WASHIGTON — WASHINGTON -- A closely divided Senate adopted, 54-46, a sweeping deficit-reduction bill early this morning after the White House said it might rescind a threatened shutdown of the federal government at midnight tonight.
The Senate bill, which would raise a variety of taxes and cut Medicare and agriculture programs, is the keystone of a plan to cut the deficit by $500 billion over five years. It must, however, be melded with a sharply different version adopted Tuesday by the House before it can be sent to the White House for President Bush's signature.
Today, lawmakers from both chambers are expected to begin crafting a compromise bill.
The president has said that he would veto the House's legislation, which would shift the bulk of the cost of deficit reduction onto the better-off, and that he would sign the Senate's bill, which would spread the burden of cutting the deficit more evenly between the middle and upper classes.
Congressional leaders expressed hope that they would be able to strike a compromise between the two versions by midnight tonight, at which point stopgap legislation providing the government with operating funds is to expire.
White House officials said yesterday, however, that Mr. Bush would be willing to sign new legislation to keep the government operating through Wednesday, if lawmakers were making headway today.
"Closing down the government is something you do only as a last resort," said White House spokesman Marlin Fitzwater. "The point is, we want a budget agreement, and we want to put a little pressure on them to get the job done."
The Senate's final action early today came as little surprise, since, during two days of floor consideration, the bill had survived repeated efforts by rank-and-file lawmakers to change it.
A Republican effort to strip the legislation of its 9.5-cent-per-gallon increase in the federal gas tax failed Thursday, as did a Democratic attempt to redraw the bill along the lines of the House plan.
Yesterday, the package survived another attempted overhaul when lawmakers voted 55-45 to defeat an effort by Sens. Albert Gore Jr., D-Tenn., and Barbara A. Mikulski, D-Md., to increase taxes on the well-off and lessen the plan's proposed Medicare premium increase.
The Gore-Mikulski proposal would have reduced the Senate package's proposed gasoline tax increase to 6 cents a gallon. It would have increased the tax paid by the highest income earners from 28 percent to 33 percent and would have imposed a 10 percent surtax on taxable incomes over $1 million, both terms in the House bill.
At the same time, it would have increased the alternative minimum tax -- constructed to ensure that well-off investors with many deduc
tions pay some amount of federal tax -- from 21 percent to 25 percent.
"We've heard a lot about fairness," said Senator Mikulski. "Fairness means we give the American people a budget that makes sense and not one that makes the middle poorer and the rich richer.
"Let's go and get it from those who've got it," she said.
Democratic leaders praised the intent behind the amendment but contended that it would have transformed the package into a bill that the president would veto.
"What we have tried to do is put together a package the president will sign," said Sen. Lloyd Bentsen, D-Texas, Finance Committee chairman.
"There is substantial divergence with what came out of the House. . . . We will end up with something that is in between."
The package passed by the Senate would raise $250 billion through tax increases and reductions in Medicare and other benefits -- about half of the $500 billion in deficit reduction promised during the next five years. The rest of the savings would come mostly through reductions in defense spending from previously contemplated levels and reduced interest payments on the national debt.
House Democrats were scheduled to meet this morning to consider their negotiating strategy with the Senate. Democratic leaders, still smarting from the rejection of the budget summit agreement at the hands of both Democrats and Republicans in the House, were wary of speculating about what could or could not be dropped from their bill in the name of compromise.
"I would hesitate to say anything is a must item," said House ZTC Majority Leader Richard A. Gephardt, D-Mo. "What is important to us is the overall fairness of the package.
"I said from the beginning this is going to be hard to do. I was right then, and I'm sure I'm right now."