GOP Willing to Compromise on Tax Cuts

WASHINGTON – Republican congressional leaders indicated willingness to compromise in a dispute over Senate-passed rules that would make it harder to approve new tax cuts (search).

That's a turnabout for top Republicans, who previously had firmly opposed the restrictions.

House-Senate bargainers were to meet as early as Tuesday in hopes of finding middle ground on the issue. The dispute has been the chief stumbling block to completing a compromise $2.4 trillion budget for next year, which House leaders want their chamber to approve this week before beginning a two-week spring recess.

The fight highlights pressure some lawmakers feel from this election year's expected $500 billion deficit, easily a record. Pitted against that is the GOP's desire to leave unfettered President Bush's proposals for ongoing tax cuts, the heart of his plan for helping the economy.

House Budget Committee Chairman Jim Nussle, R-Iowa, met informally Monday with his Senate counterpart, Don Nickles, R-Okla., to begin looking for a solution to the fight over limiting tax cuts. Nussle said no decisions were made.

"We have to talk about it. We have to talk about everything," Nussle told reporters.

But he added, "It appears on a number of levels it will be difficult to come to a compromise."

The budget the Senate approved on March 12 included language reinstating an expired requirement that future tax cuts or benefit increases be paid for by either new revenue or spending cuts.

The House-passed budget included no tax limits. That chamber will vote this spring on a separate bill requiring savings to pay for benefit increases, not tax cuts.

Four moderate Republicans joined Democrats in forcing the provision into the Senate's budget.

Of the four Republicans, Sens. Lincoln Chafee of Rhode Island (search) and John McCain of Arizona have said they will oppose the budget on final passage if the tax restrictions are watered down.

That means the GOP, which controls the Senate only narrowly, will need support from the rest of its senators if a budget is to pass with compromise limits on tax cuts.

The other two GOP senators who supported the tax restrictions were Olympia Snowe and Susan Collins, both of Maine.

Snowe said Monday she would oppose the budget if it lacked a requirement for savings "that applies equally to spending and taxes." Collins has said she wants the budget to contain "strong budget enforcement rules."

It was unclear whether either would accept a compromise.

Congressional aides, speaking on condition of anonymity, described different options under discussion by Nussle and Nickles. Under each, the House and Senate could simply vote to ignore the restrictions, by a majority in the House and a harder to attain 60 votes in the 100-member Senate.

This year, Congress is expected to keep three tax cuts from expiring: an expansion of the lowest 10 percent tax bracket (search) to more taxpayers; the enlargement of a tax credit from $700 to $1,000 per child; and breaks for married couples.

Lawmakers seem likely to vote overwhelmingly to extend these tax cuts without paying for them with savings. The Senate is expected to do so with more than the 60 votes needed to waive the requirement, if it is imposed.