Plan to Cut Deficit Stalls in House : Budget: Lawmakers hesitate after an apparent flip-flop by President Bush on higher taxes for a capital gains cut.

Democrats delayed Senate Finance Committee consideration of a deficit-reduction plan today after President Bush abruptly backed away from his endorsement of higher taxes on the rich to pay for a cut in taxes on capital gains.

“In view of the apparent reversal of position by the President last evening, we will now have to reconsider what the appropriate course of action will be,” Senate Majority Leader George J. Mitchell (D-Me.) told reporters.

“It’s obviously a difficult circumstance for all concerned,” Mitchell said.

The Finance Committee postponed a morning session scheduled to begin work on a plan that was to have included the capital-gains cut long favored by Bush. To meet Democratic demands, the plan also included higher income tax rates on the wealthy, who would benefit most from the capital-gains reduction.

“We thought until last night that the . . . (Finance Committee plan) would be acceptable,” Mitchell said.

President Bush, treading carefully on the tax issue as he campaigned for conservative Sen. Jesse Helms in Raleigh, N.C., today promised to work to “put together a better package” to match the $500 billion in deficit cuts of his rejected plan.

It was Bush’s first test of his professed goodwill toward Republicans who disagree with him on the budget.

Helms opposed the package Bush crafted with congressional leaders, which was rejected last week by the House, calling it “a turkey.” He also has criticized Bush’s decision to abandon his “no new taxes” campaign pledge.