Senate Poised to Reduce Tax Cut

President Bush and his Senate GOP allies scrambled Thursday to rescue his tax cut from a stinging blow, but Republicans conceded that the budget resolution the Senate is expected to pass today may fall short of embracing the administration’s full tax cut.

One day after the Senate voted to pare by almost one-third Bush’s bid to cut taxes by $1.6 trillion over 10 years, the president and his lieutenants urged GOP defectors as well as wavering Democrats to reconsider their position.

In a speech Thursday to newspaper editors, Bush pitched his plan as a needed antidote for a slowing economy. “I urge the senators, when they cast the vote [today], to remember there’s a lot of people in our country who are beginning to hurt,” he said.

But Senate Majority Leader Trent Lott (R-Miss.) later in the day acknowledged that efforts to restore the $1.6-trillion tax cut may fail. He seemed to have given up on efforts to win back a key Republican defector, Sen. James M. Jeffords of Vermont.

‘Like a Scene from “Gladiator” ’

Much of the day’s lobbying effort focused on Jeffords because he has said he probably would vote against the Bush overall budget plan and he helped pass Wednesday’s amendment to scale back the president’s tax cut by $450 billion. The amendment called for the money to be used instead for education programs and reducing the national debt.

“They’ve already twisted his arms off,” said Jeffords’ press secretary, Erik Smulson. “Now they are going for his legs. It’s like a scene from ‘Gladiator.’ ”

At issue is a budget resolution that sets the broad outlines of spending and tax policies for the coming fiscal year; details are worked out later in tax and appropriation bills.

The effect of Wednesday’s vote had been to scale back Bush’s tax cut to $1.16 trillion over 10 years. That sent Republicans scrambling Thursday to restore bits of the tax cut. One successful amendment increased the cost of the tax cut by providing $42 billion more in the earlier years, bringing the total to $1.2 trillion.

But late in the evening, the debate turned into a tit-for-tat skirmish between the parties that showed how hard it will be for the Senate to pass a tax cut larger than roughly $1.2 trillion.

First the Senate approved a Republican amendment that would increase the tax cut by $70 billion. But Democrats moved quickly to block that move with an amendment to scale the tax cut back by $70 billion--and funnel the money to an education program favored by Jeffords. That amendment passed 54-46, with the support of Jeffords and four other Republicans.

A second Republican attempt to again boost the tax cut by $70 billion then failed, 51 to 49.

The upshot was to bring the tax cut back to $1.2 trillion--just where Jeffords and other centrists in both parties want it to be.

In a sign that Republicans were preparing for the Senate to approve the smaller tax cut, the president and his allies started looking ahead to conference negotiations between the Senate and the House, which has already passed a budget resolution with the full $1.6-trillion cut.

“The budget process is a long and winding one,” Bush said in his speech. “No one vote is decisive.”

Bush himself has been lobbying senators on the budget, including some Democrats, according to White House spokesman Ari Fleischer. And the effort to shore up support for his tax cut has consumed the time of several top White House officials, who have spent every day this week scurrying around the Capitol.

Cheney was so preoccupied that he canceled plans to speak before board members of the New York Stock Exchange gathered in Washington on Wednesday evening. Richard Grasso, chairman of the exchange, appealed to Sen. John McCain (R-Ariz.), who agreed to fill in.

“Apparently the vice president was busy last night,” McCain said.

As the budget debate began, the resolution mirrored Bush’s priorities, making room for the $1.6-trillion tax cut over 10 years and allowing a 4% increase in spending. The resolution withstood its first test when the Senate voted 51-50--with Cheney breaking the tie--to turn back an amendment to scale back the size of the tax cut to increase funding for Medicare.

But Bush’s fragile majority did not hold Wednesday, when the Senate voted to take the $450 billion out of it. On that vote, three Republicans defected: Jeffords, Lincoln Chafee of Rhode Island and Arlen Specter of Pennsylvania.

Administration and Senate GOP officials were focusing their energy on Jeffords because they assume that nothing will change Chafee’s mind and they believe Specter would fall back in line if his is the decisive vote.

Administration Irritates Key Democrat

Administration officials also continued efforts to win over potential Democratic waverers, such as Sen. Ben Nelson of Nebraska. Nelson signaled a willingness to support a tax cut between $1.2 trillion and $1.6 trillion.

But Nelson was irritated by the fact that Bush’s top budget official, Mitch Daniels, was quoted in an Omaha newspaper complaining about the senator’s Wednesday vote supporting the amendment to scale back the tax cut.

“It was not an effective strategy,” said Nelson spokesman David DiMartino.

Administration officials also stepped up efforts to woo Sen. Max Cleland (D-Ga.), who has been noncommittal on the tax cut. Cleland is under political pressure to cross party lines because he is up for reelection in 2002 in a state that went for Bush. Also, his Senate colleague from Georgia, Zell Miller, is the one Democrat co-sponsoring Bush’s tax cut.

Despite their setbacks, Republicans still had the clout to block amendments on Thursday that sought to further scale back the tax cut.

In a key vote, the Senate rejected, 61 to 39, a Democratic alternative to cut taxes by $745 billion over 10 years. The plan would have provided an immediate $300 rebate to all taxpayers in 2001 to stimulate the economy, and cut the lowest income tax rate from 15% to 10%.

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Times staff writers Edwin Chen and Greg Miller contributed to this story.