Senate Approves Curbs on Tax Cuts

Joined by four moderate Republicans, Senate Democrats on Wednesday pushed through a budget amendment that would make it harder for President Bush to make permanent his $1.1 trillion in tax cuts that are due to expire by 2011.

But in a sign of how difficult it will be this year to cut spending -- even in the face of record deficits -- the Senate also restored nearly $7 billion in defense spending that its Budget Committee had eliminated from Bush’s proposed defense budget.

The moves came during the third day of debate over a Republican-authored $2.36-trillion budget for fiscal 2005.

The Democrats said the 51-48 vote in favor of their so-called PAYGO amendment reflected mounting bipartisan fear that deficits were out of control. The federal deficit, according to the Congressional Budget Office, is expected to reach a record $477 billion this year.

PAYGO, short for “pay as you go,” would mandate that tax cuts instituted over the next five years require 60 votes to clear the 100-member Senate, unless their impact on the deficit is erased by spending cuts or tax increases elsewhere. Increases in Social Security, Medicare and other programs that entitle certain groups of people to government benefits also would require 60 votes or offsetting spending cuts and tax hikes.

In a closely divided Senate, where Republicans now hold 51 of the 100 seats, that means it would be difficult to pass new cuts.

“It means that the message of taxpayer concerns about deficits is getting through.... The Republican leadership tried very hard, twisted some arms pretty seriously to try to win it. They couldn’t win it,” said Sen. Russell D. Feingold (D-Wis.), a sponsor of the amendment.

Republican Sens. Lincoln Chaffee of Rhode Island, Susan Collins and Olympia J. Snowe of Maine and John McCain of Arizona voted with the Democrats. Democrat Zell Miller of Georgia voted with the Republicans. Democrat Tim Johnson of South Dakota, who is recovering from surgery, did not vote.

Sen. John F. Kerry of Massachusetts, the presumptive Democratic presidential nominee, took time out from campaigning to vote for the amendment, as well as another Democratic-sponsored measure that would have required 60 votes for this year’s tax cuts only; it, however, was defeated on a 52-47 vote.

Kerry also voted for restoring the military spending Bush had proposed.

Senate Budget Committee Chairman Don Nickles (R-Okla.) said that despite the first amendment’s passage, he expected three popular tax cuts due to expire at the end of this year to be extended. They are the beefed-up child tax credit, marriage-penalty relief and expansion of the 10% income tax bracket.

“It means we will be able to extend the bulk of what we wanted to do,” Nickles said. After the budget is passed, Republicans -- who also control the House -- will have a chance to strip the amendment out of the compromise budget, which the two chambers could begin negotiating as early as next month.

Feingold acknowledged that the Senate had sent a mixed message on spending by restoring the nearly $7-billion cut in defense funding the Budget Committee had sought. That amendment passed on a 95-4 vote.

The White House earlier had pressured Republicans to fight to make the tax cuts permanent and to fully fund Bush’s $421-billion defense budget request.

In a letter sent Tuesday to Nickles and North Dakota Sen. Kent Conrad, the ranking Democrat on the committee, the White House warned that unless the tax cuts were made permanent, “the tax burden on Americans will increase dramatically, beginning next year.”

Some Republicans in both the Senate and House have urged defense cuts, saying they are necessary to demonstrate Republicans are serious about bringing spending under control and reducing the budget deficit.

But the White House warned that the proposed cuts would endanger the administration’s effort to fight its declared war on terrorism, secure the peace in Afghanistan and Iraq and continue efforts to modernize the military and improve benefits for troops.

A final Senate vote on the budget is expected today or Friday.

The House Budget Committee is due to complete its version of the budget today.