Budget Debate Comes Down to Size of Tax Cuts

Democrats allied with Republican moderates tried rounding up enough votes on Wednesday to halve President Bush's plan for $726 billion in new tax cuts as a Senate showdown neared over the pillar of his proposal for reinvigorating the economy.

Despite cautious predictions of victory on both sides, it was unclear whether opponents would be able to chop the price tag of Bush's tax cut proposal to $350 billion through 2013. In a chamber Republicans control by 51-48, plus a Democratic-leaning independent, every vote counted.

Democrats said moderate GOP Sen. Lincoln Chafee of Rhode Island would vote with them, which would mean victory if every Democrat but Bush supporter Zell Miller of Georgia backed the effort. Chafee said he was leaning toward supporting the move to reduce the tax cut's size because he worried that it might otherwise survive in its entirety.

"It's not much pressure," he said of the tugs he was getting from both sides to support them.

The maneuvering came as the Senate spent a third day debating a GOP-written $2.2 trillion budget for 2004. That budget is highlighted by Bush's full $726 billion economic package, plus a promise to end massive federal deficits by 2013.

In the first fight over spending, Republicans used a 50-48 roll call to reject an amendment by Sen. Patty Murray, D-Wash., that would have reduced Bush's tax cut by $18 billion and split it evenly between education and deficit reduction.

Though the world was focused on what looked like an imminent invasion of Iraq, a Senate vote to slice Bush's economic package in half would be a significant rebuff for one of his signature issues, tax cuts. His plan included repealing the taxes people pay on corporate dividends, and accelerating into this year income tax rate cuts currently scheduled for 2004 and 2006.

Many Democrats sought to link the two, accusing Republicans of trying to push the budget through the Senate amid the distractions of a looming war. They said the debate should be postponed until next week.

"It's wrong for Congress to proceed as if it's business as usual, that it's somehow proper to lavish hundreds of billions in new tax breaks on the wealthy at a time of national emergency," said Sen. Edward Kennedy, D-Mass.

Senate Majority Leader Bill Frist, R-Tenn., said later that the Senate would finish the budget this week though if hostilities began it would spend some time discussing the war.

"We have a statutory responsibility that's spelled out pretty clearly" to complete the budget, Frist said.

Though many Democrats would prefer a tax reduction of around $100 billion or even none at all, most were prepared to support the $350 billion alternative as their best chance of keeping its cost down.

Discussions were already under way about what would happen if the $350 billion amendment lost. It seemed possible that the full $726 billion could eventually prevail; that a compromise would be found; or that Democrats would chop the top figure down with amendments diverting money from the tax cuts to highways, domestic security or other programs.

Moderate Sens. Max Baucus, D-Mont.; John Breaux, D-La.; Olympia Snowe, R-Maine; and George Voinovich, R-Ohio, were the sponsors of the $350 billion amendment.

In the House, meanwhile, GOP leaders trying to end a rebellion by moderates decided to drop planned Medicare cuts from that chamber's Republican-written budget. Budget Committee Chairman Jim Nussle, R-Iowa, was planning to bring that fiscal blueprint to the House floor on Thursday.

Congress' budget sets limits on overall expenditures and revenue collection by the government. It takes later bills to enact actual changes in tax and spending policy, and to decide the details.

In one Senate victory for Democrats, senators voted 52-48 to erase budget language that would have allowed oil drilling in the Arctic National Wildlife Refuge in Alaska.