Moderate Senators Urge Limits to Tax Cut Plan

WASHINGTON – Four moderate senators sent a letter Thursday urging limits to President Bush's tax cut proposals amid a Republican push to get a budget blueprint to the Senate and House floor next week.

The letter to Senate Majority Leader Bill Frist and Minority Leader Tom Daschle urges them to limit any economic growth proposal to $350 billion in deficit financing over the next 10 years. It also says any tax cuts beyond that must be offset by somewhere else in the budget, which is something they refuse to do.

"All signatories to this letter are committed to defeating floor amendments that would reduce or increase this $350 billion amount," read the letter signed by Sens. Olympia Snowe, R-Maine, George Voinovich, R-Ohio, John Breaux, D-La., and Max Baucus, D-Mont.

The threat puts in jeopardy a budget resolution currently being wrapped up by the Senate Budget Committee. The GOP controls the Senate by just 51-48, plus a Democratic-leaning independent. Two Republican votes against the blueprint could bury the plan.

But Snowe and Voinovich did not rule out voting for the Senate budget next week when it reaches the floor. That's because the budget is a blueprint for spending and revenues and a cover of tax bills from filibuster. Actually getting the tax cuts would require a separate vote. That will be crafted into a tax reform law to be voted on later this spring.

On Thursday, Republicans on the Budget Committee fought back efforts by Democrats to ban any new tax cuts until the president gives a clear estimate of the costs of war with Iraq. That effort failed on a margin of 11-9.

However, the two Democratic signatories said that they think their letter lays out a clear enough position that it will dim the hopes of Senate GOP leaders trying to pass $1.3 trillion of the president's 10-year, $1.57 trillion in tax cuts. Senate Republicans have already said they are only focusing on passing $726 billion proposed by the president in January as a means to revive the economy, create jobs and help long-term growth.

More than half the tax-cutting plan is made up of the elimination of taxes on corporate dividends, which Democrats say benefits the wealthy.

"It is in serious jeopardy," Baucus told reporters of the dividend tax cut plan.

Complaining that the president's plan is not affordable in a time of growing deficits, other Democratic senators said the GOP was headed down the wrong path altogether. Deficits are expected to top $300 billion this year and next.

"If that isn't a reckless course, I don't know the definition of a reckless course," said Sen. Kent Conrad of North Dakota, the Budget Committee's top Democrat. "It's not conservative. It's radical."

On top of the letter, several other Republicans have expressed misgivings about the size of the president's tax cuts, particularly since Bush has said that an Iraq war would be paid for with an emergency supplemental, whose source would be unknown.

Sen. Lincoln Chafee, of Rhode Island, Susan Collins of Maine and John McCain of Arizona have all questioned the size of the president's plan. The president does have the support of Democratic Sen. Zell Miller of Georgia, who is sponsoring the tax cut package.

And some Republicans are also working on making sure those rocketing deficits don't last forever. The Senate plan forecasts a budget next year that sees deficits in excess of $320 billion. However, Senate Republicans also laid out a plan to turn the nation toward a surplus of $17 billion in 2013.

The Congressional Budget Office has said that it expects deficits for the next 10 years. The White House said 10-year projections are unreliable, and has emphasized that budget deficits are manageable in relation to the size of the economy as a whole.

Over in the House, which is working on a separate budget blueprint, lawmakers are trying to reduce the deficit by 2010, even as the plan calls for the $726 billion tax cuts proposed by the president. The plan, which passed the House Budget Committee Thursday on a 24-19 party-line vote, sees its first surplus of $6 billion in seven years.

In the plan written by budget panel chairman Jim Nussle, R-Iowa, the military would get a hefty boost in its spending, but domestic nonmilitary programs covering everything from national parks to air traffic controllers would get just 0.4 percent increases, less than the 2.7 percent foreseen by the president and the Senate.

Nussle's plan also would try to increase savings in automatic benefits like Medicare, Medicaid, veterans’ benefits and food stamps. The bill would exempt Social Security and jobless benefits from attempts to find savings.

The Republican House leaders also made creation of new Medicare prescription drug benefits contingent on Congress finding ways to pay for most of the costs, which Bush has proposed to be $400 billion.

Until now, the proposed drug coverage was to be handled separately from a parallel effort to carve savings from a host of benefit programs. The change could make it harder for lawmakers to produce a large-scale prescription drug program.

The resolutions, which will hit the House and Senate floors, are not the final word and appropriators are sure to make many changes to the $2.2 trillion spending outline. Once a budget is finalized in both chambers, lawmakers from each side will have to come together and crunch the numbers to reach compromise. They have until Oct. 1, the start of the next fiscal year, to get that done.

The Associated Press contributed to this report.