GOP Is Close to Agreement on Tax-Cut Plan

Congressional Republicans, after weeks of bickering among themselves over the size and timing of tax cuts, neared agreement Wednesday on a compromise to reduce taxes between $225 billion and $250 billion over seven years, sources close to House-Senate budget negotiations said.

A compromise on the tax issue would remove the last big stumbling block to agreement among negotiators trying to resolve differences between the two chambers’ versions of the federal budget, both of which aim to eliminate the deficit after seven years.

The total tax reduction would be significantly less than the $354 billion sought under the budget approved by the House last month but would likely be enough to include Republicans’ top tax-cutting priorities, including lowering capital gains taxes and granting families a $500-per-child tax credit.

Senate Majority Leader Bob Dole (R-Kan.) and House Speaker Newt Gingrich (R-Ga.) agreed to sound out fellow Republicans on their tax-cut options, which represent a middle ground between House proposals for a big tax reduction and the Senate’s preference for a more modest cut.

The Senate version called for $170 billion in tax cuts--but only if Congress first approved a budget that would eliminate the deficit, which would have the effect of producing a surplus.

Sources said some details in other areas remain to be worked out, but Republican leaders voiced optimism that agreement could be reached by the end of the week, clearing the way for final approval of the budget by the House and Senate.

The budget resolution, which does not have to be signed by the President, sets revenue targets and spending ceilings for broad categories of government spending. Once the budget is adopted, Congress must enact legislation making the spending and tax cuts needed to meet those targets.

In another area of the budget, negotiators have tentatively agreed to reduce the projected growth in Medicare, the health care program for the elderly, by about $270 billion over seven years, lawmakers and aides involved in the talks said. That figure is a middle ground between the $288 billion in savings required under the House budget and the $256 billion in savings sought by the Senate.

On taxes, a central question is whether the proposed compromise will satisfy rank-and-file Republicans.

Most Senate Republicans, however, have wanted tax cuts to take a back seat to deficit reduction. The Senate version of the budget specified that the $170 billion in tax cuts would not be enacted until Congress has passed a budget that the Congressional Budget Office certifies would eliminate the deficit. That provision concerned some House Republicans because it would have delayed action on tax cuts until later this year, rather than approving them at the same time as the politically painful spending cuts mandated by the budget.

Adoption of the budget resolution would be just the beginning of a long summer during which Congress will have to decide which programs to cut.

House Republicans got a glimpse of just how difficult and contentious that process will be Wednesday, when the House floor erupted into a partisan dispute over a relatively minor proposal to abolish the Office of Technology Assessment, a $22-million arm of Congress, as part of an appropriations bill to pay for the operations of the legislative branch.

During debate on the bill, Republicans eked out a 214-213 victory and defeated an amendment to restore funding for the technology office--but only after the leadership had persuaded several GOP members to switch their votes. When Rep. John Linder (R-Ga.), the lawmaker presiding over the raucous debate, gaveled the vote to a close, two Democrats on the floor still wanted to cast their votes for the amendment--votes that threatened to reverse the outcome.

Saying that those members were unfairly denied the right to vote, Democrats filled the chamber with angry shouts and chants of “shame, shame.”