WASHINGTON -- After nearly six months of tortuous negotiation, members of Congress launched the final push yesterday for a compromise deficit reduction package.
President Bush signed a stopgap spending bill enabling the federal government to continue normal operations through midnight Wednesday, the third temporary extension of the federal government's spending authority since September. Key lawmakers, meanwhile, settled down to the difficult task of melding the very different versions of budget legislation adopted this week by the House and Senate.
Lawmakers and their staffs planned to work through the weekend in hopes of reaching a final agreement by tomorrow evening, each armed with a 13-pound, half-foot-high stack of papers that supposedly held the key to a deal.
"I think the pieces are all there," said House Budget Committee Chairman Leon E. Panetta, D-Calif. "It's just going to be a matter of putting them in place."
That is a goal more easily uttered than realized. The deficit reduction bills, adopted Tuesday by the House and early yesterday by the Senate, both increase a variety of taxes and cut Medicare, agriculture and other benefit programs. Both bills serve as the keystone of a promised $500 billion reduction in the federal deficit during the next five years.
But the House bill, passed with little Republican support, calls on the well-off to contribute a larger proportion of their income to the cause of deficit reduction than legislation endorsed by a slender bipartisan majority in the Senate. Indeed, after the Senate passed its bill, some of its Democratic supporters called on the president to support a compromise reflecting the priorities of the House deficit package.
"I much prefer the House package with regard to revenues," said Senate Budget Committee Chairman Jim Sasser, D-Tenn. "It puts a heavier burden on the wealthiest Americans to pay their fair share."
President Bush has tacitly endorsed the Senate's version, promising to veto the document adopted by the House. But since neither bill will emerge intact from House-Senate negotiations for the president's signature, both parties became entangled yesterday in a game of rhetorical chicken, each warning the other of the perils of pressing their cases too insistently.
"I don't know why we have to go through a process of producing a bill that will not be signed," said Sen. Pete V. Domenici, the top-ranking Republican on the Senate Budget Committee. "Ultimately, we need a bill, one that the president can support."
Mr. Bush himself made a rare appearance on Capitol Hill, conferring with lawmakers to emphasize that point. Mr. Bush restated his preference, adding: "I, for the first time, feel optimistic that we can get this job done for the American people."
Democratic leaders who met with the president were just as ready to lay out their side of the case -- that the administration ought to be ready to accept some of the elements of the House bill if it wanted to see any kind of deficit legislation emerge from Congress.
For the bill to pass the House, they told Mr. Bush, a clear majority of Democrats would have to support it, since most members of the minority Republicans have committed themselves to voting against any compromise legislation likely to come before the chamber.
"I told him he had to look at the math," said Mr. Panetta. "We got 10 Republicans to come along with us [on passage of the House deficit bill], and, given their posturing on this issue, it's going to be difficult to get more than 40 on board any compromise. So the rest of the support is going to have to come from Democrats, and we're not going to be able to hold on to enough of them [to pass a bill] if we offer them something they can't support."
Actually, the two packages advanced by the House and Senate have much in common. Both would increase taxes on tobacco, alcohol, airline tickets and luxury items such as private planes. Both would enlarge tax credits for low-income people. But several issues will require tricky balancing acts between the two bills and between the political agendas espoused by Republicans and Democrats.
The House bill includes perhaps the most controversial single element in the budget debate -- a proposal to increase from 28 percent to 33 percent the tax rate levied on the highest wage-earners, coupled with a 10 percent surtax on after-tax incomes of over $1 million.
The rate increase is linked to a variant of the capital gains tax-cut proposal long championed by the president. But that capital gains break is so limited and the accompanying income tax rate increase so steep that Mr. Bush has promised to veto any legislation containing it.
The administration reiterated yesterday its earlier offers to couple a 31 percent top tax rate with a sharper cut in the capital gains rate. But Democrats seemed as ready to reject that offer now as they were during a budget summit between congressional leaders and the White House last month.
After a closed-door caucus yesterday morning, several House Democrats said they might be willing to abandon the effort to change tax rates if they could win the assent of Republicans in the Senate and White House to the 10 percent millionaires' surtax.