Senate Chops $100B From Bush Budget

The Senate voted Friday to take $100 billion over the next 10 years from President Bush's proposed new tax cuts to pay for the war with Iraq.

"We cannot blithely go along as if this were a time for business as usual," said Sen. Russell Feingold, D-Wis.

The 52-47 vote on Feingold's amendment to a budget resolution before the Senate was the first setback Bush has encountered in seeking new tax cuts totaling $726 billion over the next decade.

The package includes elimination of the taxes that investors pay on dividends. Republican leaders used a parliamentary procedure that will allow the Senate to reconsider the vote later.

The House earlier Friday passed a $2.2 trillion budget that kept Bush's tax proposals intact.

The Senate also voted 54-45 Friday against an amendment by Sen. Chuck Schumer, D-N.Y., to increase by $88 billion Bush's 10-year budget for homeland security. That set the stage for the key showdown on whether to cap the tax cuts at $350 billion, less than half of what Bush wants.

The two senators who hold the pivotal votes — John McCain, R-Ariz., and Ernest Hollings, D-S.C. — on Friday reiterated their intent to vote against the amendment trimming the tax cut in half, because they oppose any tax cuts during the war.

The Senate voted 77-22 to defeat Hollings' amendment rejecting any new tax cuts.

"We cannot cut taxes and raise spending until we know what the cost of the war is," said McCain, who opposes the overall budget because it includes the $726 billion tax cut plan.

Praising the House action, Bush said in a statement Friday: "As we engage in action to ensure freedom and security, it is imperative that we stay focused on important domestic priorities, including creating jobs and strengthening growth at home."

The GOP-run House passed the $2.2 trillion budget 215-212. It provides broad outlines of tax and spending policies for other committees to follow, and there is no guarantee the final tax bill will give Bush the combination of accelerated income tax cuts and lower dividend taxes that he seeks.

Moderates leading the Senate fight to halve the Bush tax cut proposal made a long-shot plea to lawmakers opposed to all tax cuts, arguing their plan offered the best opportunity to stop the president's momentum.

"I would prefer no tax cut at this time, but that is not politically popular," said Sen. John B. Breaux, D-La.

Senators worried about paying for the war in Iraq, protecting the nation against terrorist attacks and reversing a growing deficit remained unconvinced. "This is playing for the needs of the campaign next year. And I'm for the needs of the country," said Hollings.

In the House, GOP leaders cemented the last few votes in favor of their budget when they made a late-night concession and matched the Senate's spending on veterans' programs, exempting automatic benefits payments from cuts and adding $1.8 billion to the president's budget for next year.

"It will allow us to fully meet our commitments to more than 2.6 million disabled veterans and widows who rely on VA benefit checks every month," said House Veterans' Affairs Committee Chairman Christopher H. Smith, R-N.J. "It's a major win."

GOP leaders also overcame opposition from moderates who disliked their budget's tax reductions and cuts in programs like Medicaid and agriculture. The centrists closed ranks and voted for the budget blueprint only after intensive lobbying by Vice President Dick Cheney, Treasury Secretary John Snow and other administration officials.

The wavering centrists heeded the orders delivered by the White House and Speaker Dennis Hastert, R-Ill., to support the president while he waged war in Iraq. They, however, made it clear they voted for the budget only because they expect a more acceptable version to emerge from negotiations between the House and Senate.