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Tax cut's fate rests with compromise
By BILL ADAIR © St. Petersburg Times, published May 22, 2001 WASHINGTON -- The Senate abruptly adjourned Monday night without passing the $1.35-trillion tax cut, an indication the bill still faces some significant hurdles. The tax plan is still likely to pass the Senate today, but supporters are worried it could run into trouble when it is reconciled with a House version that is larger and has more benefits for wealthy taxpayers. Sens. Charles Grassley and Max Baucus, the bill's prime sponsors, said Monday they were concerned that House Republicans on the conference committee might shatter the fragile compromise that attracted key votes in the Senate. To attract Democrats and moderate Republicans, Baucus and Grassley gave more benefits to low-income taxpayers and reduced the tax cut for the wealthiest Americans. But those changes are unpopular with many House Republicans. "I suspect the House conferees will aggressively argue their positions, with the net result that we could well lose some senators" when it comes back for final passage, said Baucus, the ranking Democrat on the Finance Committee. He said he warned House leaders that they could jeopardize the bill if they try to change it substantially. Monday night, Baucus and Grassley's compromise appeared to be holding firm. A bloc of nearly all Republicans and a handful of Democrats turned back efforts to change the plan. "It's a good package and it will benefit the economy in America and help working Americans," said Majority Leader Trent Lott, R-Miss. Democrats hoped by delaying the votes that they could postpone final passage until after the Memorial Day holiday, which would give them time to build public support against the bill and win back some of the Democrats who are expected to vote for the bill today. The votes stretched late into the night. Lott ordered pizzas to entice senators to stay in the chamber and speed up the voting. But dozens of amendments and stalling tactics by the Democrats forced the Senate leaders to adjourn shortly before midnight. They said they will resume consideration of the bill today and hope to pass it later this week. The Senate plan is smaller than the $1.6-trillion plan President Bush proposed during the Republican primaries last year, but it has the same basic components: A reduction in tax rates. Elimination of the estate tax. A fix for the marriage penalty, the quirk in tax laws that makes some married couples pay more than if they were single. A doubling of the child tax credit to $1,000 per child. The Senate measure includes a proposal for $100-billion in immediate tax relief this year and next, but it delays many of the largest reductions until later in the decade. Under the Senate plan, any American who paid federal income taxes would receive $300 in relief this year, plus an extra $100 per child if a family didn't exceed certain income thresholds. That would mean an $800 savings for a typical two-earner family with two children. Unlike the House version, the Senate bill would allow poor families to receive a refund for the child credit if they pay no income taxes. Despite that concession, many Democrats complained Monday that the Senate bill provided the biggest benefit for the wealthy and did relatively little for the poor. "What we've got here is a tax cut that is Robin Hood in reverse," Sen. Paul Wellstone, D-Minn., told a rally on the Capitol steps. But on the Senate floor, supporters of the bill said it was balanced. "This bill is loaded very much toward low-income groups," said Sen. Don Nickles, R-Okla. Florida Sens. Bill Nelson and Bob Graham, both Democrats, said they were opposed to the bill because it did not do enough to pay down the national debt. Nelson also said the bill did not have enough benefits for poor and middle-income taxpayers. Graham said a factor in his decision was that the bill did not do enough to stimulate the sluggish economy. Graham's plan for an immediate cut in the lowest tax rate failed Monday by a 64-35 vote. Graham also failed to change an aspect of the estate tax plan in the bill that he said would cost states hundreds of millions of dollars in the next few years. His amendment failed, 60-39. Graham will try again to change the estate tax provision when it goes to the House-Senate conference committee. - Information from the Washington Post was included in this report.
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