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Senate approval of tax-cut deal highly likely

WASHINGTON - Legislation to avert a Jan. 1 increase in income taxes for millions of Americans won overwhelming support in a Senate test vote Monday, backed by an uneasy and unusual alliance of the White House and lawmakers in both parties.

Senate passage, expected within a day or two, would set up a final showdown in the House between President Barack Obama and liberals in his own party who want the White House to scale back the billions the bill includes in relief ticketed for the rich.

Despite strong criticism from fellow Democrats, Obama has made passage of the bill a key year-end priority, essential for the economy as it struggles to recover from the worst recession in decades.

In the Senate, Majority Leader Harry Reid (D-Nev.) and his GOP counterpart, Mitch McConnell of Kentucky, were joint sponsors of the bill, a symbolic gesture of bipartisanship. "We're telling the American people to keep money that's rightfully theirs so they can spend it and invest it as they please," McConnell said.

New York's Democratic senators were split, with Kirsten Gillibrand voting no and Charles Schumer supporting the measure.

Gillibrand said she was "opposing this deal in its current form because right now we need to focus on the middle class, who are always left behind, not the people at the very top, who are doing just fine in this economy . . . Extending Bush tax cuts for the very wealthy will saddle our children with billions of dollars of debt."

Schumer also complained about the bill's effect on the national debt.

"It is unfortunate that Republicans have dictated an ultimatum that we either provide tax breaks for millionaires or else jeopardize our fragile economic recovery," Schumer said in a statement. "This is not the final say on whether the failed Bush economic policies should be continued. These millionaire tax breaks have exploded the deficit without creating jobs. We cannot allow them to become permanent."

The bill would provide a two-year reprieve in the tax increases scheduled to take effect on Jan. 1 at all income levels, reduce Social Security taxes for every wage earner in 2011, and extend expiring jobless benefits for the long-term unemployed. The estimated cost is $858 billion over two years.

The measure represents a reach across party lines after two years of political combat in which Republicans wanted a permanent extension of all the tax cuts. Democrats insisted rates be permitted to rise on incomes over $200,000 for individuals and $250,000 for couples.

Disgruntled House Democrats have vowed to block a final vote unless the legislation is changed to scale back the tax relief for the nation's wealthiest.

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