Senate Leaders Agree on Deficit Reduction

Senate leaders today agreed on a plan to strip hundreds of special-interest provisions from a $14.1-billion deficit-reduction bill, leaving partisan fights over a capital gains tax cut and other controversial issues for the future.

Republican and Democratic leaders were trying to sell the agreement to their respective members, which if successful will ease the way for completion of the budget-cutting bill later in the day.

Under terms of the agreement, all items in the Senate’s deficit reduction bill that do not either reduce federal spending or raise revenues will be eliminated from the measure.

“We think this is absolutely the best approach,” said Sen. Pete Domenici of New Mexico, ranking Republican on the Senate Budget Committee.

Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, said the deal will allow the Senate to pass “a stripped-down bill, I mean really stripped.”

‘Another Tax Bill Soon’

Sen. Robert Packwood of Oregon, ranking Republican on the finance panel, said, “This ensures we will have another tax bill very soon--two or three weeks.”

He said a capital gains tax cut, a Democratic plan to expand Individual Retirement Accounts and other proposals could be attached to that tax measure.

Across-the-board spending cuts on government programs totaling $16 billion will take effect Monday unless the Senate finishes its deficit-reduction bill, the House and Senate agree to a compromise version and President Bush signs it into law.

The House previously passed an $11-billion deficit-cutting bill loaded with special-interest provisions of its own.

With House members out of town until next week, it seems unlikely that a compromise bill can be completed until then. If the automatic cuts take effect, they can be rolled back by Congress later.

‘Not Ruling Out Anything’

Earlier today, Bush told reporters that while “mixing capital gains and IRAs in this debate is troublesome to me,” he would let Republicans on Capitol Hill find the solution to a dispute that has slowed work on the deficit-reduction bill.

Asked if he was ruling out accepting broader IRAs, he said, “I am not ruling out anything in that regard. I am ruling in capital gains.”

The leaders worked out the deal as the Senate headed into a second day of debate on the budget-cutting measure, which has drawn criticism from members of both parties for being loaded with provisions for special interests that do little to shrink the deficit.

Republicans, with support from some Democrats, have been threatening to offer an amendment reducing the capital gains tax, a top priority of Bush. But Senate Majority Leader George J. Mitchell (D-Me.), told reporters Thursday that “without a doubt” he would prevent the GOP from getting the 60 votes it needs.

The budget-cutting legislation, aimed at whittling the deficit to below $110 billion for the fiscal year that began Oct. 1, took its share of abuse Thursday from lawmakers who said it is stocked with unnecessary items.