring.

Nelson told reporters after the vote that it was a tough decision that wasn’t made any easier by the fact the vote is unlikely to go anywhere in the House.

“We vote on a lot of things that are DOA in the House. The House votes on a lot of things that are DOA in the Senate,” Nelson said. “So that’s not the test.”

Sens. Claire McCaskillClaire Conner McCaskillMSNBC's McCaskill: Trump used 'his fat thumbs' to try to intimidate Yovanovitch GOP senator rips into Pelosi at Trump rally: 'It must suck to be that dumb' Iranian attacks expose vulnerability of campaign email accounts MORE (D-Mo.), Jon TesterJonathan (Jon) TesterTester: Our forefathers would not have tolerated Trump asking Ukraine to investigate Biden The Hill's Morning Report - Fallout from day one of Trump impeachment hearing Veterans face growing threat from online disinformation MORE (D-Mont.), Bill NelsonClarence (Bill) William NelsonBottom Line Bottom Line Media and candidates should be ashamed that they don't talk about obesity MORE (D-Fla.) and Kay HaganKay Ruthven HaganDemocrats will win back the Senate majority in 2020, all thanks to President Trump The Hill's Morning Report - Presented by Better Medicare Alliance - Dems shift strategy on impeachment vote Former North Carolina Sen. Kay Hagan dies at 66 MORE (D-N.C.), all of whom face potentially difficult reelection races in November or in 2014, also backed Obama’s proposal. 

The votes came following a topsy-turvy morning of legislative maneuvering in which Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellOvernight Health Care: GOP senator says drug price action unlikely this year | House panel weighs ban on flavored e-cigs | New York sues Juul McConnell hopes Senate impeachment trial 'not too lengthy a process' Former Speaker Boehner's official portrait unveiled MORE (R-Ky.) consented to allowing straight up-or-down votes on the two tax plans. The Senate had been scheduled to hold a procedural vote on just the Democratic plan, which would have needed 60 votes to advance. 

McConnell, speaking on the Senate floor, suggested his move was meant to smoke out vulnerable Democrats, and make them put their cards on the table. “The American people should know where we stand,” McConnell said. “Today they will.”

Reid has said for weeks that he could muster a majority for the tax plan. The passage of the bill came after Democrats bickered over whether to raise the $250,000 threshold to $1 million annually. 

Obama refused to budge from his $250,000 mark, and congressional Democrats recently rallied behind their president, who is deadlocked in his reelection race with Mitt Romney. 

With Wednesday’s vote, a Democratic aide said, the chamber had upped the pressure on the House, with President Obama now being able to single out Republicans — and not just Congress — for not passing tax relief for the middle class.

“Why don’t we pass this now, give real relief to the middle class, and have the other debate later?” Sen. Charles SchumerCharles (Chuck) Ellis Schumer2020 Republicans accuse Schumer of snubbing legislation Schumer: Leadership trying to work out competing surprise medical bill measures Top GOP senator: Drug pricing action unlikely before end of year MORE (D-N.Y.) said, referring to the question of whether to extend the tax rates to income levels between $250,000 and $1 million. Schumer has previously embraced the higher threshold. 

Both Republicans and Democrats believe they have the upper hand on taxes, with 103 days to go before the election. Leaders of the respective parties are looking to win the message war this fall while also jockeying for leverage in advance of the post-election lame-duck session — when most of the substantive decisions on big-ticket tax and fiscal issues are expected to be made. 

For starters, measures that raise revenues are, under the Constitution, supposed to start in the House, and McConnell objected on Wednesday to a request from Reid to fix that issue.

Democrats noted Wednesday that Republicans had allowed bills dealing with transportation and the Federal Aviation Administration to move forward, even though they could have been tripped up by the same problem.

Regardless, the House is expected to hold its own vote next week on a measure that, similar to the Senate Republican bill, would essentially extend all Bush-era rates for a year. 

The House is expected to reject Obama’s plan while pushing for legislation to force a comprehensive revamp of the tax code in 2013.

“Here in the House, where tax legislation originates under the Constitution, we’re going to vote to stop the tax hike,” Speaker John BoehnerJohn Andrew BoehnerFormer Speaker Boehner's official portrait unveiled Key Republicans say Biden can break Washington gridlock From learning on his feet to policy director MORE (R-Ohio) said in a statement. “That much is clear.”

Either way, Republicans and Democrats are expected to continue their broadsides, with each side accusing the other of holding tax relief hostage for political gain.

“All sides agree on the need to extend the tax cuts for the middle class — this legislation reflects that consensus,” the Obama administration said in a policy statement.

GOP lawmakers, meanwhile, have accused Democrats of seeking a tax hike on small businesses, and said that the current sluggish economy should convince policymakers not to raise anybody’s taxes at the end of the year. 

Republicans lambasted Democrats for leaving the estate tax out of their tax proposal, with the tax’s parameters scheduled to get much less generous at the end of the year.

Senate Democrats had been calling to reinstate 2009 estate tax levels, which have also been endorsed by Obama. But with some Democrats suggesting they prefer the current estate tax policy, party leaders dropped the proposal from their plan.

Sen. Orrin HatchOrrin Grant HatchKey Republicans say Biden can break Washington gridlock Trump awards Medal of Freedom to racing industry icon Roger Penske Trump holds more Medal of Freedom ceremonies than predecessors but awards fewer medals MORE (Utah), the ranking Republican on the Finance Committee, and other GOP lawmakers have said that the Democrats’ decision could ensnare many more family farms and small businesses.

But Senate Majority Whip Dick DurbinRichard (Dick) Joseph DurbinSenators voice support for Iran protesters but stop short of taking action GOP divided over impeachment trial strategy Democratic senators introduce bill to push ICE to stop 'overuse' of solitary confinement MORE (D-Ill.), citing polling on the issue, said that he thought Wednesday’s vote would be a boon to Democratic candidates in tough races, and that Republicans were on the wrong side of the issue.

“Just take the phrase: ‘The top 2 percent of wage earners pay their fair share,’” Durbin said. “We’ve tested it in every direction. We know where people stand on it. They’re wrong, and they’ve been wrong.”

— Updated at 9:08 p.m.