GOP Budget Blueprint Includes Bulk of Bush Tax Cut

WASHINGTON – The Republican chairman of the Senate Budget Committee is contemplating a 2004 fiscal blueprint that leaves room for only about $1.3 trillion of President Bush's proposed 10-year, $1.57 trillion tax cut, Senate GOP officials said Tuesday.

The tentative plan by panel chairman Don Nickles of Oklahoma, described by officials speaking on condition of anonymity, underlines the soft support in the Republican-led Congress for the president's entire tax-cutting package.

Nickles' proposal would have little practical effect because top Republicans have already said they will give top priority this year only to the $726 billion portion of Bush's tax cut that he says will invigorate the economy. Nonetheless, it would be the first formal sign that the president's tax package will not be enacted in its entirety this year.

The economic plan is already expected to shrink because some moderate senators of both parties say they prefer a package of about $350 billion. Bush's economic growth plan would eliminate taxes on corporate dividends and accelerate some already scheduled personal income tax reductions.

Nickles' budget will include room for enactment of Bush's $624 billion, 10-year plan to make permanent the income tax reductions enacted in 2001 that will otherwise expire after 2010, the officials said.

The plan to trim the tax cut also accentuates some of the changes Nickles is having to make in an attempt to end a projected string of annual deficits within the next decade. Aides said that as of Tuesday, Nickles' plan was still several tens of billions of dollars out of balance in its final year, 2013.

That year has particular challenges for budget-writers seeking to eliminate deficits. It will be expensive to extend the 2001 tax cuts beyond 2010, and 2013 is when the enormous baby boom generation begins retiring, driving up the government's costs for Social Security and Medicare.

On Wednesday, the House and Senate budget committees will begin writing separate but similar budgets for 2004. Their work begins just days after the nonpartisan Congressional Budget Office projected that Bush's budget would produce an accumulated $1.82 trillion in deficits over the next decade. Analysts and government officials have said the possible war looming against Iraq could cost more than $100 billion, including the expenses of a U.S. occupation and other postwar activities.

House budget panel chairman Jim Nussle, R-Iowa, said last week that his spending blueprint will balance the budget in less than 10 years. It was unclear whether he will include Bush's entire $1.57 trillion tax reduction.

Both the House and Senate budgets will include Bush's full $400 billion plan to add prescriptionrug benefits to Medicare and make other overhauls in the health insurance program for the elderly and disabled.

Nickles has been talking about proposing about $786 billion -- the same as Bush -- for the spending bills that Congress writes each year controlling agencies' budgets. Nussle was still uncertain, an aide said.