WASHINGTON – President Bush (search) called congressional Republican leaders to the White House on Monday to start discussing how and when to reconcile two tax cuts that stand $200 billion apart.
"The president believes a jobs and growth package is urgently needed," said White House spokeswoman Claire Buchan. "The sooner they reach agreement and pass legislation, the sooner the president can sign it into law."
House and Senate tax writers had planned to meld their two bills into a final tax cut by Memorial Day. That goal became more difficult when the House passed a bill to cut taxes $550 billion over the coming decade, and the Senate limited its tax cut to $350 billion.
House Speaker Dennis Hastert, R-Ill., still has the Memorial Day goal in site. "I think that's the hope," his spokesman John Feehery said.
Dividends pose the biggest hurdle for House and Senate tax writers working to combine their bills. Responding to the president's call to eliminate the double taxation of corporate earnings, the Senate suspended taxes on dividends for three years.
The House rejected a full suspension in favor of reducing the top tax to 15 percent on both dividends and capital gains. Low-income taxpayers would pay 5 percent tax on both types of investment income. The House also wants to reject dozens of smaller items the Senate added, including some used to offset the cost of their legislation.
Before tackling the tax cuts themselves, congressional leaders must decide how to continue. Senate Finance Committee (search) Chairman Charles Grassley, R-Iowa, wants the two bodies to meet in a traditional conference to settle their differences, a committee spokeswoman said.
House leaders currently favor sending a tax cut bill back to the Senate, possibly with an extension of unemployment benefits attached, to avoid a protracted negotiation, an aide said under condition of anonymity.