Congressional talks on tax-cut extensions collapse

Bush seeks at least 5 years for breaks expiring Dec. 31

July 22, 2004|By COX NEWS SERVICE

WASHINGTON - Plans to rush an extension of popular personal tax cuts through Congress before it starts its six-week summer break collapsed yesterday.

The Republican leaders of Congress - Senate Majority Leader Bill Frist of Tennessee and House Speaker Dennis Hastert of Illinois - had agreed late Tuesday on the outline of a deal to extend the tax breaks for at least two years. Democrats said they were willing to go along.

The three tax breaks, which expire Dec. 31, lessen the "marriage penalty" that raises taxes for some couples, preserve the 10 percent tax bracket, and offer a refundable tax credit of $1,000 a child.

The deal also contained a one-year extension of relief for middle-class families from the alternative minimum tax, which is imposed on people who take a lot of deductions.

If Congress and the president fail to agree on a renewal of those four tax breaks, an analysis by the private, nonpartisan Tax Policy Center shows that the average household would pay about $347 more a year.

The deal broke down, however, when the White House insisted yesterday that the breaks be extended for at least five years. The five-year plan would have raised the $75 billion price tag for the package to about $120 billion.

Because the tax cuts are not offset with spending cuts or revenue increases, Frist and Senate Finance Committee Chairman Charles E. Grassley, an Iowa Republican, could not round up support for the more expensive package from the anti-deficit moderates in both parties who cast the swing votes in the closely divided Senate.

The talks aimed at ending the impasse ground to a halt late yesterday afternoon as Republicans prepared join President Bush at a fund-raising dinner last night for this fall's Senate and House campaigns.

"It would be nice to do it now, but if it's not just the right package, I'll wait and do it later," Frist said.

"The goal was to have this on the floor this week," said Christin Tinsworth, a spokeswoman for the lead House negotiator, Ways and Means Committee Chairman Bill Thomas, a California Republican. "But if we don't do it this week, it won't deprive anyone of a tax break, as long as we do something before the end of the year."

White House spokesman Scott McClellan indicated that even a five-year extension is less than the president wants.

"He's called for making these tax cuts permanent," McClellan said.

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