President Obama signs massive year-end tax cut and spending package

Reporting from Washington —  Congress gave final approval Friday to one of the most ambitious legislative packages in years — a $1.1-trillion funding bill, up to $680 billion in tax breaks and dozens of other substantial policy initiatives.

The measure, which averts another shutdown and keeps the federal government running through September, was sent to President Obama, who signed it into law.

“I do want to thank Congress for ending the year on a high note,” Obama said at a news conference after lawmakers voted on the deal. “I’m not wowed about everything in it — I’m sure that’s true for everybody — but it is a budget that, as I insisted, invests in our military and our middle class without ideological divisions.”

Obama added that “because it eliminates the possibility of a shutdown for the first nine months of next year, Congress and I have a long runway to get some important things done on behalf of the American people.”

The 65-33 Senate vote on Friday followed overwhelming passage in the House, delivering a rare bipartisan compromise as lawmakers headed out of Washington for the holiday recess.

Among other things, the package lifts the decades-long ban on U.S. crude oil exports and imposes new U.S. visa restrictions for some foreigners who have visited countries with links to terrorism.

Dozens of tax breaks will be extended or made permanent, including some for low-income families, renewable energy development and businesses.

The measure reverses automatic “sequester” cuts that were set to take effect for most government spending, and will boost funds for the Pentagon and domestic programs, including cancer research and college Pell Grants.

Together, the tax package and spending bill will likely be one of the last big legislative efforts before the 2016 election.

Last-minute fears arose early Friday morning that the House vote might be close. Some Democrats hinted they would withhold their support for the spending bill over objections to lifting the oil export ban. But ultimately most House Democrats and Republicans voted for it, 316-113.

Democratic leaders said accepting the oil provision was worth what they got in return, namely blocking Republican efforts to defund Planned Parenthood, securing new funding for environmental conservation and extending tax breaks for wind and solar power.

“They wanted big oil so bad that they gave away the store,” said Minority Leader Nancy Pelosi, the San Francisco Democrat. “They got zero.”

Republican leaders said they were also pleased with the outcome.

“Congress can now move into 2016 with a fresh start,” said House Speaker Paul D. Ryan (R-Wis.).

Passage emerged as an early test for Ryan, who was able to build stronger Republican support than his predecessor, John A. Boehner.

While conducted largely in secret, the talks between congressional leaders and the White House established a new model for conducting business under Ryan’s tenure. The top four congressional leaders never met as a group. Instead, work was outsourced to committee leaders, part of Ryan’s attempt to decentralize power and involve more lawmakers in decision-making.

Obama called Ryan after the vote, thanking him for “making this work so we didn’t have a shutdown,” the speaker told reporters at his office in the Capitol. The president invited Ryan to dinner at the White House in the new year.

Year-end packages are often stuffed with last-minute policy priorities, but this year’s deal represented an enormous undertaking that dispatched with months of pent-up legislation.

Trade-offs fill the 2,200 pages of text, with difficult compromises on both sides.

Democrats lost a chance to reverse a ban on federal funding for gun violence research, and Republicans punted their fights against Obama’s executive actions on climate change and immigration to next year.

“This is Washington, D.C., there is no such thing as a perfect bill,” said Rep. Steve Israel (D-N.Y.)

One area of bipartisan agreement was the continuation of compensation and health monitoring funds for the families of victims and responders in the Sept. 11, 2001, terrorist attacks.

The package also included cybersecurity reforms that will nudge companies to disclose cyberattacks, and shield them from some liability if they aid government investigations.

To ensure passage, Ryan separated the bills into the tax-breaks package that Republicans overwhelmingly supported, and the spending bill that had more Democratic backing — sprinkling different priorities in each one to build the largest margins of support.

For example, a provision to delay a new Obamacare tax on high-priced “Cadillac” health insurance plans — sought by organized labor — was included in the spending bill to draw Democratic support. At the same time, the lifting of the oil ban brought Republicans on board.

The measures were combined in the Senate, but opposition ran strong among conservatives and some liberals.

Among the 2016 presidential candidates, Republican Sens. Ted Cruz of Texas and Rand Paul of Kentucky voted against the package, as did Sen. Bernie Sanders of Vermont, a contender for the Democratic nomination. Only Sen. Lindsey Graham (R-S.C.) voted for it. Sen. Marco Rubio (R-Fla.) missed the vote.

The tax measure drew particular scorn from budget hawks who complained that the $622-billion package, with a price-tag that rises to $680 billion when similar benefits in the omnibus bill are included, is a giveaway that will only add to the nation’s red ink.

It extends or makes permanent dozens of credits and deductions for businesses and households, none of them paid for with cuts elsewhere in the budget. Specialty breaks include those for charitable giving, thoroughbred horses and teachers who buy classroom supplies. A new Obamacare tax on medical-device manufacturers will be delayed.

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Republicans argued that the tax breaks will pave the way for a more comprehensive tax overhaul in the future and more than pay for themselves by stimulating economic growth.

Pelosi derided the tax package as “immoral” for piling onto the deficit.

Democrats tried late into the night Thursday to negotiate aid for Puerto Rico to restructure its debt, but instead ended with a commitment from Ryan that the issue will be debated in the New Year.

As both sides declared victory Friday, Democrats provided a colorful account of the legislative sausage making.

Ryan and Pelosi met for dinner last week, according to a Democratic aide, and the speaker lamented he would get virtually none of the Republican “riders,” holding up his hand and drawing a circle.

Days later as Republicans grumbled about the session, Ryan told Pelosi, partly in jest, he had “to defend having dinner with you.”

Pelosi responded: “Tell them you tried to poison me, but I had the antidote,” according to the Democratic aide.

Ryan on Friday declined to divulge much of the backstory, simply calling the private talks “professional.”

For the latest from Congress and 2016 campaign follow @LisaMascaro

For more, go to www.latimes.com/politics

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