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Senate GOP Fights to Keep Bush Tax Plan Alive

Party defeats a bid by Democrats to delay action over concerns on the deficit and Iraq but faces a major test from within its own ranks.

March 19, 2003|Janet Hook | Times Staff Writer

WASHINGTON — Senate Republicans struggled Tuesday to salvage the tax cut plan that President Bush proposed to stimulate the economy, battling against concerns about the growing federal deficit and the uncertain cost of war with Iraq.

Bush allies defeated a Democratic amendment to the annual budget resolution that would have postponed action on Bush's $725-billion tax cut plan until after more is known about the costs of combat and postwar reconstruction in Iraq. The vote against the amendment was 56 to 43.

A more serious challenge looms from lawmakers pushing a bipartisan amendment to scale back the tax cut to $350 billion. A vote is expected today or Thursday, but the result could leave the tax cut issue unsettled. The Senate is so closely divided on the matter that leaders said neither the president's plan nor the stripped-down alternative had enough votes to pass.

"We don't know if we have the votes for anything," said Sen. Kay Bailey Hutchison (R-Texas).

The battles over the tax cut are being fought as part of the debate on the budget resolution that sets general targets for revenue and spending for the year. The details of any tax cut would have to be written later. But if the resolution sets a tax cut target of only $350 billion, it would essentially doom the cornerstone of Bush's economic proposal -- the elimination of taxes on dividends, which would cost $396 billion.

Concern about war costs and efforts to scale back the proposed tax cut reflect anxiety among members of both parties about the burgeoning budget deficit. According to the Congressional Budget Office, Bush's proposed tax cuts and spending plans would produce $1.8 trillion in budget deficits over the next 10 years.

Many Republicans in Congress are reluctant to give up their party's long-held goal of balancing the budget. The blueprint before the Senate is designed to eliminate the deficit in 10 years; the House later this week is to vote on a budget that purports to be balanced in seven years. But because both plans make room for Bush's big tax cut and his proposed increases in defense and homeland security spending, they call for stringent spending cuts for other government programs.

Even in the House, where fiscal conservatives wield significant clout, GOP leaders have had a hard time persuading their rank-and-file to support the budget.

Republican leaders say the tax cut is needed to boost the economy, arguing that it is more important to spur economic growth than to worry about the deficit. But critics say Bush's tax cut is too big and too skewed to the wealthy.

The impending war with Iraq has given critics fresh grounds for arguing that the tax cut was a luxury the United States cannot afford.

Sen. John McCain (R-Ariz.) announced Tuesday that he would oppose any tax cut -- as well as any spending increases in non-defense programs -- for the moment.

"No one can be expected to make an informed decision on fiscal policy at this time with so many uncertain contingencies possibly on the horizon, and with the near, mid- and long-term costs of defending this country unknown and presently unknowable," McCain said.

Sen. Kent Conrad (D-N.D.) introduced the amendment that would have made it more difficult for the Senate to consider Bush's tax cut proposal or any other measure that would increase the deficit until the administration submits estimated costs on a war with Iraq.

The administration and its GOP allies in Congress argue that such estimates are impossible to produce because it is not clear how long a war may last or how large a role the United States would play in postwar reconstruction. But some unofficial estimates have put the possible cost of the war alone at from $60 billion to $100 billion.

Democrats said it made a mockery of the budget process to write a spending plan with no reference to such a significant expenditure.

"It's almost like we are engaged in an Alice in Wonderland world," said Sen. Christopher J. Dodd (D-Conn.). "The entire world is anxious about what may happen within hours," while the Senate budget is silent on the war.

The alternative to trim Bush's tax cut plan to $350 billion will be co-sponsored by Sens. John B. Breaux (D-La.) and George Voinovich (R-Ohio). Breaux acknowledged that they were still struggling for the 51 votes they need for passage.

They are trying to get support from most of the Senate's 48 Democrats, but Breaux said some of his party's colleagues did not want to support a tax cut as large as $350 billion. Voinovich, meanwhile, is struggling to persuade other moderate Republicans to vote for the smaller tax cut.

Sen. Trent Lott (R-Miss.) argued that it was important to back Bush on domestic policy as he girds for war: "We need to be supporting the president and the president's number."

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