Senate GOP rebuffs efforts to reduce, delay tax cuts

Wednesday, March 19, 2003

WASHINGTON -- Senate Republicans rebuffed a pair of Democratic efforts Tuesday to derail President Bush's planned new tax cuts, including one proposal to delay them until after he details the likely costs of combat with Iraq.

The near party-line votes underlined a determination by majority Republicans not to let an imminent war alter their plans for boosting the economy with tax cuts. Democrats dubbed their amendment to delay the tax reductions the "Patriotic Pause," arguing that with troops poised to enter battle, now was not the time for tax cuts that they said would go primarily to the wealthy.

The roll calls also moved the Senate closer to a showdown over a more serious threat to Bush: A drive by moderates and Democrats to halve his plan for rousing the economy with $726 billion in tax cuts through 2013. With the cornerstone of the plan Bush hopes will revive economic growth at stake, both sides conceded they were unsure they had the votes to prevail.

The maneuvering came as the narrowly divided Senate spent a second day debating its $2.2 trillion budget for next year. The GOP-written plan embraces Bush's full tax-cutting proposal, whose centerpiece is the termination of taxes paid on corporate dividends.

Across the Capitol, House GOP leaders struggled to find a way to push their own, similar budget through their chamber. That plan also has run into problems with moderate Republicans, who are unhappy that substantial cuts in benefit programs such as Medicaid would be required to pay for a major new effort to create Medicare prescription drug coverage.

Congress' budget sets overall targets, leaving changes in taxes and spending for later legislation.

With war against Iraq perhaps hours away and federal deficits zooming toward record territory, Democrats complained that now was not the time for a new round of tax cuts.

But by a mostly party-line 56-43 vote, the Senate rejected an amendment by the budget panel's top Democrat, North Dakota Sen. Kent Conrad, to block most new tax cuts, and any new spending not related to war or domestic security, until after Bush reveals how much he thinks the war and its aftermath will cost.

"We may need every dollar to do what is needed to prevail in this conflict and to respond to the terrorist threat that is expanded by it," Conrad said.

Congressional and administration officials have said the White House will ask for up to $90 billion for the costs of combat and other expenses in a request that Bush could send to Capitol Hill as early as Friday. The House and Senate budgets set aside no money for the war; Republicans say Congress will provide the money once details are known.

Conrad's other amendment, defeated by 57-42, would have trimmed $1.2 trillion from the $1.3 trillion, 10-year tax cut in the Senate budget and use the money for deficit reduction. The $726 billion economic package is included in that amount.

The key fight, though, was expected later over the moderates' effort to shrink Bush's economic plan to $350 billion.

One moderate, Sen. George Voinovich, R-Ohio, said he was hoping to ensure that the money sliced from Bush's tax cut would be used to reduce budget deficits. He and fellow Republicans were having difficulty figuring out how to do that, which left GOP leaders worried that the money would be used to boost spending for highways, domestic security and other programs.

"I'm a deficit hawk. We certainly don't want the balance between what we did and what's in the budget to be spent," Voinovich said.

For Voinovich to win, his group would have to be supported by virtually every Democrat, many of whom prefer a far smaller tax reduction or even none at all. Senate Minority Leader Tom Daschle, D-S.D., said there was "near unanimity" among Democrats to support the $350 billion package.

With the budget debate expected to last all week, it remained unclear whether anyone had yet won enough votes for the tax cut they preferred.

Sen. John McCain, R-Ariz., said he would vote against any new tax cuts or spending increases unrelated to defense until a war with Iraq is over. Waiting, he said, "is far sounder statesmanship than cutting taxes in the dark or running up spending."

Just in case, Senate Finance Committee Chairman Charles Grassley, R-Iowa, a supporter of Bush's full plan, said he was preparing contingency plans that included a 50 percent exclusion for corporate dividends, instead of eliminating such taxes as Bush wants. Grassley's panel will write whatever tax legislation is called for by Congress' budget.

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