Holdout Senators Provide Key Votes on Cut in Dividend Taxes

For President Bush to get a key provision of the tax cut bill through the Senate on Thursday, he had to capture the votes of two independent-minded senators: George Voinovich (R-Ohio) and Ben Nelson (D-Neb.).

The president and his allies did their best to put them on the spot: Bush flew to their states to rally their constituents behind his economic growth plan, and both lawmakers were targets of hard-hitting television ads aired in their home states. One even pictured Voinovich next to a French flag, imagery that’s become a political slur because of France’s opposition to the U.S. war with Iraq.

In the end, both senators jumped off the fence onto the president’s side, providing the key votes on a proposal targeting dividend taxes.

It wasn’t exactly what Bush sought, which was to abolish the tax on dividends. The Senate bill would cut the tax for 2003, then eliminate it for 2004 through 2006. Supporters hope that could pave the way for eventually making the elimination permanent.

The vote on the Senate’s dividend proposal came down to 50-50, with Vice President Dick Cheney breaking the tie to pass it. A few hours later, the entire bill was narrowly approved, 51 to 49, again with crucial support from Nelson and Voinovich.

The two lawmakers insisted it was changes made to the bill -- not pressure -- that determined their decisions.

Voinovich, a moderate Republican and self-described deficit hawk, said he got what he wanted: a bill with a net cost of no more than $350 billion (though critics note that if the elimination of dividend taxes is extended, the price tag would soar). He also got the Senate to agree to one of his pet issues: creating a commission to examine the tax code “from top to bottom.”

And Nelson, who was lobbied by Cheney and two Cabinet members, said he got the $20 billion he sought to aid struggling states.

Bush has regarded eliminating the tax on dividends as the cornerstone of his efforts to promote economic growth.

All Senate Democrats except Nelson and Zell Miller of Georgia voted against the measure.

Three Republicans opposed it -- Sens. Lincoln Chafee of Rhode Island, John McCain of Arizona and Olympia J. Snowe of Maine.

Opponents argued the tax cut would disproportionately benefit the wealthy, questioned whether the measure would stimulate the economy and worried about its effect on the burgeoning federal budget deficit.

Following the Senate passage of the overall bill, House-Senate negotiators will begin to reconcile differences between their versions of the legislation.

The House last week passed a $550-billion bill that would cut, but not eliminate, the tax on dividends.

Both bills include a number of common features, such as accelerating income tax rate cuts scheduled to be phased in between now and 2006.

Voinovich and Nelson dismissed any notion that Bush’s visits to their states or the attack ads swayed them. Voinovich said the tax issue pales in comparison to other challenges he’s faced during his lengthy political career.

“If I ever get to the Pearly Gates, I’m going to say that I was the mayor of Cleveland,” he said.

And Nelson said: “What got me was state fiscal relief. What keeps me is state fiscal relief,” a not-so-subtle message that House-Senate negotiators better keep the state aid in the final package if they expect his support.

But political analysts said Bush was a big presence.

“It’s hard to resist a full-court presidential press,” said Don Kettl, a University of Wisconsin political scientist. “When Air Force One swoops into town, only the foolish stand in its way.”

The Bush team has gotten far more sophisticated in its relations with Congress, Kettl said. “They’ve become deft at laying on presidential prestige, applying subtle arm-twisting and ladling on delicate doses of pork.”

Nelson was in a particularly prickly position: lobbied on one side by Democratic colleagues to oppose the tax cut, and on the other side by a president who handily carried Nebraska.

“Sure, there are some of my colleagues who would prefer that I vote otherwise,” Nelson said. “But there are times when I would prefer they vote otherwise.... You have to look at the issues and try to decide what you think is going to be best for the people in your state and the people in our country.”

Nelson bristled at the ads aired in his state by the Club for Growth, a tax cut advocacy group, accusing him of opposing the president. But he said his constituents would “see right through” the “pack of lies.”

David Keating, executive director of the Club for Growth, said he thought the ads were a factor in swinging the wavering senators to the president’s side.

He said the group’s polling suggested Voinovich was vulnerable “because of what he’s been doing to buck the president.”

But Alexander Lamis, a political scientist at Case Western Reserve University in Cleveland, called Voinovich, a former governor of Ohio as well as Cleveland mayor, “untouchable” in state politics.

Voinovich said he spent much of Thursday poring over paperwork “tracking down every dime to make doggone sure” the package stayed within the $350-billion limit.

“I feel good about this package, and I’m hopeful that it’s going to do what we expect it to do and give the economy a jolt and move things along,” Voinovich said.