WASHINGTON — The Senate on Tuesday formally buried President Bush's plan to lower the tax on capital gains, but the proposal is expected to be resurrected in Congress next year.
On a procedural motion, a GOP proposal to reduce capital gains taxes and establish a new type of individual retirement account won the support of a bare majority of 51 senators. However, it was killed because it fell well short of the 60 votes necessary to end a filibuster.
The vote was split largely on party lines, with all Republicans who voted supporting the capital gains tax cut, and all but six Democrats backing their leaders.
A cut in the capital gains tax rate passed the House this year and, with substantial Senate support, appeared on the verge of victory as recently as early October. However, Senate Democratic leaders put up a united front, forcing Bush to put off the issue until 1990.
The fate of the measure was sealed early this month when Bush reluctantly acknowledged that he could not overcome the stiff parliamentary roadblocks erected by Senate Majority Leader George J. Mitchell (D-Me.).
To avert a congressional deadlock that threatened to push the federal government into default on its debts, the White House retreated on its yearlong effort to win approval of a capital gains tax cut and agreed to strip it from must-pass legislation approved last week to raise the ceiling on the national debt. To cover his retreat, Bush stiffened his demand that Congress send him a deficit-reduction bill far more substantial than those currently on the table.
Despite Bush's demands, however, lawmakers continued to work Tuesday on a compromise deficit-reduction bill loaded with budgetary gimmicks previously accepted by the White House as part of last April's budget deal.