Democrats Plan Showdown Over Budget : Congress: Party leaders intend to send Bush’s tax cut package and their own proposal to the House floor. A deadlock is likely as lawmakers say they will be unable to override veto.

House Democratic leaders said Wednesday that they plan to send both President Bush’s package of tax cuts and a Democratic alternative to the House floor for showdown votes late this month or early in March.

“We will be able to move promptly and well before the President’s deadline on the key issues of taxes and growth,” House Speaker Thomas S. Foley (D-Wash.) told reporters after an hourlong meeting of the House Democratic Caucus. Bush had said in his State of the Union address last week that Congress should act on his proposals by March 20.

Bush’s tax proposals include a cut in the capital gains tax, a $5,000 tax credit for first-time home buyers and investment incentives for business. Congressional sources said that the House Ways and Means Committee will send Bush’s plan to the House floor next week without a recommendation. Then the 23 Democrats on the panel plan to go behind closed doors to hammer out their own tax cut plan, which would follow the Bush proposals to the floor.

Ways and Means Chairman Dan Rostenkowski (D-Ill.) indicated at the caucus that he would join the Democratic leadership in pushing a bill that would provide tax credits ranging from $200 to $400 a year for all workers. It would be financed by raising the top-bracket tax rate to 35% for married couples with taxable incomes of $140,000 or more and single persons with taxable earnings above $80,000. In addition, a 10% surtax would be imposed on millionaires.

Bush has threatened to veto any bill that provides an increase in taxes for anyone. While sure of getting a House majority for their plan, Democrats acknowledged that they would not be able to override a Bush veto of their bill. The result, therefore, could be deadlock.

Foley said that the Democratic Caucus showed “very strong support” for reductions for average taxpayers to be financed by higher taxes on the wealthiest Americans. Some Democrats, however, said that they will go along only reluctantly with their party’s proposed middle-income tax cuts because they believe that the maximum tax reductions of about $400 a year for a couple are too small to stimulate the economy.

Rep. Robert T. Matsui (D-Sacramento) said that the proposed Democratic tax cut would provide less than $1 a day for the typical taxpayer.

Rep. Jim McDermott (D-Wash.), like Matsui a member of the tax-writing panel, also voiced reservations about the Rostenkowski bill, saying: “I’m not very keen on it. I’m not sure it’s going to do very much for the economy.”

“We ought to come up with a Democratic growth package,” added Rep. Charles E. Schumer (D-N.Y.). “The Republicans don’t have a growth package--they just give money away to their friends.”

But such influential Democrats as Rep. David R. Obey of Wisconsin said: “If we back away from a middle-income tax cut now, we’d be absolute damn fools. The question is whether we’re going to get sucked into George Bush’s bangles for the rich or stand up for what the Democratic Party has always believed in.”

House Majority Leader Richard A. Gephardt (D-Mo.) said that he heard a lot of support for the Rostenkowski tax cut proposal in the Democratic Caucus. His party’s alternative would contain as many growth incentives as possible without using budget gimmicks to pay for them, he said.

As for arguments that $200 to $400 is a paltry sum, Gephardt shot back: “Only inside the (capital) Beltway is $300 or $400 not a lot of money. . . . For the people I represent, it means a couple of car payments or a mortgage payment.”