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Senate trims $100-billion from tax cuts to fund war

©Associated Press

March 22, 2003

WASHINGTON -- The Republican-run Senate dealt President Bush's $726-billion tax-cutting proposal a surprise blow on Friday by plucking out $100-billion to finance the war with Iraq. An effort to slice the tax plan in half was resoundingly defeated.

Senators debating a $2.2-trillion budget for next year decided by a mostly party-line 52-47 vote to shave the tax cut to pay for the U.S. drive to topple Iraqi President Saddam Hussein.

After hours of seeking enough support to reverse the vote, White House officials and top Republicans decided to try to restore the money when House-Senate bargainers write a compromise fiscal blueprint during the next few weeks.

The overall tax package, the heart of the plan that Bush says will fortify the economy, would end levies on corporate dividends and accelerate already scheduled cuts in income taxes.

The vote underlined the political potency of an argument Democrats had made in a week of budget debate: that the plan should not map tax reductions while lacking a single penny for the war, especially as budget shortfalls climb toward record levels. Florida's senators, both Democrats, voted to reduce the tax cut.

"The largest deficit in American history, and one of the biggest wars in our history, and we're handing out a giant tax cut. This is sort of the definition of irresponsible budgeting," said Sen. Russell Feingold, D-Wis., the sponsor.

After days of lobbying by both sides aimed at a handful of moderates from each party, senators voted 62-38 against slashing the tax cut's price tag to $350-billion through 2013. That amendment had represented the gravest threat to Bush's proposal, threatening to pare it to a level where its Republican sponsors said it would have little stimulative effect.

"There is a war going on," said Sen. Charles Grassley, R-Iowa, chairman of the tax-writing Senate Finance Committee. "When these men and women come home from the battlefield, we want a growing economy so these folks will have jobs."

The votes meant Congress seemed likely ultimately to produce tax cuts in the range that Bush wants. After a marathon debate that ran well past midnight into Friday morning, the House approved by 215-212 its own GOP-written budget that made room for the entire $726-billion in tax reductions over the decade that the president wants.

Florida's representatives split along party lines, with Republicans voting for the budget.

When the House and Senate approve a compromise budget, it will clamp overall limits on revenues and expenditures for next year. It will take separate bills later this year to cut taxes or alter spending programs.

Both the House and Senate budgets plot savings from a host of domestic programs -- many unspecified -- that their GOP authors said would end annual deficits a decade from now. Democrats and many nonpartisan analysts have said the proposed reductions are unlikely to get enough votes to become law, especially the deeper-cutting House plan.

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