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Senate slashes bush tax cut { March 26 2003 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A28860-2003Mar25.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A28860-2003Mar25.html
Senate Votes to Slash Bush's Tax Cut to $350 Billion
By Helen Dewar
Washington Post Staff Writer
Wednesday, March 26, 2003; Page A01
The Senate unexpectedly reversed itself yesterday and voted to slash more than half of President Bush's proposal to reduce taxes by $726 billion over the next decade, turning victory into defeat for the president on his economic program's centerpiece.
Four days after rejecting a similar proposal by a 62-to-38 vote, the Republican-run Senate voted 51 to 48 to reduce the size of the tax cut to $350 billion in a demonstration of volatility that some senators attributed in part to uncertainty over the cost of the war in Iraq.
The smaller tax cut was included in a $2.2 trillion budget for fiscal 2004 that the Senate plans to approve today. The House last week approved Bush's full tax cut request as part of its version of the budget. Differences will have to be worked out in negotiations between the two chambers.
In what amounted to a victory for Democrats and a handful of GOP moderates, the Senate's turnabout on taxes makes it less likely than it appeared a few days ago that Bush will get all the tax cuts he wants.
Republican leaders had argued that the larger tax cut, which would eliminate the levy on corporate dividends and reduce income tax rates, was needed to boost the nation's sagging economy and create jobs. Most Democrats and a handful of GOP moderates contended the proposed cut was too large at a time of war, soaring budget deficits and homeland defense needs.
With a projected deficit of $300 billion and the unknown costs of war and reconstruction in Iraq, it is "not good policy" to embark on a major new round of tax-cutting, Sen. John Breaux (D-La.) told the Senate as he introduced the alternative.
Republicans said a halving of Bush's proposal would be insufficient to stimulate the economy.
"It would cut the growth out of the growth package," said Budget Committee Chairman Don Nickles (R-Okla.), who has led the fight for Bush's proposal.
The vote came a few hours after the White House formally sent Congress the president's $74.7 billion request for emergency funds to help pay for the war, anti-terrorism efforts and foreign aid. Some senators said worries about war-related costs played a key role in yesterday's vote switch.
Even before Bush submitted his war request, the Senate voted last week to reduce the 10-year tax cut by $100 billion, which would go to help pay for the war and subsequent efforts to rebuild Iraq. That proposed reserve fund for war costs remains in the Senate budget after yesterday's tax vote.
Concern over the "cost and uncertainty" of the conflict in Iraq helped persuade some wavering senators to back off the larger tax cut, said Sen. Max Baucus (D-Mont.). He joined Breaux and Republican Sens. Olympia J. Snowe (Maine) and George V. Voinovich (Ohio) in leading the charge for the smaller tax cut.
"Once there was a specific request, it became more of a reality," Snowe said in an interview.
To others, the vote switch appeared to underscore the enduring political power of Social Security. The proposal defeated last week would have devoted the money taken from Bush's tax cut plan to deficit reduction. The one approved yesterday earmarked the funds first for overhaul of the financially strained Social Security retirement system. If the reform effort failed, the money would be used for deficit reduction.
This apparently was enough to gain the vote of Sen. Ernest F. Hollings (D-S.C.), who had voted against last week's proposal but wanted to use funds from the proposed tax cut for Social Security. He was joined by Sen. Lincoln D. Chafee (R-R.I.) and some Democrats who also had voted against the earlier proposal on grounds that the $350 billion tax cut was still too large. That was enough to reverse the Senate's position.
White House press secretary Ari Fleischer brushed off the vote's significance, suggesting the tax cut's size is still in play. "That vote is not the final vote," he said. "There are many more to come."
In yesterday's vote, 47 Democrats and one independent were joined by three Republicans -- Snowe, Voinovich and Chafee -- in voting to reduce the tax cut to $350 billion. Sen. Zell Miller (Ga.), the only Democrat who unequivocally supports Bush's tax proposal, was absent because of his son's surgery. Maryland senators voted to reduce the tax cut; Virginia senators voted against reducing it.
The vote came as a surprise in the midst of a day-long "vote-o-rama" on several dozen amendments, with roll calls scheduled almost back-to-back to get through as many as 60 to meet the Senate's self-imposed deadline for passing the budget by late this afternoon. Although the proposal was included in the Democrats' list of amendments, it was not seen as having much chance of passing until the vote was called.
Snowe said the strategy came together late Monday when it appeared that earmarking funds for Social Security could tip the balance toward the smaller tax cut.
Still to be decided is the fate of a proposal, tentatively defeated yesterday, that would restore $145 billion of the tax cut by repealing the 1973 law that increased taxes on Social Security benefits. The proposal, offered by Sen. Jim Bunning (R-Ky.), narrowly failed. But Majority Leader Bill Frist (R-Tenn.) set the stage for another vote on the issue today after Miller returns.
© 2003 The Washington Post Company
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