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Bush tax cut will hit Senate speed bump
By BILL ADAIR © St. Petersburg Times, published March 8, 2001 WASHINGTON -- Don't spend your $180 yet. The House is likely to pass a big tax cut today, but the plan faces an uncertain future in the Senate, where a mixture of politics and tradition could lead to a plan much different than what President Bush proposed. The House has moved with lightning speed and virtually no input from Democrats. Republicans on the Ways and Means Committee muscled the bill through on a party-line vote last Thursday, just two days after President Bush asked a joint session of Congress to endorse the plan. The $958-billion bill includes the centerpiece of Bush's plan, a rate cut that would give most taxpayers a $180 benefit this year ($360 for married couples) and provide larger cuts by 2006. Republicans say they want to pass the bill quickly to stimulate the economy and ward off a recession. But after today's vote, the pace on Capitol Hill should slow dramatically. By speeding forward with the bill, the House is ignoring its own rules that first require a budget resolution with guidelines for spending and taxes. But the Senate is expected to follow tradition and adopt a budget first, which should set the parameters for a tax bill. It appears the Bush plan is still at least one or two votes short in the full Senate. Two Republicans -- Sens. James Jeffords of Vermont and Lincoln Chafee of Rhode Island -- have said they will vote against it because it is too big. On Wednesday, they joined three other GOP senators pushing for a "trigger" that would suspend future tax cuts if the budget surplus does not materialize. Sen. Olympia Snowe, R-Maine, said the triggers were needed because budget projections could be way off. "The real issue here is to have a measure of control so we don't jeopardize or squander the surplus," Snowe said. She said the budget predictions could be as inaccurate as last weekend's Washington weather forecasts, which predicted more than a foot of snow. The city ended up with less than an inch. The triggers are needed, Snowe said, "because we may have a change in the weather." The Bush administration and Republican leaders have opposed triggers. They say that the surplus will be large enough to afford the cuts and that Congress can take further action in the unlikely event the surplus dwindles. "We are the trigger here," said Rep. Clay Shaw, R-Fort Lauderdale. During the presidential campaign, Bush proposed a sweeping tax plan that included the rate reduction, a doubling of the child credit, a reduction in the "marriage penalty" and a repeal of the estate tax. The House bill deals only with the rate reduction. Republicans plan to take up the other proposals later. Democrats have warned that the surplus is not large enough for all of Bush's initiatives. Bush has said the entire tax plan will cost $1.6-trillion over 10 years, but Democrats say that the true cost is well over $2-trillion. In the House, Democrats were reduced to being spectators when the bill was considered by the committee last week. Despite all the talk of bipartisanship, GOP leaders blocked Democratic efforts to modify the plan. But it will be a different story in the Senate, where the chamber's rules and the 50-50 party split will give Democrats more of a voice. "The action is going to be over in the Senate," said Rep. Michael Castle, R-Del. Sens. Bob Graham, D-Fla., and Jon Corzine, D-N.J., on Wednesday were pushing a plan they call "the 10 percent compromise." Unlike Bush's plan, which lowers all tax brackets and provides the biggest benefit to the wealthiest taxpayers, the Graham-Corzine plan would give nearly everyone the same amount. It would create a new 10 percent bracket for the first $9,500 of taxable income ($19,000 for married couples). That would result in a $475 tax cut for each taxpayer ($950 for married couples) each year. Corzine, a multimillionaire, estimates that he would receive a $1-million tax cut from the Bush plan but only $475 from his own proposal. But he says his proposal is better because it targets the middle class -- the group most likely to spend the money and, therefore, stimulate the economy. At a hearing Wednesday, liberal and conservative tax experts testifying before the Senate Finance Committee had sharply different ideas about the plan. "The tax cut is not too big. It is too small," said Stephen Entin, president of the Institute for Research on the Economics of Taxation, a conservative economic group. Entin said triggers would blunt the economic effects because consumers might not spend as much if they doubted the tax cut would be there in the future. Henry Aaron, a senior fellow at the liberal Brookings Institution, said the Bush plan was too costly and would do little to stimulate the economy. He urged the committee "to talk about real numbers, not fairy tale ones." He said Congress should not rush with a tax plan. "Go slow," he said. "There will be opportunities to cut taxes again."
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