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Republicans set aside tax cut tiff to forge budget

By Associated Press
Published April 9, 2003

WASHINGTON - House and Senate Republicans moved Tuesday toward striking a deal that would let the two chambers pass a compromise 2004 budget this week but settle their differences over the size of a tax cut later, aides said.

Under the proposal - which still needed signoffs from many lawmakers and on which some final decisions remained - the budget would let the more conservative House write a tax bill later this year with a deeper tax cut than the more moderate Senate has approved. The two chambers would then have to agree to a common figure before the tax bill could be sent to President Bush for his signature.

The plan was, in effect, a decision to postpone resolving the simmering House-Senate dispute over the size of the tax cut until many weeks from now. It was described by aides from both Republican-run chambers who spoke on condition of anonymity.

It also provided hope to Bush that the 10-year, $726-billion tax cut he has proposed to energize the economy would not be cut in half, as the Senate voted to do last month. Bush's tax package - which would eliminate individuals' taxes on corporate dividends and accelerate some income-tax cuts - is one of the cornerstones of his domestic agenda this year.

Congress' budget sets revenue and expenditure totals for the year, and does not need the president's signature. Subsequent tax and spending bills make actual changes in law.

Passage of a budget has been crucial to GOP tax-cutting plans because the measure can protect a tax reduction from Senate delays, or filibusters, that take 60 of the chamber's 100 votes to halt. Republicans have badly wanted to give Bush's tax cuts that procedural protection from the Senate's 48 Democrats, who mostly oppose even a $350-billion reduction, citing massive federal deficits.

The House included a $726-billion tax reduction in the budget it approved last month.

The Senate budget, however, endorsed a $350-billion tax package. The chamber included that lower figure in its budget after moderates from both parties demanded a limit on tax reductions because of soaring federal deficits and the costs of war with Iraq.

Aides cautioned that under the proposed compromise, each chamber's tax-cutting number would not necessarily be the figure it approved in its initial budget.

The unusual agreement, if completed, means the House and Senate would probably be able to approve a $2.2-trillion budget for 2004 by late this week, when lawmakers plan to begin a two-week recess.

"We're going to do it before the break," Senate Budget Committee Chairman Don Nickles, R-Okla., said.

Leaders hope to begin writing actual tax-cutting legislation after the recess.

The proposal emerged after a day of meetings in which congressional leaders sought the votes to make the final budget's tax reduction as large as possible.

Until Tuesday evening, GOP House and Senate bargainers had been stymied in efforts to craft a budget compromise, with moderates refusing to support a reduction bigger than $350-billion but conservatives threatening to oppose one that small.

Senate Republicans hold a 51-48 edge over Democrats, plus Democratic-leaning independent, Sen. Zell Miller, D-Ga., supports Bush's full $726-billion plan.

[Last modified April 9, 2003, 02:16:40]