Senate delays vote on tax cut

Lawmakers trying to get bill passed, to Bush this week

May 22, 2001|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON - Democratic stalling tactics prevented the Senate last night from completing work on its version of a $1.35 trillion tax-cut package that Republican leaders hope to speed through final negotiations with the House and send to President Bush by the end of the week.

After hours of votes on amendments with no end in sight, GOP leaders postponed until today a vote on the Senate measure, which is expected to be approved by a narrow margin.

The bill provides for broad income tax rate cuts, a doubling of the $500-a-child credit, a reduction of the "marriage penalty" that affects many dual-income couples, elimination of the estate tax and an increase in tax breaks for education and pension savings.

With the exception of a short-term stimulus - worth about $300 per taxpayer this year - most of the benefits in the bill would be delayed, some for five years or longer.

Republican leaders said they were eager to help Bush achieve his highest priority and to grant Americans the largest tax cut in two decades.

They expressed disappointment that some Democrats seem determined to block their path, simply for partisan tactical advantage.

"It's very sad that some of the same people who have been complaining about a lack of bipartisanship by the president are now tying to sabotage a bipartisan tax bill," said Sen. Charles E. Grassley, the Iowa Republican who is chairman of the Finance Committee and who drafted much of the Senate bill with the senior Democrat on the committee, Sen. Max Baucus of Montana.

"But this bill is bipartisan," he added. "That's why it's going to succeed."

Democratic leaders, who tried in vain to rewrite the bill through amendments, warned that the tax cuts are so large they threaten to rob funds from such programs as Social Security and Medicare and might even send the nation back into deficit.

"Shame on us for pushing this debt onto our kids," said Sen. Kent Conrad of North Dakota, the senior Democrat on the Budget Committee.

Missing the middle class

Democrats also complained that the rate changes conspicuously omitted couples with taxable incomes between $12,000 and $45,000, who would continue to pay a 15 percent marginal rate.

"This is the heart of the American middle class," protested Sen. Jean Carnahan, a Missouri Democrat.

"They are the Americans who are working the late-night shift at the factories, they are the cops on the beat, they are American moms and dads working two jobs to send their kids to college."

Carnahan proposed to correct "this serious inequity" by dropping the 15 percent rate to 14 percent, and providing for smaller reductions - 2 percentage points instead of 3 percentage points - for taxpayers in the higher brackets.

But her amendment was defeated, 50-48, on a mostly party-line vote - a fate that awaited most of the Democratic moves yesterday.

Senate negotiators were scheduled to begin today trying to iron out differences between their bill and the House package, which more closely tracks Bush's original $1.6 trillion proposal.

`A timid package'

Several of the Senate Republican leaders said they prefer the House bill because it provides greater benefits to more affluent taxpayers than the Senate bill does and delivers nearly all of its benefits much more quickly.

"This is a very timid package," said Senate Republican Whip Don Nickles of Oklahoma. "It only uses about one-fourth of the [budget] surplus. The maximum tax rate will take four years to drop 1 point- from 39.6 percent to 38.6 percent."

But Grassley cautioned that it would be risky to trade away any of the concessions he made to win the votes of moderate Republicans and Democrats in shaping the bill. Without the support of those senators, he said, a compromise won't pass the Senate, which is divided 50-50 along party lines.

"It's just a fact of life," Grassley said. "The more bipartisan the bill is coming out of conference and the closer it is to the Senate's position, the better chance we have of getting it passed."

Ready in the House

House Republican leaders say they understand this reality and are prepared to accommodate it.

"We can pass anything here," said House Majority Whip Tom DeLay, referring to House Republicans who have a small but usually reliable majority. "We have to worry about what can pass the Senate."

Even so, the most vulnerable pieces of the Senate bill appear to be the proposals to boost the tax benefits for education and retirement savings at a cost of about $75 billion over 10 years.

Some lawmakers argue that action on these proposals should be delayed so that income tax rate cuts can be accelerated.

Benefits redirected

The Senate bill, like the House-passed proposals, would provide most of its relief through the individual income tax. But some of the benefits have been redirected away from the affluent to provide more help to middle- and low-income Americans.

Rates would be reduced in all income brackets beginning with an immediate drop to 10 percent from 15 percent on the first $6,000 of taxable income.

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