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Bush tax cut gets Senate Republican support

WASHINGTON (AP) – Republican senators agreed Thursday to push for an immediate $60 billion tax cut, above the tax relief President Bush has proposed, in an effort to boost the ailing economy this year.

”The first thing is to do as much as we can, earlier, and in the first year, because of the economy,” said Senate Majority Leader Trent Lott, R-Miss. ”What you’re doing is, you’re front-end loading it.”

Budget Committee Chairman Pete Domenici outlined a blueprint Thursday for GOP senators in which about $60 billion of this year’s projected $93 billion budget surplus would be set aside for tax cuts effective this year. They could be coupled with Bush’s $958 billion in across-the-board tax cuts over 10 years and probably would not involve a rebate, Lott said.



”The American economy needs to see a positive sign that we are concerned,” Domenici, R-N.M., told reporters.

Senate Minority Leader Tom Daschle, D-S.D., said the combined package the GOP envisions would be too expensive and was still too tilted toward the wealthy.




”We should address the urgency of fiscal stimulus and the need to address fairness,” Daschle said.

Because of the available surplus, lawmakers could pass the 2001 tax cuts quickly and still have room for President Bush’s entire 10-year, $1.6 trillion tax package, Lott said. That plan includes the income tax cuts, relief from the marriage penalty and elimination of the estate tax but provides less than $6 billion in tax cuts this year.

”The other items, while they need to be done … could still come at a later date,” Lott said.

The move toward earlier tax cuts does not mean, however, that Republican leaders have a majority of votes for their budget blueprint in the Senate. Yet, senators of both parties are increasingly rallying around quicker tax relief to help the economy.

”I think there’s a sense of urgency that we should act swiftly,” said Sen. Dick Lugar, R-Ind.

Daschle is pushing a plan to cut immediately the bottom 15 percent income tax rate to 10 percent. Sen. Max Baucus of Montana, senior Democrat on the Finance Committee, is arguing for a three-year, $200 billion income tax cut that would provide up to $70 billion in cuts this year.

”His objective is to put money into people’s pockets quicker, in a responsible way,” Baucus spokesman Mike Siegel said.

Bush has said he supports accelerating his tax cut but also has insisted on living within his 10-year, $1.6 trillion price tag. A White House official, speaking Thursday on condition of anonymity, said Bush could support an expansion of his $1.6 trillion tax plan to make it retroactive, and the $60 billion figure did not sound out of line.

Along party lines, the House Ways and Means Committee voted 26-13 Thursday for its $399.2 billion version of Bush’s plan to ease the tax marriage penalty and gradually double the $500 child tax credit – including a $100 increase in the credit that would apply in 2001.

But that bill, and Bush’s $958 billion income tax cut pushed through by the House GOP, would provide less than $6 billion in 2001. Democrats said that’s far too little to have an appreciable economic impact.

”It’s a drop in an ever-expanding ocean of problems,” said Rep. Sander Levin, D-Mich. ”So far, they’ve acted with blinders on.”

One part of the marriage penalty measure, enlargement of the bottom 15 percent tax bracket for married couples, wouldn’t even begin taking effect until 2004 and would be phased in over five years. Another part of the plan, making the standard deduction for married couples equal to twice that of singles, would take effect in 2002.

”This isn’t a marriage penalty, it’s an anniversary present,” said Rep. Earl Pomeroy, D-N.D.

Senior House Republicans said the tax bills now in the pipeline are intended to keep up the tax-cutting momentum and allow Bush to claim success on his central campaign issue. Real negotiations on a final tax cut, with more relief in early years, would be likely to come in the months ahead with the Senate.

A Treasury Department official, speaking on condition of anonymity, confirmed that Bush and Treasury Secretary Paul O’Neill are exploring options to improve upfront tax relief using a greater chunk of this year’s surplus.

”This, more than any time, is a work in progress,” said House Majority Whip Tom DeLay, R-Texas. ”The bills are placeholders.”

Rep. Bill Thomas, chairman of the tax-writing Ways and Means Committee, put it this way: ”The point is, we’re moving forward. We’re ready to sit down with the administration and the Senate to alter the plan if it is appropriate.”

Meanwhile, the California Republican added, ”we will continue to move the parts of the president’s plan.”

The bill approved Thursday by the Ways and Means Committee to address the marriage penalty paid by some 25 million two-income couples and double the $500 child credit illustrates another dilemma for the GOP: keeping the tax cut within Bush’s $1.6 trillion limit over 10 years.

The two measures that have passed the panel this far add up to about $1.36 billion, leaving only $240 billion for other Bush tax cuts including elimination of the estate tax, a new charitable deduction and a permanent business research tax credit.

”We would like to know which of the president’s recommendations he would like to drop,” said Rep. Charles Rangel of New York, senior Democrat on the Ways and Means Committee.

Thomas, however, insisted the numbers would work out. ”We still have room,” he said.

Meanwhile, at the White House, Bush met with House GOP leaders and asked for patience as his administration reviews requests to revamp and boost the Pentagon’s budget.

”While we’re hawks, we want to be responsible about how we spend the money,” he said, according to a participant.

Associated Press writer Alan Fram contributed to this report.

On the Net: Ways and Means Committee: http://waysandmeans.house.gov/


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