Senate OKs reduced tax cut

65-35 vote supports $1.2 trillion measure, less than Bush asked

House backed $1.6 trillion

Blueprint's outcome called good indicator of subsequent action

April 07, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - With a strong bipartisan majority, the Senate approved a budget blueprint yesterday that would sharply reduce the size of the tax cut President Bush had insisted on but would still grant the most sweeping tax relief in two decades.

The $1.2 trillion worth of tax cuts over the next 11 years, approved by a vote of 65-35, fell well short of the $1.6 trillion Bush had been seeking. But 15 Democrats defied their party leaders to join all 50 Republicans and help assure that a compromise version of the president's top priority can get through Congress without being blocked by parliamentary obstacles.

The measure includes an $85 billion tax cut for this year, intended to energize the sagging economy as quickly as possible.

The House has already approved Bush's $1.6 trillion tax-cut proposal. Differences between the House and Senate versions of the budget blueprint will be reconciled within a few weeks. And Republican Senate leaders say they are confident that a bigger tax cut will ultimately be approved during House-Senate negotiations.

"The fact that both houses of Congress have committed to provide significant relief is good for the American people, and it's good for our economy," President Bush said at the White House.

Congress' budget blueprint for next year is not binding. But it reflects roughly how much tax relief is likely to be approved later this year, when specific tax and spending items are to be enacted into law.

After four days of intense lobbying in Washington and weeks of stumping around the country, Bush chose to settle for the smaller tax cut backed by moderate senators in both parties because he could not prevail in the Senate, which is evenly divided between Democrats and Republicans.

The president could neither keep Republican ranks united behind him nor woo enough Democrats to replace the Republican defectors.

"It's one of the realities of a 50-50 Senate," Sen. Charles E. Grassley, an Iowa Republican, said in acknowledging that the president had suffered a setback.

Even so, Bush succeeded in winning bipartisan approval for a tax cut far larger than what Democrats had originally said they could support. The White House and its Republican allies in Congress claimed victory by winning so many Democrats to their cause, and Bush pronounced himself "really pleased."

Meanwhile, leaders of the Senate Finance Committee plan to begin work next week on a tax-cut bill that would begin reducing income tax rates this year in the lowest brackets, thus providing relief to nearly all taxpayers. Rate reductions in the higher brackets would kick in over the next decade.

Support for a major tax cut has been building steadily in Congress along with concern about the slumping economy. Lawmakers of both parties argue that a speedy reduction in taxes would make more money available to consumers and small businesses.

Also in the tax-cut legislation the Senate plans to draft soon are expected to be proposals to reduce the "marriage penalty" that affects many two-earner couples and to gradually eliminate the estate tax. The House has passed three separate measures, dealing with income tax rates, the marriage penalty and the estate tax.

A key feature of the budget blueprint approved yesterday is one that sets forth a procedure for Senate debate on the tax-cut bill that makes it difficult for opponents to delay and impossible to filibuster. The broad margin of support also seems to assure that action will be relatively quick.

The blueprint calls for Congress to enact a second tax-cut bill later this year that might include breaks sought by the business community, such as tax credits for research and development.

The budget outline approved by the Senate represents a setback for Bush on spending proposals. The president had hoped to limit the increase in spending on domestic programs next year to 4 percent. But in the compromise measure, the senators added about $17 billion to the $661 billion Bush had sought, providing more money for education, health, defense, agriculture and veterans programs that would raise the overall increase to nearly 7 percent.

To block that new spending, the president might have to veto - or threaten to veto - spending bills that will be enacted later, possibly with the support of many of Bush's fellow Republicans.

Sen. Tom Daschle, the Senate Democratic leader, said he was heartened by the support for greater spending and a smaller tax cut reflected in the blueprint.

"If this is a victory for them, there ought to be more like them," Daschle said.

But Daschle complained that the tax cut was still too large, that new spending for priorities such as health care was too small and that too little was set aside to reduce the national debt.

Along with Daschle, Sens. Paul S. Sarbanes and Barbara A. Mikulski of Maryland were among the 35 Democrats who voted against the budget blueprint.

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