GOP agrees on tax cut plan

The Associated Press
Wednesday May 02, 2001

WASHINGTON — Top congressional Republicans reached tentative agreement Tuesday on next year’s budget, deciding to include a $1.35 trillion, 11-year tax cut that would give President Bush most of the tax reduction he has long treasured but less than he and GOP leaders wanted. 

The leaders and the White House also tentatively agreed to let spending for many programs grow by about 5.2 percent next year, said a Republican familiar with the talks who spoke on condition of anonymity. That exceeds the 4 percent boost that Bush has insisted is sufficient, but less than the 8 percent growth approved by the Senate. 

A final decision on spending would remove the last major hurdle to completing a compromise House-Senate budget for 2002 largely reflecting Bush’s fiscal priorities. GOP leaders were hoping to push the budget through Congress this week, clearing the way for the Senate to begin quickly writing tax-cutting legislation. 

“I think we’re going to get it done,” Senate Budget Committee Chairman Pete Domenici, R-N.M., told reporters. 

After failing to persuade pivotal moderate senators to support a deeper tax reduction, the White House and Republican leaders settled for the best they could get: a $1.25 trillion cut for 2002 through 2011, plus $100 billion more for 2001 and 2002 that is supposed to stimulate the economy. 

“This is a great day for the American people and the American taxpayer,” said Bush, who took to the White House Rose Garden to declare victory. He hailed the deal for promising “meaningful, significant, sweeping tax relief, the most tax relief in a generation.” 

Bush had called for a 10-year, $1.6 trillion tax reduction since early in his campaign for the Republican presidential nomination in 1999, making it the pillar of his economic plan. Only last week did he concede he would have to compromise in the face of opposition in the evenly divided Senate. 

The agreement would let Bush and congressional Republicans claim credit for one of the biggest tax cuts in decades. But it also underscored the limits on the president’s power forced by the Senate’s 50-50 division between the two parties. The new tax figure was only reached after several moderate senators said they would support it and White House aides concluded they could do no better. 

Bush used the tax agreement to cast himself as a leader who can ease partisan differences. 

“Republicans and Democrats have today proven we can work together to do what is right for the American people,” he said. 

On spending, Bush had proposed letting last year’s $635 billion in spending for discretionary programs grow to $661 billion. Those programs, approved by Congress annually, cover one-third of the budget and encompass everything but automatically paid benefits like Social Security. 

Under the tentative deal, those programs would get about $667 billion. 

The tax agreement was virtually identical to what the moderates had been insisting was the biggest package they would support. One of their leaders, Sen. John Breaux, D-La., said he supported the deal and predicted it would garner enough moderates’ votes to ensure its passage. 

“It’s the tax number we recommended,” Breaux said. 

The budget guides Congress’ later tax and spending bills, but is not binding and provides little detail. 

Indeed, Senate Majority Leader Trent Lott, R-Miss., said he believed the budget’s tax figure would not be enough “to do all that the president has asked for” in his tax package, but he and other GOP leaders say they will try passing additional tax cuts in separate, smaller bills. 

House Speaker Dennis Hastert, R-Ill., said he realized the tax number had to be reduced until it would get enough votes to pass the Senate. 

“That’s the Senate, and we’ll work with them on that,” he said. 

Senate Minority Leader Tom Daschle, D-S.D., who with other top Democrats preferred a 10-year, $750 billion tax reduction, called the new GOP tax plan “a step in the right direction.” 

He said he would still oppose the budget because he believed the tax cut’s size would deplete money needed for prescription drug benefits, education and other priorities. 

In the budget it approved last month and in tax bills it has already passed, the House endorsed Bush’s full $1.6 trillion figure, with many House Republicans calling it the minimum figure that Congress should enact this year. 

The Senate approved just a $1.2 trillion reduction in its budget on April 6. In the end, Bush had to bow to the realities of the divided Senate, in which 14 moderate Democrats and two moderate Republicans ended up wielding decisive power over the size of Bush’s top fiscal priority. 

“It’s a very major step forward to accomplishing many of the major goals that I have,” said Sen. James Jeffords, R-Vt. It was his resistance to a higher tax figure — along with Sen. Lincoln Chafee, R-R.I. — that prevented Bush from muscling his entire tax plan through the Senate, with Vice President Dick Cheney to cast the tie-breaking vote. 

Members of the tax-writing Senate Finance Committee are already holding meetings to decide which of Bush’s — and their own — proposed tax cuts will make it into the big tax package they will begin writing next week. Most Republicans believe Bush’s proposed across-the-board cut in income tax rates is the top priority. 

The budget is important because under congressional rules, a later bill reflecting the budget’s tax number cannot be subject to filibusters, or delays aimed at killing the legislation. It takes the votes of 60 of the 100 senators to end a filibuster — a margin that united Democrats could block.