House appears poised to accept Bush tax cuts

Critics fear measures will raise deficit at time of costly war, weak economy

March 21, 2003|By Julie Hirschfeld Davis | Julie Hirschfeld Davis,SUN NATIONAL STAFF

WASHINGTON The Republican-led House appeared poised late last night to pass a budget that includes President Bushs $726 billion tax cut, even as Senate leaders fought off attempts by Democrats and moderate Republicans to slash the tax cut by more than half.

Scrambling late into the night for the votes to pass their $2.2 trillion budget, House Republican leaders faced opposition from virtually all Democrats and from some moderate Republicans who said the tax cuts were too large and the spending on key social programs too limited.

Some Republican conservatives, too, were unhappy with the plan, after leaders restored proposed Medicare cuts in attempts to persuade moderates to support the measure.

Still, on a day dominated with talk of war in Iraq, House GOP leaders pressured their members to stay focused and united on the budget. In a late-morning meeting behind closed doors, House Speaker Dennis Hastert, an Illinois Republican, told the rank-and-file it was important for them to support the presidents budget in a time of war, an aide said.

"This is a very, very serious time, a grave time," Hastert said after the session. "We have a lot of work to do."

In the Senate, Minority Leader Tom Daschle, a South Dakota Democrat, was working to garner support for an amendment by moderate Sens. John B. Breaux, a Louisiana Democrat, and Olympia J. Snowe, a Maine Republican, that would shrink the tax cut by more than half to $350 billion. If that effort prevails in a vote scheduled for today, Congress is almost certain to pare Bushs tax plans during a House-Senate conference on the budget, setting a far lower threshold than the White House or Republican congressional leaders wanted.

The budget blueprints before the House and Senate this week will not become law, but they do set limits for the tax and spending measures Congress will consider later in the year, and are thus magnets for partisan controversy.

Both plans include all $1.6 trillion over 10 years in tax cuts proposed by Bush, including his "growth package." That proposal would eliminate the tax that shareholders pay on corporate dividends and accelerate the cuts in the individual income tax brackets enacted as part of Bush's 2001 package, but not scheduled to take effect until 2004 and 2006.

Democrats are attacking Republicans for including those tax cuts in their budget plans, charging that they are exacerbating federal deficits already projected to surpass $300 billion next year even as the nation begins what could be a costly war in Iraq.

"Every time you have to choose in this budget, tax cuts take priority," said Rep. Benjamin L. Cardin, a Baltimore Democrat. "It makes no sense given our current deficit situation, it makes no sense now that we're at war, and it makes no sense given the state of the economy."

The House Republican plan calls for spending $400 billion for defense and $27 billion for homeland security next year both increases over this year but a 1 percent across-the-board cut in all other programs Congress controls. It would also direct lawmakers to find $265 billion worth of savings in such mandatory entitlement programs as Medicaid, student loans and federal employees benefits. It does not include funding for the war in Iraq or its aftermath.

The plan includes the $400 billion that Bush requested for reforming Medicare and adding a prescription drug benefit to the federal health program for the elderly.

Last night the House rejected, mostly along party lines, the alternative presented by House Democrats, which would have included only $136 billion in tax cuts, added $20 billion in spending for the programs Congress controls, restored the cuts in entitlement programs, and provided $528 billion for a prescription drug benefit.

Republicans defended Bushs $726 billion growth package of tax cuts, arguing that the beneficial effects they would have on the economy would help alleviate -- not increase -- deficits in years to come. Rather than scaling back tax reductions, they argued, Congress should resist the urge to spend.

"Around here, in Washington, your level of compassion and concern has been equal to the amount of money youre willing to put into the program, said Rep. Jim Nussle, the Iowa Republican who chairs the Budget Committee." It's our job to control spending-- if we dont do it by the time it gets to [the presidents] desk, its not going to get done."

Nussle's comments highlighted a major difference between Bushs budget and those presented by congressional Republicans: the presidents plan forecasts deficits throughout the next decade, while the House blueprint shows a balanced budget by 2012; the Senates, by 2013.

To achieve a balanced budget a goal that many Republicans feel is a political imperative both budget plans call for substantial cuts in spending, far beyond what Bush has proposed.

Budget experts say it is highly unlikely that congressional leaders will be able to muster the appetite to push through those spending cuts when they write the 13 binding appropriations bills later this year.

"Trying to achieve a balanced budget and doing another big tax cut at a time when were already in deficit is a fundamentally inconsistent goal," said Robert L. Bixby, the executive director of the fiscally conservative Concord Coalition. "I don't think that the hard choices will be made later in the year. Their plans demonstrate how unlikely it is that were going to get back to balance anytime soon."

Bixby's group called on Congress yesterday to postpone action on the budget until the Bush administration sends a supplemental spending request to fund the war and homeland security needs a measure that many lawmakers believe will cost as much as $100 billion.

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