WASHINGTON – Republicans and Democrats staged an election-year joust in the Senate on Tuesday over the Bush administration's tax cuts for capital gains and dividends.
The parties lined up a series of votes that caused most other morning business in the Senate to be postponed or canceled, including hearings featuring Cabinet members Condoleezza Rice, Michael Chertoff and John Snow.
The battle began when Democrats decided to use a routine procedure that sends the bill into final negotiations to make political points about President Bush's insistence on continuing tax cuts for investors.
Republicans matched each Democratic motion, but by lunchtime the party leaders had agreed to set aside some of their motions.
Both parties fashioned their motions to put the opposition in a political squeeze. But they could only suggest, not force, changes to the pending bill, a $70 billion package aimed at reducing taxes over five years, mostly extending tax breaks scheduled to expire by the end of the decade.
The votes ended, and the Senate sent the tax cuts into final negotiations. None of those votes bound negotiators named to hammer out the final version of the bill. Senate Finance Committee Chairman Charles Grassley, R-Iowa, said he hoped the House and Senate could iron out their differences by mid-March.
The House version of the bill features a two-year extension of the reduced tax rates for capital gains and dividends. They're scheduled to disappear at the end of 2008.
The Senate version omits that extension, even though Senate GOP leaders want the final bill to preserve tax cuts for investors. The key element in the Senate bill prevents millions of taxpayers this year from owing the alternative minimum tax, a trap for wealthy tax dodgers that increasingly hits the middle class.
In the first pair of motions, the Republican-controlled Senate voted 53-47 to include both matters in the final bill.
"Some of my colleagues are creating a false choice when they suggest that in order to provide AMT relief we need to remove incentives that encourage economic growth," said Senate Finance Committee Chairman Charles Grassley, R-Iowa.
The top Democrat on the committee, Sen. Max Baucus of Montana, said senators can't have both.
"This motion says you can have it all. This motion says there's no deficit problem. This motion says, don't worry, be happy," Baucus said.
The Senate then voted 53-47 to reject a Democratic effort to exclude capital gains and dividends from the final bill.
Senators voted to preserve tax deductions for state and local sales taxes, but they rejected Democratic efforts to prevent the final bill from increasing the nation's legal debt limit. Democrats also lost a bid to drop extensions of investors tax cuts in favor of military spending.
Senators by voice vote endorsed an effort to keep the child tax credit at $1,000.