Republicans strike tentative tax deal

Tuesday, May 1st 2001, 12:00 am
By: News On 6

WASHINGTON (AP) _ House and Senate Republicans tentatively agreed Tuesday to push for an 11-year, $1.35 trillion tax cut, GOP aides and lawmakers said.

The deal would give President Bush most of the tax reduction he wants and resolve one of the two outstanding issues blocking completion of a 2002 budget.

It also reflects the failure of the White House and Republican leaders to persuade Senate moderates of both parties to move much closer to the $1.6 trillion, 10-year tax reduction that had been the pillar of Bush's economic program since his presidential campaign.

Under the agreement, taxes would be cut by $1.25 trillion between 2002 and 2011 _ $350 billion less than Bush had insisted on for more than a year. There would also be a $100 billion tax cut aimed at stimulating the economy that would be enacted this year but would cover 2001 and 2002.

Details of the agreement were disclosed by GOP aides and lawmakers speaking on condition of anonymity.

The pact underlines the clout moderates of both parties can wield in a Senate divided 50-50 between the two parties.

The more conservative House had approved Bush's full $1.6 trillion 10-year figure, and its leaders have been insisting that they would like to see an even deeper tax reduction.

Asked by a reporter if he could accept the deal, House Majority Leader Dick Armey, R-Texas, said, ``Not very happily,'' adding, ``You've got to have something. Something has got to pass both houses.''

For weeks now, 16 Senate moderates _ 14 Democrats and two Republicans _ have refused to move any closer to Bush's proposal than $1.25 trillion over 10 years, plus more for a stimulus package.

Bush conceded last week that he would have to compromise on his $1.6 trillion proposal, the core of his economic plan. GOP bargainers spent the last few weeks hunting votes for between $1.3 trillion and $1.4 trillion in 10-year reductions.

In the end, they had to settle for $1.25 trillion _ still one of the biggest tax reductions in decades.

Lawmakers and aides from both parties said that many of those moderates were expected to support the tax agreement, all but ensuring that a budget reflecting those figures would pass both chambers of Congress.

Asked about the deal, one of the moderates' leaders, Sen. John Breaux, D-La., said, ``We're moving in a direction that would give us an agreement.''

And Senate Majority Whip Don Nickles, R-Okla., said he expected a tax agreement to be announced later on Tuesday.

``We'll come up with a good tax bill,'' Nickles said.

The budget is an outline that sets overall tax and spending figures and guides later tax and spending bills. GOP leaders want to send Bush a big tax bill by Memorial Day.

The tax figure in the budget is important because under congressional procedures, it ensures that a bill cutting taxes by that amount cannot be filibustered in the Senate. Filibusters are endless delays that can kill legislation, and can only be ended with the votes of 60 of the 100 senators. In today's Senate, that would be impossible for Republicans to achieve if at least 10 Democrats did not go along.

Republicans hope to pass other tax bills _ not protected from filibuster _ in an attempt to boost this year's total tax cut.

With the tax question all but resolved, Republicans still had to work out internal conflicts over spending.

Bush proposed _ and the House endorsed _ holding many programs to a 4 percent increase next year. The Senate approved a boost of more than 8 percent. The two sides were discussing ratcheting that back to about 5.2 percent, but talks were still under way.

Earlier Tuesday, Republican members of the Senate Finance Committee met to discuss how to fit Bush's tax priorities into the lower tax cut figure but reached no consensus.

A leading GOP moderate, Sen. Olympia Snowe of Maine, said the biggest issue is what to do about Bush's across-the-board income tax cut _ particularly whether to drop the top 39.6 percent rate to 33 percent as the president wants or agree to a higher figure, perhaps 35 or 36 percent.

``It is the marginal rates around which everything revolves right now in terms of the centerpiece of the tax proposal,'' she said. ``We really do need to make some adjustments to accommodate some other priorities and address the distribution issue of who gets this tax cut.''