House OKs Tax Cuts for Parents, Setting Up Senate Battle

The House on Thursday approved more than $81 billion in tax breaks for parents, a move likely to prolong a controversy over aid to low-income families that the White House wants settled soon.

The bill is the response from the House’s Republican leaders to Democratic-led criticism that tax cuts President Bush recently signed into law failed to extend to low-income families the benefits of an increased tax credit for children.

The bill passed on a largely party-line vote of 224 to 201. It includes a $3.5-billion provision for the working poor, along with an additional $77.7 billion in tax cuts that would largely benefit families with middle and higher incomes.

The measure veers sharply from a bill that passed the Senate, 94 to 2, last week. The Senate version would provide about $10.5 billion in tax breaks.

Democrats contended that, by approving a much larger bill, the House’s action would stymie efforts to quickly make the benefits available to low-income families.

At issue is whether families that pay no income tax should get cash benefits comparable to the tax credit for children.

The $350-billion tax cut package that became law in late May included an increase to $1,000 from $600 in the per-child tax credit. A provision that would have helped families that earn less than $27,000 a year benefit from the increase was omitted by GOP negotiators who crafted the measure, a move protested by Democrats.

The House bill would help these lower-income families qualify for the benefit in 2003 -- but only after they file their tax returns next year. Others, with higher incomes, are eligible under the law for immediate rebates this summer.

The bill also would raise to $150,000 from $110,000 the annual income level at which the $1,000-per-child credit begins to phase out for joint filers. And it would fix the credit at $1,000 through 2010; under current law, its value will fluctuate during that time.

The House bill would also grant $800 million in tax breaks to military families and the immediate relatives of astronauts who die in shuttle missions, for a total cost of $82 billion. It proposes no measures to recoup the lost revenue.

Before the vote, the Bush administration issued a short statement calling for the House to pass its bill and urging the two chambers “to quickly resolve their differences.”

Earlier this week, the White House more actively supported the Senate bill.

White House spokesman Ari Fleischer, in comments Monday, said Bush’s advice to House Republicans was “to pass [the Senate bill], to send it to him so he can sign it.”

“He wants to make certain that this does not get slowed down, bogged down,” he said.

House GOP leaders objected to those comments and welcomed a more neutral White House statement Thursday.

But in the Senate, some Republicans shared Democratic complaints that the House bill would prove too big a drain on the federal budget. Those concerns set up potentially extended negotiations on a compromise measure.

The House bill “is going to run into a lot of stormy weather over here,” said Sen. Max Baucus (D-Mont.)

Senate Finance Chairman Charles E. Grassley (R-Iowa) said, “If we don’t change the House bill, I don’t know if there are enough Senate votes to pass it.”

Some lawmakers said privately that it would take strong intervention by Bush for the issue to be resolved soon.

The Senate bill was passed after the chamber’s Republican leaders cut a deal with Democrats to help lower-income families qualify for the full $1,000 credit -- part of it through advance aid this year -- and expand the eligibility for upper-income taxpayers. The Senate bill would offset its $10.5-billion cost with higher customs fees.

In contrast to the Senate, House debate on the issue was marked by partisan rancor.

Some Republicans said it was inaccurate to refer to the proposed aid as a tax credit or refund when it would go to families that owe no income taxes.

“It’s not a tax refund; it’s not a tax credit,” said Rep. Spencer Bachus (R-Ala.). “If we’re going to do it, let’s call it what it is, and it is welfare.”

House Minority Leader Nancy Pelosi (D-San Francisco) said House Republicans were “frightened” of debate on the Senate-passed bill. “It would pass unanimously and be on the president’s desk within the hour,” she said, scolding the House leadership for refusing to take up the Senate version.

In the House vote, nine Republicans broke with their party to oppose the bill, and nine Democrats split from their colleagues to support it.

The vote among the 53 members of California’s House delegation followed party lines.