Tax Cut In Trouble?

(CBS)  President Bush said Thursday he had "a lot of work to do" to sell his $1.6 trillion tax cut to the public and to Congress, as key lawmakers told him he did not yet have the votes needed to pass his program.

The comments were a sign that momentum for tax cuts may be slowing since several factors, including what the White House and Wall Street regarded as an endorsement from Federal Reserve Chairman Alan Greenspan, made the president's tax cut plan seem unstoppable.

"I've got a lot of work to do, but I'm convinced that when the American people hear our plan, they will support it. And I think we've got a very good chance of getting the tax package through," Mr. Bush told reporters as he met a group of Republican budget committee members from the Senate and House .

After the meeting, Sen. Pete Domenici of New Mexico said lawmakers had told the president he so far lacked the votes to win Senate passage of a budget bill containing the 10-year, $1.6 trillion tax cut.

"We told him tonight at this meeting of the closeness of the debate in the Senate and he indicated that he was well aware of that and that he was going to do his share to help us," Domenici said.

"Right now it would appear there are a number of senators who are undecided and there are between 47 and 49 that are absolutely committed (to the cut), and we're still working," he said.

It would take at least 50 votes to pass the Bush proposal in the 100-member Senate. Were there to be a deadlock, Vice President Dick Cheney would cast the tie-breaking vote for the measure. The Senate is divided 50-50 between Republicans and Democrats.

One Democratic senator, Zell Miller of Georgia, backs Mr. Bush's plan but at least two Republicans — Sen. Lincoln Chafee, R-R.I., and Sen. James Jeffords, R-Vt. — oppose it in its current form because they fear it could produce future deficits.

As Mr. Bush fought to keep his plan alive Thursday, Democrats unveiled their own tax cut scheme.

"This debate is not the Democratic tax cut versus the Republican tax cut," Daschle told reporters. "This debate is about Republican priorities versus Democratic priorities."

According to the numbers the Democratic leaders used, their plan would result in a $750 billion, 10-year tax cut, though the government would lose an additional $150 billion in interest costs because there would be less debt reduction.

The Democratic proposal lacks details — for example, it will not endorse any particular tax cut — reflecting ongoing disagreements among Democrats over specifics.

For example, many liberals are pushing a plan to give every American a $300 annual dividend for the next decade. Some other Democrats prefer income-tax rate reductions.

Whatever its exact form, the Democrats' tax cut would be part of a budget in which they would set aside $2.9 trillion for debt reduction over the next decade. That is the portion of the projected overal $5.6 trillion, 10-year federal surplus that comes from Social Security and Medicare.

Of the remaining $2.7 trillion in estimated surpluses, Democrats would divide the rest into thirds: for tax cuts; additional debt reduction; and new spending for education, a Medicare prescription drug benefit and other programs.

The Democrats' announcement of their budget principles followed weeks in which they spent most of their time assailing Mr. Bush's plan as too expensive and too skewed toward the wealthy.

As the centerpiece of his plan, Mr. Bush would telescope the current five income-tax brackets into four and lower them. The top rate would fall from 39.6 percent to 33 percent, while the bottom rate would drop from 15 percent to 10 percent.

Late Thursday, Domenici said Mr. Bush told the group he intended to limit spending growth in his fiscal 2002 budget request to around four percent, compared with what Domenici said was nine percent growth for combined defense and non-defense spending in 2001.

Mr. Bush declined to confirm this figure in his comments to reporters before the meeting, but said we wanted to keep a tight lid on spending.


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