WASHINGTON - President Obama yesterday signed into law a huge, holiday-season tax bill extending cuts for all Americans, saluting a new spirit of political compromise as Republicans applauded and liberals seethed. The benefits range from tax cuts for millionaires and the middle class to longer-term help for the jobless.
The most significant tax legislation in nearly a decade will avert big increases that would have hit millions of people starting on New Year's Day. Declared Obama: "We are here with some good news for the American people this holiday season."
"This is progress, and that's what they sent us here to achieve," Obama said as a rare bipartisan assembly of lawmakers looked on at the White House.
The package retains Bush-era tax rates for all taxpayers, including the wealthiest Americans, a provision Obama and congressional liberals opposed. It also offers 13 months of extended benefits to the unemployed and attempts to stimulate the economy with a Social Security payroll-tax cut for all workers.
At a cost of $858 billion over two years, the deal contains provisions dear to Democrats and Republicans. It represents the most money that Obama was likely to have been able to dedicate over the next year to the slowly recovering economy. Yet it also increases the federal deficit at a time when the country is growing increasingly anxious about the red ink.
Dramatic both as an economic and a political accomplishment, the agreement sets the stage for Obama's new relationship with Congress in the aftermath of a midterm election wave that devastated Democrats and stripped them of control of the House.
Obama called for maintaining the spirit of cooperation, declaring he was hopeful "that we might refresh the American people's faith in the capability of their leaders to govern in challenging times."
He conceded that the White House and Congress face a difficult challenge when it comes to controlling the deficit and tackling the nation's debt.
"In some ways this was easier than some of the tougher choices we're going to have to make next year," he said.
Conspicuous by their absence at the ceremony were House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, D-Nev., a reflection of the sharply divided sentiment about the bill in the Democratic caucus.
For Obama, the deal completes the biggest agenda item he has placed before Congress during the postelection lame-duck session. In addition, the White House is increasingly optimistic that he will also win Senate ratification of a nuclear-arms deal with Russia and the repeal of the military's ban on openly gay service members.
Obama, who is delaying his vacation to Hawaii until Congress completes its work, now is expecting to leave Washington as early as next Wednesday, said spokesman Robert Gibbs.
Yesterday's bill signing marked a remarkably swift conclusion to a bargain struck 10 days ago between the White House and Senate Republican leader Mitch McConnell of Kentucky.
To complete the deal, Obama set aside his vow to extend tax cuts only for the middle class and lower-wage earners. The measure also enacts an estate tax that is more generous to the wealthy than Obama had sought.
The extended tax cuts in the negotiated package include rates lower than those that would have gone into effect Jan. 1, a $1,000-per-child tax credit, tax breaks for college students and lower taxes on capital gains and dividends. The bill also extends through 2011 a series of business-tax breaks that expired at the end of 2009 designed to encourage investment.
Social Security taxes will be cut by nearly a third, from 6.2 percent to 4.2 percent, for this coming year. A worker making $50,000 will save $1,000; one making $100,000 will save $2,000.