GOP Hashing Out Deal to Delay Tax Cut Vote

House and Senate Republican leaders, with their ranks bitterly divided over how big a tax cut to pass this year, sought agreement Wednesday night on a budget compromise that would postpone resolving the dispute until later this year.

By then, President Bush’s allies hope a changed political and economic climate will make Congress more receptive to the $725-billion, 11-year tax cut he has proposed to stimulate the economy.

But for now, moderate Senate Republicans have refused to vote for a budget that allows a tax cut any bigger than $350 billion. That puts them at loggerheads with conservative Republicans in the House, who refuse to pass a budget with a tax cut that small.

To break the impasse, GOP leaders said, they hoped to resort to an unusual legislative maneuver that will allow them to pass the annual budget resolution this week without setting a single tax-cut target, which should be a core provision.

The details were still being haggled over late Wednesday, and GOP leaders said they were seeking a compromise that would include an unprecedented provision giving the Senate a tax-cut target of $350 billion, while allowing the House to write a bigger tax cut -- up to $626 billion, according to GOP sources.

“There are differences between the House and Senate, and in order to get a budget we need to recognize those differences and be able to address them later,” said Senate Majority Leader Bill Frist (R-Tenn.)

But efforts to strike a deal hit a glitch late in the evening when the Senate parliamentarian issued a ruling that seemed to impose a new procedural hurdle to the Senate passing a tax cut bigger than the $350 billion it had earlier voted to support.

The parliamentarian ruled that if the conference committee approved a tax cut larger than $350 billion, it would take 60 votes to sustain the additional tax reduction in the Senate. Without the support of the GOP moderates and some Democrats, this would be impossible to attain.

The parliamentarian’s ruling angered House Republican leaders, who want a clear shot at a bigger tax cut.

GOP leaders are under pressure to seal a deal so Congress can pass a compromise budget resolution this week -- a political imperative for Republicans, who made a major campaign issue in 2002 out of the failure of the then-Democratic controlled Senate to pass a spending blueprint.

Still, a senior House Republican strategist acknowledged that the scramble for a compromise resolution amounted to a tactical maneuver to avert a major setback for Bush’s tax-cut plan.

“If we reach agreement now, we’d have to go to $350 billion,” said the strategist.

Two moderate Republicans who have opposed the Bush plan -- Sens. Olympia J. Snowe of Maine and George Voinovich of Ohio -- seemed receptive to the idea of setting different tax cut targets for the House and Senate.

But they vowed to continue fighting against any final tax cut greater than $350 billion. They said no compromise would change the underlying reality that there is not a majority in the Senate for a bigger reduction.

“I don’t think the votes are there now and I don’t think they will be there in the future,” said Sen. John B. Breaux (D-La.), who teamed with Snowe and Voinovich to scale back Bush’s tax cut.

GOP leaders, Breaux added, “are postponing the inevitable.”

But these leaders are banking on Bush’s enhanced status as commander-in-chief -- given the apparent success of the war in Iraq -- to help bolster support for a bigger tax cut later.

The news from Iraq “builds the prestige of the president of the United States,” said Sen. Pete V. Domenici (R-N.M.). “He has become a very much stronger president today than he was just a few months ago.”

The annual budget resolution sets targets for detailed spending and tax bills that Congress will draft later in the year.

A key provision in the resolution is how much of the proposed tax cut will be protected by special budget procedures that prohibit a filibuster in the Senate. Those special procedures mean that a tax cut could pass with a simple majority of 51 votes, rather than the 60 votes it takes to break a filibuster.

Because most Democrats in the closely divided Senate oppose any tax cut, lawmakers assume no reduction will pass without protection against filibusters.

The House budget resolution set the target for protected tax cuts at $725 billion -- the amount Bush sought for his plan to stimulate economic growth. The Senate version of the budget trimmed that to $350 billion.

For the last week, Voinovich and Snowe refused entreaties from their leaders and the White House to support more than the $350-billion figure. But GOP leaders concluded that the more conservative House would not pass a resolution with less than $500 billion in tax cuts.

Faced with that stalemate, the leaders were seeking to work out their differences later. Once the final budget resolution is passed -- perhaps today or Friday -- tax cut legislation will be drafted by the Senate Finance and the House Ways and Means committees. The final tax bill then will be written in a conference committee to reconcile differences between the chambers.

House Republicans pushing for a larger tax cut have been hoping it will be easier to sell it once lawmakers are faced not with an abstract price tag but with concrete proposals -- such as politically appealing elements in Bush’s plan. These include tax relief for families with children and married couples.

The House leaders also are hoping to change some minds once the war is over and its costs more certain.

But Voinovich and Snowe insist that there is virtually no chance that a bigger tax cut will clear the Senate. Snowe is especially well positioned to influence the debate because she is a pivotal member of the Senate Finance Committee, where Republicans have only a one-vote margin of control.

“At this point, I don’t see how I get more than $350 billion [in tax cuts] through the Senate,” said Finance Chairman Charles Grassley (R-Iowa). “But I’m going to do my darnedest to get [it].”