WASHINGTON – Republicans are looking toward September to restart talks on extending three popular tax cuts (search) as prospects for a deal this summer ended in deadlock between the White House and the Republican-controlled Congress.
The White House insisted that the three tax cuts, scheduled to expire at the end of this year, stay on the books for five more years. President Bush had asked Republican leaders to push a bill through Congress this week before a six week summer hiatus and the parties' presidential nominating conventions.
Lawmakers neared agreement late Tuesday to extend the three popular tax cuts for two more years. The shorter timeframe took into account worries among moderate senators, including a few Republicans, about record budget deficits.
The president rejected the two-year offer as insufficient, and tax writers pledged to restart talks when Congress reconvenes in September. Several Republicans said Bush conveyed his views on the tax cut bill in a brief Oval Office conversation with House Speaker Dennis Hastert, R-Ill. Hastert's spokesman John Feehery declined comment.
Democrats said the disagreement within GOP ranks exposed political motives at the White House.
"They are more interested in a political bumper sticker for the fall than in passing sound legislation now," said Rep. Charles Rangel of New York, the top Democrat on the House Ways and Means Committee.
The Senate's top Democratic tax writer, Sen. Max Baucus of Montana, said concerns about deficits won't necessarily disappear this fall.
"I'm disappointed that the administration wouldn't join us at the table and work toward an agreement that would work for all," he said. "It wouldn't have been right to agree to a five year extension that would have needlessly increased the nation's debt."
Some taxes paid by parents, married couples and workers are scheduled to increase automatically at the end of the year.
Under current laws, the bottom 10 percent tax bracket would shrink, causing income taxes to rise -- a change that would affect virtually all individuals. Parents would see the child tax credit (search) revert from $1,000 to $700. Married couples would lose some tax breaks that ameliorated the so-called marriage penalty (search), which causes some couples to pay higher taxes than they would if unmarried.
White House spokesman Scott McClellan said Wednesday that the president's ultimate goal is to make the tax cuts permanent.
"We're encouraged that Congress recognizes the importance of not raising taxes," he said.
The tax bill is one of several items that have seen Republicans at odds with one another over the impact of tax and spending decisions on record budget deficits.
A group of the Senate's moderate Republicans and Democrats told negotiators this week that they wanted to extend the tax cuts for only one year and to stop the extension from worsening the budget's red ink. They proposed raising revenue to offset the cost of the tax cut by closing corporate tax shelters and loopholes.
Also Wednesday, House lawmakers voted 424-0 to retain another expiring tax benefit. The bill keeps through 2007 a tax break for small businesses that lets them immediately deduct up to $100,000 in investments. Left unchanged, the amount of new investment that businesses could write off would drop to $25,000 starting in 2006.
The business bill, and a companion bill aimed at individual taxpayers, also made changes designed to simplify taxes for daunted taxpayers.
"The key to reforming our tax code is to keep it simplified, stupid," said House Majority Leader Tom DeLay, R-Texas.
Many Democrats said the GOP talk on tax simplification isn't matched with action.
"Our tax code today is a maze of complexity that confounds millions of Americans every year. But since 2001, Republicans have created more complexity, enacting more than 200 changes to the tax code," said House Minority Whip Steny Hoyer, D-Md.