After Senate takes stand on tax cuts, real battle begins

<br>WASHINGTON (AP) _ Congress is getting down to the real business of writing tax legislation after the Senate's emphatic statement that President Bush's $1.6 trillion, 10-year tax cut plan is

Saturday, April 7th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) _ Congress is getting down to the real business of writing tax legislation after the Senate's emphatic statement that President Bush's $1.6 trillion, 10-year tax cut plan is too large.

The Senate hopes to vote on a tax plan by the end of May, and Finance Committee Chairman Charles Grassley, R-Iowa, said that even under the lower figure approved by the chamber, he believes he can meet most of Bush's tax relief goals.

``We can squeeze in significant tax reductions,'' he said after the Senate voted 65-35 Friday for a fiscal 2002 budget plan that laid the framework for a 10-year tax cut of some $1.2 trillion, a quarter less than what the president wanted.

Bush urged Americans on Saturday to keep pressure on lawmakers to support his tax and education overhaul plans when they attend town-hall meetings during Congress' spring recess, which began late Friday.

``They are decisions that we cannot afford to get wrong. Important reform is never easy, and it will always be tempting to postpone it,'' the president said in his weekly radio address.

``On education, there are some interest groups who don't like the idea of changes. On taxes, there are powerful institutions in Washington that would prefer to keep the people's money for themselves. ... If we want higher educational standards, if we're to pass a substantial tax cut, the people must make their voices heard.''

The $1.2 trillion figure could go up when Senate negotiators work out differences in a conference with the House, which earlier passed a budget with the president's numbers. House Majority Leader Dick Armey, R-Texas, said he believed ``we need more, not less, tax relief to pull this struggling economy out of its nosedive.''

But with the Senate divided 50-50 between Republicans and Democrats and moderates from both parties joining mainstream Democrats in opposing Bush's plan as too high, moving too far from the $1.2 trillion figure could be difficult.

``I don't think there's any question you will not see a $1.6 trillion or $2.5 trillion tax cut pass in the Congress,'' Democratic leader Tom Daschle said. The higher figure refers to what Democrats say could be the true cost of the Bush plan.

Both sides found reason to celebrate in the Senate vote on the budget, which is chiefly a nonbinding guideline but also a politically important marker.

Bush said the smaller package still represents ``meaningful, real tax relief'' and he was pleased with it.

``The fact that both houses of Congress have committed to finding significant relief is good for the American people and good for the economy,'' he told a White House awards ceremony.

Other Republicans pointed out that Democrats had moved substantially from recent months when they pushed for a tax cut of no more than $750 million. ``We're moving in the right direction,'' said Sen. Phil Gramm, R-Texas. ``There's no question, it's going up.''

But Daschle, D-S.D., said that if this is a victory for Republicans, ``there ought to be more like them. We are pleased.''

Democrats also chided Bush for touring the country to promote his $1.6 trillion plan, often in the districts or states of vulnerable Democrats, rather than seeking a bipartisan compromise.

``The White House understands it better than before,'' said Sen. John Breaux, D-La., a moderate who was active in seeking a middle ground. ``You can't be successful just by getting one Democrat to join a group of Republicans.''

On Monday the administration is to reveal the details of its 2002 budget, opening up to scrutiny what programs could face slower growth or cuts to accommodate the $1.6 trillion tax cut package.

The House has already passed some $1.54 trillion in several tax cut packages, including across-the-board income tax rate reductions, a fix to the so-called marriage penalty, elimination of the estate tax and a doubling of the $500 child tax credit.

Grassley, the Finance Committee chairman, said he has been working on a $1.34 trillion package over 10 years to accomplish those four goals.

``We will come up with a bill that reflects the Senate position,'' said Sen. Max Baucus of Montana, the ranking Democrat on the Finance Committee.

The panel also must decide how to craft a quick, $85 billion stimulus package for the faltering economy, with possibilities including giving people a tax rebate or simply sending them a check. The House tax bills do not include such measures.

The Senate's budget plan provides some $2 trillion in spending in fiscal 2002, including $678 billion in discretionary spending _ everything but automatic benefits such as Social Security.

That would be 7 percent above the current budget. That is well above the 4 percent growth sought by the president and followed passage of amendments that increased funding in such areas as education, agriculture, veterans benefits and health care.

The bill is H.Con. Res. 83.