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Senate Democrats Fail to Stop Your Tax Cut

Wednesday, 23 May 2001 12:00 AM

Twelve moderate Democrats joined with the 50 Republicans in the 62-38 vote.

The bill was sent on to a joint House-Senate committee, where differences between the two bills will be resolved before it goes on for President Bush's signature.

"We're going to be able to get it done in the time frame" of Memorial Day, predicted the House Ways and Means Committee chairman, Rep. Bill Thomas, R-Calif.

The tax cut is the largest since President Ronald Reagan's in 1981. Supporters hail it as a vital boost to deserving taxpayers and an unsteady economy.

The vote came as the Senate buzzed with the increasing possibility that liberal Republican Sen. Jim Jeffords of Vermont - who had worked to reduce the president's initial tax proposal - would leave the GOP and become an independent or Democrat. Either way, a move would give control of the Senate to the Democrats.

Had Jeffords switched parties before a conference committee was named to negotiate the final format of the bill with House lawmakers, it would have been possible that Democrats would have had a majority of Senate conferees, leaving the bill's future and conditions in serious question.

But Wednesday, a key Democrat senator said that Jeffords had promised to leave the party only after the tax bill was completed and signed by the president.

Jeffords is expected to announce his switch today at a news conference in Vermont.

The Jeffords story overwhelmed the passage of the bill, relatively intact from the format that left the Finance Committee last week, which should have been seen as a huge victory for Finance Committee Chairman Charles Grassley, R-Iowa, and Bush.

Besides establishing a new 10 percent tax bracket as the lowest level and reducing most other income bracket rates over 10 years, the tax cut eliminates the estate tax and an unintended penalty for married couples filing jointly. In addition, it allocates $100 billion over the next two years as a stimulus package to help spur an economy that Bush says has slowed.

The biggest battle was over reduction for the highest tax bracket - currently a rate of 39.6 percent - for households or individuals earning more than $288,350 a year. Grassley and the committee's ranking minority member, Sen. Max Baucus, D-Mont., compromised on a plan that reduced the rate to 36 percent, in stark contrast to the reduction to 33 percent passed by the House and preferred by the president. Conservatives in the Senate wanted the rate reduced regardless of whether any Democrats voted for the measure, so long as it passed, but Grassley managed to protect the bipartisan committee compromise through the Senate votes.

Grassley repeatedly warned conservatives throughout the week in the House and Senate that any attempt to lower the top rate during the conference committee meetings would not be seen as bipartisan, or even prudent. Baucus joined his colleague and warned that Democrats had made their last compromises to the leadership and White House on taxes and would oppose any significant revamping of the tax cut that passed the Senate.

"I believe that it is very important for House conferees to realize that it is going to be difficult for the conference to come out with a bill that does not substantially, if not entirely, represent the bipartisan provisions of the Senate bill," Baucus told reporters.

Grassley recognized the need for the conference committee to act quickly, as the plan is to get the bill's conference report passed and sent to the president's desk for signing on Memorial Day, but also warned that the effort should be diligent and comprehensive.

"We will need to work very quickly," Grassley said. "But this is a very important public policy issue and we can't do it in a sloppy fashion. There is a lot of pressure to get this done as early as possible."

A coalition of moderates in the Senate, led by Louisiana Democrat Sen. John Breaux, sent a letter to Grassley Tuesday that pushed for the conference committee to stick as close as possible to the Senate language, or as many as 15 moderates who voted for the measure the first time around could defect. Those members certainly provide the margin needed to reject the conference report.

Despite tension with those in his own party who wanted a lower upper rate, or reductions in capital gains taxes, Grassley managed to protect his bill from amendments during a two-day round of voting on 50-plus stacked amendments called "Vote-O-Rama" in legislative slang. He also fended off assaults by the Democrat leadership - including its ringleader, Sen. Tom Daschle, D-S.D. - to modify or replace the bill.

The tax cut also survived an assault by Arizona Republican John McCain, a one-time opponent of Bush for the GOP nomination, who introduced two amendments: one to reduce the upper bracket tax cut until military spending is increased; and another to broaden the definitions of each income bracket to include more taxpayers in each.

Both measures lost, but McCain decided to support the bill. In a statement released after the vote, he expressed concern about the tax cut, but said he did not want to reject the efforts of Grassley to keep the upper rate at 36 percent.

"I wish we could have made even more progress by increasing the 15 percent bracket to include more middle-class taxpayers," he said. "But the Senate has decided otherwise, and recognizing what progress has been made by Senator Grassley, I will not register my disappointment by voting against the bill."

Led by Daschle and the top minority member on the Budget Committee, Sen. Kent Conrad of North Dakota, Democrats tried to add amendments that would change the distribution of the majority of the tax cut to people who already pay little tax. A defeated amendment by Sen. Jay Rockefeller, D-W.Va., wanted a provision that would require the establishment of prescription drug coverage for Medicare before lowering the top income rates.

For the past weeks, Daschle, Conrad and other Democrats have repeated a litany of complaints about the tax cut: it's too big, it favors the "rich" (i.e., people who pay the most taxes), and relies on projections they claim are unrealistic. Though lacking the votes to stop the GOP, they did manage a long delay.

"We just completed an action that you already understand I opposed," Conrad said. "Not only does this tax cut explode in the out years when millions of baby-boomers will be retiring, but it's just not fair. The only bracket not to get any tax relief is the 15 percent bracket that the vast majority of working Americans belong to," he claimed.

Copyright 2001 by United Press International.

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Twelve moderate Democrats joined with the 50 Republicans in the 62-38 vote. The bill was sent on to a joint House-Senate committee, where differences between the two bills will be resolved before it goes on for President Bush's signature. We're going to be able to...
Wednesday, 23 May 2001 12:00 AM
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