Bush May Deal on Capital Gains Cuts, Lawmakers Say

President Bush may be willing to compromise on his call for a capital gains tax cut, the main sticking point in talks to slash the federal deficit, Republican members of Congress who met with the President said today.

Instead of reducing the rate on capital gains taxes, Bush might accept other incentives to economic growth, the lawmakers said.

“He might be willing to look at alternatives in the growth area,” said Senate Minority Leader Bob Dole (R-Kan.), as he and other GOP lawmakers left the White House.

But Bush and GOP lawmakers warned that without Democratic concessions at ongoing budget talks, no deal would be reached in time to avoid $85 billion in federal spending cuts that the Gramm-Rudman deficit-reduction law will impose Monday.

Bush, at a political fund-raiser today in Akron, Ohio, criticized congressional Democrats, saying, “It’s their fault for holding up getting a budget agreement.”

“We will continue to press hard for incentives for capital investment,” Bush said. However, he did not further discuss his longstanding insistence on a capital gains tax reduction as part of any budget agreement.

Rep. Newt Gingrich (R-Ga.), the No. 2 House Republican, said the incentives Bush might be willing to accept include tax breaks for businesses to encourage research and investment, and a proposal to establish so-called enterprise zones. The zones would provide tax breaks for businesses in poor urban and rural areas.

“While he’s going to be very flexible and he’s willing to look at a Democratic offer, he wants part of this final agreement to be a growth package,” Gingrich said.

“He’s willing to negotiate every item that’s been advanced,” said Sen. Thad Cochran (R-Miss.) when asked if Bush was now ready to bargain on the question of capital gains.