Accord reached on 2004 budget

Congressional leaders agree to pass plan, put off decision on tax-cut figure

April 10, 2003|By Julie Hirschfeld Davis | Julie Hirschfeld Davis,SUN NATIONAL STAFF

WASHINGTON - In an unusual move designed to sidestep a deadlock over President Bush's tax cut, congressional leaders agreed yesterday to pass a 2004 budget that puts off until later this year a decision on how deeply to slash taxes.

Senior Republicans reached a final deal last night that would allow the $2.2 trillion measure to come up as early as today.

Republicans in the House and Senate are deeply divided over Bush's 10-year, $726 billion economic growth package. So leaders chose to avoid a potentially embarrassing defeat of one of the president's top priorities by essentially leaving the budget vague about how large a tax cut Congress can pass this year.

The deal that Republican leaders envision would allow the Senate to pass a tax cut of $350 billion over the next 10 years; the House could pass a $626 billion measure.

The two chambers would still have to agree on an amount before clearing the measure for Bush's signature. But the hard work of determining how to do so would be put off for at least a couple of months. The approach is intended to let Congress adopt a budget without a consensus on tax cuts.

The Senate's version of the budget allows for tax cuts of $350 billion. Republican moderates whose support would be needed for a final deal have refused to budge from that figure.

The House version keeps Bush's $726 billion package intact. Leaders there said that conservatives refuse to accept the scaled-down Senate-passed tax cut. The two chambers have been negotiating to resolve their differences.

The agreement essentially allows both sides to declare victory. It puts off what will undoubtedly be a nasty debate.

"We think that this can be a win-win," said Sen. Olympia J. Snowe, a moderate Maine Republican who insists on limiting tax cuts to $350 billion. "We get the process moving forward, we preserve the commitment of the United States Senate for a budget resolution with tax cuts of $350 billion."

But the deal could hardly be seen as a Bush victory. It still takes a sizable chunk out of the growth package he proposed this year. And it seems to doom the largest part of that proposal - a $364 billion plan to end the tax that shareholders pay on corporate dividends.

Democrats ridiculed the budget deal, which Senate Minority Leader Tom Daschle of South Dakota called "bizarre."

"If it weren't so serious, it's comical," added Rep. Benjamin L. Cardin, a Baltimore Democrat. "There's a reason there's a sharp division here - it's because Americans aren't lined up on one side or the other. They're in the middle, and that's where we should be."

Sen. John B. Breaux, a Louisiana Democrat who won adoption last week of the amendment to shrink Bush's tax cut by more than half, said the proposal was "a convoluted way of doing business.

"You're just delaying the inevitable," Breaux said.

Some Democrats also expressed worry that the agreement could allow a far more costly tax package to move through Congress this year.

Snowe and Sen. George V. Voinovich of Ohio, the other Republican moderate who has pushed for a smaller tax cut, dismissed that possibility.

"I don't think that the Senate majority leader is engaged in trickery," Snowe said.

Senate Majority Leader Bill Frist, a Tennessee Republican, said that forcing through a bigger tax cut was "certainly not the intent, in any way."

Even if the House and Senate agreed later this year to push a larger tax cut, Snowe and Voinovich said they would not support a package topping $350 billion, unless cuts were made elsewhere in the budget to pay for it.

Their opposition to larger cuts, along with that of Republican Sens. Lincoln D. Chafee of Rhode Island and John McCain of Arizona, forced budget-writers to come up with the unusual plan.

The moderates want the Senate to pass a budget resolution this year, to enforce some fiscal discipline on Congress' tax and spending decisions.

"It's very important that we have a budget resolution," Voinovich said. "We can't go through what we went through last year."

Divisions over tax cuts during the last Congress prevented Democrats from passing a budget. Republicans have argued that that failure made it harder to pass key legislation, such as a measure to create a prescription drug benefit for Medicare beneficiaries, and the annual spending bills.

Budget resolutions do not have the force of law. But they set limits for the tax and spending measures that Congress will consider later. The blueprints can also shield legislation from Senate filibusters, which require 60 votes to overcome, thus allowing high-priority measures to pass with just a simple majority.

That protection is especially crucial this year in the closely divided Senate, where Republicans hold 51 seats, Democrats hold 48, and one independent, James M. Jeffords of Vermont, usually sides with Democrats.

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