Senate Slashes Bush Tax Cut

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Despite frantic efforts by the Bush administration to corral moderate Republicans, the Senate Friday approved a budget outline reducing the president's proposed tax cut by 25 percent, reports CBS News Correspondent Bob Fuss.

The bill provides for roughly $1.2 trillion in tax cuts over ten years, while Mr. Bush had wanted a $1.6 trillion cut.

The 65-35 vote was a stinging defeat for the young Bush administration and a show of strength for the Democrats.

President Bush said the smaller package still represents "meaningful, real tax relief" and he is pleased with the vote.

"The fact that both houses of Congress have committed to finding significant relief is good for the American people and good for the economy," Bush said at an awards presentation in the White House's East Room. "I applaud today's action and congratulate the Republicans and Democrats who helped make it happen."

Vice President Dick Cheney also tried to put the administration's best face forward, saying he was "delighted" with the outcome in the Senate.

"I would emphasize, this is one step among many," Cheney told reporters moments after the vote. He added that the Senate's action would lead to a "significant reduction in taxes for the American people as well as the approval of important spending programs going forward."

Republicans settled on the lower cuts after Democrats in the evenly split Senate successfully slashed Mr. Bush's proposal by $450 billion earlier in the week.

The budget blueprint carves out the space for tax cuts that will be crafted in later legislation.

The Republican-led House of Representatives approved Mr. Bush's plan last week with his proposed $1.6 trillion tax cut intact. The budget now goes to a joint House-Senate conference to iron out the differences.

Friday's vote highlighted the difficulty of maneuvering controversial legislation through the 50-50 Senate without attempting a bipartisan compromise. Democrats said Mr. Bush's tax cut would shortchange Medicare, health care and other programs, and argued the cuts themselves were too generous to the wealthy.

Asked if the vote were a setback for the president, Sen. Charles Grassley, R-Iowa nodded affirmatively, adding, "It's one of the realities of a 50-50 Senate."

Weeks ago, Mr. Bush won the support of one Democrat, Sen. Zell Miller of Georgia, for the full tax cut. But GOP Sen. Lincoln Chafee of Rhode Island sided with the Democrats, and a second Republican, Sen. James Jeffords of Vermont, said he wanted more than $150 billion for education support for the disadvantaged before he would agree to back a tax cut of $1.6 trillion.

Fitful negotiations involving Cheney, Budget Director Mitchell Daniels and other senior administration officials failed to yield an agreement. After a brief stab at trying to fashion a compromise with one or two Democrats, the White House and Republican leaders decided to gahead with the vote.

A total of 50 Republicans and 15 Democrats supported the proposal that passed, while all 35 "no" votes were cast by Democrats.

Mr. Bush was in the Oval Office while the vote unfolded, having traveled to 22 states in an attempt to mold public opinion behind the $1.6 trillion cut. The president spoke during the day with Lott and Sen. Pete Domenici, R-N.M., chairman of the Budget Committee.

Mr. Bush was "upbeat about the fact that all the movement has been in the direction of the tax bill that we campaigned on," White House spokesman Ari Fleischer said earlier Friday. He said the president continues to believe that $1.6 trillion is the right number but also "understands the reality of where we are."

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