Senate Trims Bush’s Tax Cut

The prospects for the centerpiece of President Bush’s domestic agenda--his $1.6-trillion, 10-year tax cut plan--suffered a serious setback Wednesday when the Senate tentatively voted to reduce it by $450 billion.

The critical vote came on a floor amendment to the overall budget resolution that will set tax and spending parameters for Congress. The amendment calls for taking the money out of the tax cut and splitting it evenly between education programs and reducing the national debt.

Three Republicans from the Northeast fended off heavy lobbying by GOP leaders and the Bush administration to join all but one Democrat to support the amendment. It passed, 53 to 47, with Senate Majority Leader Trent Lott (R-Miss.) also voting for it at the last minute so that he could use parliamentary rules to call for reconsideration later in the week if he is able to persuade two senators to change their minds.

The dickering over the budget resolution--and especially the proposed tax cut--remains sufficiently volatile that a deal could be struck between the GOP mavericks and their leadership. But Wednesday’s vote demonstrated the difficulty Bush will face in winning majority support for his economic policy in a Senate evenly divided between the parties.

Senate Minority Leader Tom Daschle (D-S.D.) insisted that the vote showed that Bush’s “original [budget] proposal, as far as the Senate goes, for all intents and purposes appears to be over.”

Daschle said he hoped the vote would send a strong signal to the administration that it begin negotiations that could lead to a bipartisan agreement on the size of a tax cut.

The administration strategy has been to win passage of a budget resolution that includes the $1.6-trillion tax cut, even if negotiations later this year lead to a smaller figure. The House passed the resolution earlier this month on a near party-line vote.

Following Wednesday’s setback, the White House sought to maintain a calm public face. “The Senate is at the beginning of an ongoing process in which decisions are often revisited,” said White House Press Secretary Ari Fleischer. “The president looks forward to continuing his work with the Senate to provide real, meaningful tax relief to the American people as he proposed in his budget.”

The three Republicans who strayed from party ranks in the vote were Sens. Lincoln Chafee of Rhode Island, Arlen Specter of Pennsylvania and James M. Jeffords of Vermont.

In another blow to Bush just shortly before the vote on the amendment, Jeffords said he was prepared to oppose the overall budget resolution incorporating Bush’s proposals because he views the $1.6-trillion tax cut as too large. “Unless a miracle occurs, I fear that I am . . . bending in that direction,” Jeffords said.

During negotiations with GOP leaders, Jeffords has been pushing for increased funding of special education programs, at a cost of $180 billion over 10 years. Jeffords, who was the lone Republican to oppose President Reagan’s 1981 tax cut, has a long-standing commitment to special education.

Late Wednesday, Lott emerged from the Senate chamber and asserted he had struck a deal with Jeffords that would regain his support for Bush’s tax and spending plan. “We’re doing a deal; it’s as good as done,” Lott said.

Lott also predicted that “we’re going to have a tax cut in the $1.6-trillion range. Along the way, there’ll be some bumps in the road.”

A spokesman for Jeffords, however, said there was no deal yet.

Since the Senate debate began earlier this week, the fate of the tax cut has been in doubt. Although it survived a critical first vote on Tuesday when Vice President Dick Cheney cast the deciding vote to stop a Democratic amendment that would have taken money from it to pay for a prescription drug benefit, it is clear that most votes will be close.

Wednesday’s successful amendment to reduce the Bush tax cut plan was sponsored by Sen. Tom Harkin (D-Iowa).

The one Democrat to join with most Republicans in opposing it was Sen. Zell Miller of Georgia. Miller announced his support early this year for the Bush tax cut, and the administration has hoped he would be joined by other moderate and conservative Democrats. But so far, that has not occurred.

Although the Bush plan lost only the one vote Wednesday, a second vote showed the fragility of the Senate’s GOP majority. The Democrats offered an amendment that would have taken $88 billion from the tax cut and funneled it to farmers; the vote was held open for nearly an hour while Republicans attempted to shore up their opposition to it. The amendment was defeated, 51 to 49, after GOP leaders persuaded Republican Sens. John McCain and Jon Kyl of Arizona and George Voinovich of Ohio to switch their votes and oppose it.

Another crucial vote could come today on a $1.2-trillion tax cut plan pushed by Sen. John B. Breaux (D-La.). The Breaux plan essentially splits the difference between Bush’s proposal and a $900-billion tax cut supported by the Democratic Senate leadership.

“What we are saying is there are not enough votes to pass either of the two measures,” Breaux said Wednesday.

Jeffords and Chafee appeared with Breaux and several other conservative Democrats at a news conference Wednesday to tout the compromise. But as of now, it appears to lack enough support to pass.