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Defiant House GOP to Offer Broader Tax Cut Bill

The $82-billion measure adds a low-income child credit, but new provisions could stymie its chances of passage by the Senate.

June 11, 2003|Janet Hook | Times Staff Writer

WASHINGTON -- Defying White House pleas to act quickly on a bill to extend child tax credits to low-income families, House Republicans said Tuesday they would instead pass a broader $82-billion tax cut that could prove more difficult to push through the Senate.

The House is scheduled to vote Thursday on its version of the bill, which would not only provide benefits for low-income families, but also include additional longer-term benefits for upper-income families with children.

House GOP leaders defiantly refused to rubber-stamp the $10.5-billion child tax-credit bill passed last week by the Senate, despite comments Monday by White House spokesman Ari Fleischer that Bush supported the Senate bill and wanted to sign it quickly.

Asked about Fleischer's comments, House Majority Leader Tom DeLay (R-Texas) said, "Last time I checked, he doesn't have a vote."

The split between the House GOP and Republicans in the Senate and White House reflects, in part, their differing assessments of the political urgency of child tax credits. House Republicans have said they feel no great pressure to act on a bill they consider bad policy because it gives tax breaks to people whose income is too low to pay taxes.

"I'm not concerned about the political issue," said Rep. Jim McCrery (R-La.), a member of the House Ways and Means Committee, which writes tax policy. "I'd just as soon stand and fight."

By contrast, Senate Republicans and the White House are more eager to quickly end the dispute, which critics say shows the GOP's insensitivity to the needs of the working poor.

The controversy flared immediately after Bush signed the new $350-billion tax cut bill, which temporarily increased -- from $600 to $1,000 -- the tax credit that millions of middle-income families can take for each child. But it gave no per-child benefit to families making too little to pay federal income taxes -- even though such benefits, in the form of direct checks, were to be provided in the years to come under the tax cut law approved by Congress in 2001.

That omission spawned a barrage of criticism from outraged Democrats, liberal activists -- and a handful of Republicans.

As political pressure snowballed, the Senate last week voted overwhelmingly to approve a bill that would provide the benefit for low-income families, but just for 2003-04. It also would give higher-income families a break by raising from $110,000 to $150,000 per couple the income level at which eligibility for the credit begins to phase out. However, that increase would not begin until 2008 and would not hit $150,000 until 2010.

The Senate bill provided $10.5 billion in relief through the end of the decade, offsetting that cost with provisions that raise $10.5 billion by extending U.S. Customs Service fees that are due to expire.

House Republicans opposed the Senate bill's fee extensions and, more broadly, objected to the policy expanding tax-relief measures to low-income people who do not pay taxes.

The House version of the bill unveiled by Ways and Means Chairman Bill Thomas (R-Bakersfield) goes far beyond the Senate's in its expansion of the child credit. It would:

* Provide child tax-credit relief for low-income families through 2010, not just until 2004 as in the Senate bill.

* Raise the income eligibility threshold to $150,000 immediately and make it retroactive to Jan. 1, 2003, rather than delay it, as the Senate does.

* Keep the per-child credit at $1,000 through 2010, rather than allowing it to drop to $700 in 2005 as it would under the Senate bill and current law.

House Republicans also tacked on provisions adding tax benefits for members of the military and for the families of astronauts who die in space shuttle missions.

Thomas called the Senate bill, with its 2004 child credit benefits cutoff, a blatantly political document that is designed to aid the bill's lead sponsor, Sen. Blanche Lambert Lincoln (D-Ark.), who faces reelection in 2004.

"If these people need help between now and the next election, they need it for the rest of the decade," Thomas said.

He also denounced the Senate for what he described as its gimmickry of ending provisions in 2004 and phasing in the increased income-eligibility ceiling -- even though such devices were used often in tax-cutting bills approved by the House earlier this year.

Once the House acts, differences with the Senate will have to be settled in a conference committee.

The biggest obstacle will be the House price tag: A majority in the Senate has insisted that any new tax cut not swell the budget deficit, but a majority in the House is against including offsetting tax increases. House Republicans are gambling that the political appeal of the child credit expansion will outweigh concerns about the deficit.

The White House was noncommittal after House Republicans released their proposal and merely reiterated the president's desire for Congress to act soon.

"The president wants it to get done," said Claire Buchan, a White House spokeswoman.

The House Republicans said they were not concerned that protracted negotiations would dash White House hopes to settle the matter quickly. They were irritated by Fleischer's comments, believing they undercut the House's bargaining position.

"They cut us off at the knees," said one House GOP leadership aide.

"We don't feel like there is any hurry to get a bad bill."

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