Senate, House focus on tax cuts

107th Congress convenes

both sides signal compromise

Bush presses for action

January 04, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - The almost evenly divided 107th Congress convened yesterday amid signs that it might eventually come to terms with the newly elected Republican president on tax cuts, one of his top priorities.

The day's ceremonial pomp included the formal seating of the first-ever 50-50 Senate, with President Clinton watching his wife, Hillary Rodham Clinton, the new junior senator from New York, became the only first lady sworn into elective office.

In one of the oddities of the day, Democrats took over as the majority party until Jan. 20, when the inauguration of President-elect George W. Bush will shift the balance back to the Republicans because his vice president, Dick Cheney, will be able to break any ties by voting with the GOP.

Vice President Al Gore, who can provide the winning margin for Democrats in the interim, administered the oath, stoically performing an awkward task after his loss in the contested presidential election. Among the senators Gore swore in was Joseph I. Lieberman of Connecticut, Gore's running-mate, who had run simultaneously for re-election to the Senate.

The new House took office with a shrunken Republican majority of 221 to 211, the narrowest since the 1950s, and quickly began squabbling over procedural issues.

Even before the opening gavels fell in both chambers, however, the Democratic leader in the House, Richard A. Gephardt, signaled his willingness to compromise with Bush on a tax-cut package larger and broader than the reductions that most Democrats were willing to back last year.

Gephardt noted the slowing national economy and the larger-than-expected budget surplus as reasons why some Democrats might be inclined to rethink their opposition to all but narrow, targeted tax cuts.

"It may be that it has to get bigger because the recession is looming, and we've got economic worries out there," the House Democratic leader said on NBC's "Today" show. In interviews later in the day, Gephardt said Democrats were willing to discuss all tax-cut options. But he declined to discuss any specific size or cost.

Lawmakers from both parties suggested that Gephardt's comments might reflect not so much a change of position as a recognition that if Democrats do not back a broad tax-cut bill, one might pass anyway and hurt them politically.

Not even the staunchest partisans predict that the 10-year, $1.3 trillion tax-cut proposal Bush campaigned on could pass intact. But scores of House Democrats supported smaller Republican tax-cut bills last year, only to see them vetoed by President Clinton. At least some of those Democrats are considered likely to back a broader tax-reduction bill.

Senate passage would probably more difficult, but swing Democrats could also provide the winning margin there. The Senate Democratic leader, Tom Daschle, who is now briefly the majority leader, has also signaled more flexibility on tax cuts than he did last year, in part because of indications that the economic boom that began in the early 1990s is over.

Bush and his supporters said the Federal Reserve's surprise decision yesterday to cut its benchmark interest rate by half a percentage point did not lessen the importance of cutting taxes in a weakening economy. In fact, Bush said, the Fed's action could give further momentum to his tax-cut drive because it underscored his own concerns about the economy.

The president-elect, who was meeting in Austin on economic issues with three dozen of the nation's top business leaders, hailed the interest rate reduction as just one of the steps necessary to "make sure that our economy does not go into a tailspin."

The further stimulation of a major tax cut remains "an integral part of economic recovery," Bush maintained.

"A lot of folks in this room have brought some pretty bad news," Bush said, referring to slumping sales and falling stock prices.

The president-elect also announced that Larry Lindsey, a former member of the Federal Reserve and the top economic advisor to Bush's presidential campaign, would head his economic team in the White House.

Congressional action on tax-cut legislation, however, is probably many months off. At the moment, the lawmakers are still trying to figure out how to run an institution that is almost in perfect equilibrium between the two parties.

Daschle has been trying to get Senate Republican Leader Trent Lott to agree to a power-sharing arrangement on committees. But Republican committee chairmen insist on retaining a majority of at least one vote on each committee.

"You can't have two people trying to drive a car," said Sen. Don Nickles, the Republican whip. "This is the same thing."

So far, the leaders have agreed only that Democrats would chair the Senate committees until the new administration takes office Jan. 20. This arrangement will allow confirmation hearings to begin on Bush Cabinet nominees, but Daschle plans no other action during his brief reign.

Gore opened the Senate by calling on Daschle, addressing him as majority leader for the first time.

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