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Obama signs 'big win' tax bill

world Updated: Dec 18, 2010 08:48 IST

AFP
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President Barack Obama on Friday savored "a big win" just six weeks after his rebuke by mid-term election voters, signing a 858-billion-dollar tax law after a contentious deal with Republicans.

The White House meanwhile also expressed confidence that two other priority agenda items -- the repeal of a ban on gays serving openly in the military and a new nuclear pact with Russia would also soon win Senate backing.

"The legislation... is a substantial victory for middle-class families across the country. They're the ones hit hardest by the recession we've endured. They're the ones who need relief right now," Obama said.

The president argued that the bill, which extends tax cuts passed by former president George W Bush along with unemployment benefits, would help speed up so far sluggish economic growth after the worst recession in decades.

And he said the bill could be a harbinger of a period of cross-party cooperation when Republicans take control of the House of Representatives in January, after routing his Democrats last month in mid-term elections.

"The final product proves, when we can put aside the partisanship and the political games, when we can put aside what's good for some of us in favor of what's good for all of us, we can get a lot done," he said.

Unusually, Obama was joined at the bill signing by Republican Senate Majority leader Mitch McConnell, who has spent the last two years doing everything he could to thwart Obama's agenda.

But McConnell signed on to the deal after Republicans won inclusion of an extension of tax cuts for the wealthy and a cut in inheritance taxes -- provisions Obama does not like, but accepted to get the bill passed.

"Republicans have fought hard for this legislation. Up until last week, most Democrats resisted, but in the end the American people were heard," McConnell said.

"That's a welcome change from the past two years."

The pre-Christmas rush of legislation in the previously logjammed Senate helped confound perceptions that Obama would be constrained after his Democrats got an election pounding.

"I think it is a big win for the president," White House spokesman Robert Gibbs said.

But some Democrats are furious that the bill extended tax breaks for the wealthiest Americans and rolled back inheritance tax on the richest estates.

"This measure does not create a single job or stimulate the economy in any way," said number-three Democratic Representative James Clyburn, who urged lawmakers to "restore some fairness to the tax code."

Democrat Linda Sanchez from California called the measure "reckless," and Democrat Jay Inslee from Washington state derided it as "deja-voodoo economics."

Gibbs said that the White House was also increasingly hopeful that the bid to scrap the "Don't Ask, Don't Tell" provision on gays in the military and the START nuclear disarmament treaty would also pass before the end of the year.

Obama's Democratic allies in the US Senate have set the stage for a critical weekend test vote on the bill.

Supporters fear they will lose their best chance in years of overturning "Don't Ask, Don't Tell" when a new US Congress musters in January with Republicans -- who largely oppose repeal -- in charge of the House.

The Senate is also forging ahead on Obama's top foreign policy priority, the new Strategic Arms Reduction Treaty (START) with Russia, even as Republicans sought to put off a vote until next year or even kill the deal.

Top US military officials rebuffed Republican charges that the pact will cripple US missile defense plans, as Democratic Senate Majority Leader Harry Reid set the stage for a likely ratification vote next week.

The agreement -- which has the support of virtually every present and past US foreign policy or national security heavyweight -- restricts each nation to a maximum of 1,550 deployed warheads, a cut of about 30 percent from a limit set in 2002, and 800 launchers and bombers.

The accord would also return US inspectors who have been unable to monitor Russia's arsenal since the treaty's predecessor lapsed in December 2009.