GOP leaders hope to wrap up budget deal this week

<br>WASHINGTON (AP) _ Republicans are hoping to push a final 2002 budget through Congress this week after settling for an 11-year, $1.35 trillion tax cut that would give President Bush most of the tax

Wednesday, May 2nd 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Republicans are hoping to push a final 2002 budget through Congress this week after settling for an 11-year, $1.35 trillion tax cut that would give President Bush most of the tax reduction he has long fought for.

White House officials and GOP leaders seemed to resolve the two major remaining stumbling blocks to a House-Senate compromise on the budget Tuesday. They first reached the tax-cut deal. Then they tentatively agreed to let spending for many programs grow by 5.2 percent next year, surpassing the 4 percent Bush had wanted, said a Republican speaking on condition of anonymity.

Bush had made a $1.6 trillion, 10-year tax cut the cornerstone of his economic plan since early in his campaign for the GOP presidential nomination in 1999.

But facing resistance from moderates of both parties in the evenly divided Senate, he took the best deal he could get: $1.25 trillion in tax cuts from 2002 through 2011, plus $100 billion more in 2001 and 2002 aimed at sparking the economy.

``You all deserve great credit for agreeing to provide the American people with meaningful, significant, sweeping tax relief, the most tax relief in a generation,'' Bush said in White House remarks aimed at the Republicans and moderate Democrats who were supporting him. He planned to meet at the White House Wednesday with a bipartisan group of lawmakers involved in the budget process.

Sen. Pete Domenici, R-N.M., chairman of the Senate Budget Committee, said of the tentative spending deal, ``When you marry it to what we're going to do on taxes, I think we have a very good package.''

Senate Minority Leader Tom Daschle, D-S.D., called the GOP tax agreement ``a step in the right direction'' because it trimmed Bush's proposal. But Daschle said he would oppose the budget because the tax deal would still divert money from education and other priorities.

House Speaker Dennis Hastert, R-Ill., called the agreement ``a tax relief victory by any measure,'' adding, ``Within this year, hardworking Americans across this nation will be benefiting from more dollars in their pockets.''

The budget sets overall fiscal goals that are implemented in later tax and spending bills. The House already has approved bills cutting the income, estate and other taxes Bush has proposed paring. Congressional approval of a budget would let Senate tax-writers begin voting on their own package next week.

Republicans said they would seek additional tax cuts that would go beyond the budget's tax numbers in separate, smaller bills.

The agreement would let Bush and congressional Republicans claim credit for one of the biggest tax cuts in decades. But it also underscored the limits on the president's power forced by the Senate's 50-50 division between the two parties. The new tax figure was only reached after several moderate senators said they would support it and White House aides concluded they could do no better.

On spending, Bush had proposed letting last year's $635 billion in spending for discretionary programs grow to $661 billion. Those programs, approved by Congress annually, cover one-third of the budget and encompass education, defense, and everything but automatically paid benefits like Social Security.

The House approved Bush's figure on March 28, but the Senate later voted to boost it to $688 billion. Under the tentative deal, those programs would get about $667 billion.

The tax agreement was virtually identical to what the moderates had been insisting was the biggest package they would support. One of their leaders, Sen. John Breaux, D-La., endorsed the deal and predicted it would garner enough moderates' votes to win passage.

In the budget it approved in March and in tax bills it already has passed, the House endorsed Bush's full $1.6 trillion tax-cut. But in its budget, the Senate approved only a $1.2 trillion cut. In the end, Bush had to bow to the realities of the divided Senate, in which 14 moderate Democrats and two moderate Republicans refused to move above $1.25 trillion, plus an accompanying stimulus package.

Not all of the moderates immediately endorsed the package.

Many reacted like Sen. Ben Nelson, D-Neb., who said he wanted to see more details of the GOP's tax and spending plans.

Members of the tax-writing Senate Finance Committee already are holding meetings to decide which of Bush's _ and their own _ proposed tax cuts will make it into the big tax package they will begin writing next week. Most Republicans believe Bush's proposed across-the-board cut in income tax rates is the top priority.