March 22, 2003
Senate pares Bush tax plan to fund war By SUSAN MILLIGAN WASHINGTON - The Senate on Friday agreed to pare $100 billion from President Bush's proposed tax cut and use the savings to pay for the war against Iraq, buoying congressional Democrats who have complained that the $726 billion package of cuts is too large and ignores war-related costs. The White House has not officially revealed how much money the administration expects to spend on the war. Democrats accused Republican congressional leaders of trying to push through a budget plan for fiscal 2004 to protect Mr. Bush's 10-year plan for cutting taxes. "It's just common sense to take $100 billion from the tax cut and create a reserve fund," said Sen. Russ Feingold, D-Wis., author of the amendment to trim the Bush tax package. "If we don't have the sense to reduce or get rid of the tax cut in this situation we have right now, I fear we never will." Sens. Barbara Boxer and Dianne Fienstein, both California Democrats, voted to cut the $100 billion. The Senate also voted to trim another $900 million from tax cuts and transfer those funds to Amtrak, whose financial problems have periodically threatened cuts in passenger train service. Despite the budgetary setbacks, Congress appeared headed toward giving final approval to a package of tax cuts, although possibly smaller than Mr. Bush requested. Congress has never cut taxes during wartime, according to congressional budget officials. Early Friday morning, the House narrowly approved Mr. Bush's budget, including the total amount of tax cuts he proposed. The Senate was expected to approve its reduced package of tax cuts Friday night. Republican lawmakers said they hoped to restore at least some of the money the Senate diverted to the Iraq war and Amtrak when House and Senate negotiators hammer out the differences between the two plans. "As we engage in action to ensure freedom and security, it is imperative that we stay focused on important domestic priorities, including creating jobs and strengthening growth at home," Mr. Bush said in a statement praising the House vote. The Senate agreed, 52-47, to transfer $100 billion to finance the war, but Republicans maneuvered later in the day to undo the vote. Senate majority leader Bill Frist, R-Tenn., voted with the Democrats, giving him the procedural right to bring the issue up a second time. Republicans hoped to persuade one of four moderates in their party to switch. Sen. Zell Miller, D-Georgia, missed the first vote, and Republicans counted on winning his support on a new one. If Mr. Frist and another Republican also reversed their votes, the tally would be 50-50, and Vice President Dick Cheney could break the tie and salvage the $100 billion for tax cuts. While Mr. Bush has mostly gotten what he wanted from Congress - including a $1.3 trillion tax cut in 2001, a sweeping education reform package the same year, and a resolution last year authorizing force against Iraq - the Senate in the last few months has balked at a few of his requests. Senate Democrats, for instance, successfully filibustered the controversial nomination of Miguel Estrada to a federal appeals court. This week, the Senate rejected a Bush-backed plan to allow oil drilling in the Alaska National Wildlife Refuge. The Democrats' initial success in whittling down the tax cut indicates Mr. Bush may have to accept a smaller package than he wanted. The White House and congressional Republicans argue that the tax cuts would stimulate the economy and create jobs. "We need to be very bold in response to the flagging economy," said Sen.Charles Grassley, R-Iowa. The budget resolution provides a blueprint for Congress as lawmakers decide how much to spend on government programs and how much to tax to pay for them. Congress can revise the details of the $2.2 trillion budget, such as how much to spend on different programs, or how to apportion the tax cuts. Congress could also approve less than is earmarked for tax cuts. Senator John Breaux, Democrat of Louisiana and a leading proponent of postponing the cuts, said he was hopeful the Senate Finance Committee would trim the package more. Republicans control the Finance Committee, but Senator Olympia Snowe, Republican of Maine, is adverse to deficits and could provide the pivotal vote to further rein in the size of the tax cut. "We're not dead yet," Breaux said. Moderate Republicans and some Democrats Friday sought unsuccessfully to reduce the tax cut by more than half, to $350 billion. That move failed because some Democrats - including Senator Edward M. Kennedy of Massachusetts - and moderate Republicans believed there should be no tax cut at all. "We're on the edge of a fiscal crisis in this country if we keep going the way we are," said Senator George Voinovich, Republican of Ohio. "Tax cuts are not free," Breaux said. "They're great things politically, but they're not free. We need to be responsible." The tax package includes the elimination of the income tax on stock dividends, a proposal opposed by Democrats and some moderate Republicans. Advocates of the proposed change would eliminate "double taxation," since both corporate profits and stock dividends are now taxed. But foes of the proposal say it would mainly aid the wealthy while driving up the budget deficit. Middle-income Americans tend to hold stock in 401(k) retirement plans, which are already tax-free until retirement, critics note. The dividend tax proposal nearly felled the budget resolution in the House. But Republican leaders lobbied their members well into the early morning and eked out a 215-to-212 victory on the Bush budget. |
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