Senate Rejects Obama’s Tax Plan, Setting Stage for Deal

The vote was 53 to 36, on a bill adopted by the House on Thursday that would end the cuts on income above $250,000 a year for couples and $200,000 a year for individuals.

Republicans voted unanimously against the House-passed bill, and they were joined by four Democrats — Senators Russ Feingold of Wisconsin, Joe Manchin III of West Virginia, Ben Nelson of Nebraska, and Jim Webb of Virginia — as well as by Senator Joseph I. Lieberman, independent of Connecticut.

Excerpt:

The roll call on the so-called millionaire’s tax, which also needed 60 votes to advance, was 53 to 37 with Republicans again unanimously opposed and joined this time by Mr. Feingold, Mr. Lieberman, and Senators Richard J. Durbin of Illinois, Tom Harkin of Iowa and John D. Rockefeller IV of West Virginia.

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The looming-large deficit is a function of both revenue and expense. The government will need to work both sides. So, on the revenue side, it is a cynch that the entire Bush tax cut will not extend out.

On the expense side, the payroll freeze for 2 years is a joke; it is almost inconsequential on the bottomline.  Real reduction in the government size with require major reengineering of processes and take work out, not just outsource it to private sector.  Quick chop will only result in outsourcing of the work to the private sector, and that may only give you optical illusion of reduction of government in terms of the number of employees, even as the projects and outsourced workers on government seats increases.  We have seen this happen in many states with ultimate bad consequences.  Just look at Virginia - so many of the government jobs are now done by private companies, but there is a big contractor sitting as the intermediary creaming big percentage margins.  It is unhealthy and it is not the result we want.