U.S. Congress to cast final votes on tax cut, budget deal


WASHINGTON, Reuters

Congress was expected to cast final votes on Thursday on a budget compromise to deliver on a large share of President George W. Bush’s call for sweeping tax cuts and limits on government growth.

The US$1.97 trillion fiscal 2002 budget plan, that would hold increases in most federal spending next fiscal year to 5 percent and start US$1.35 trillion in tax cuts over 11 years, is expected to clear the Republican-led House of Representatives.

It then moves on to the Senate for final passage later in the day or possibly on Friday.

The White House and congressional Republicans reached a deal on Wednesday after making concessions to a few moderate Senate Democrats needed to tip the balance in the Senate, which is split 50-50 between the parties.

Eager to move on to the legislation that implements the tax cuts, Republicans hoped for quick votes on the budget plan that are not binding, but set parameters for later tax and spending bills.

Bush, who was forced to back off his demands for US$1.6 trillion in tax cuts and a 4 percent limit on spending increases, said the compromise made “a lot of sense” and produced “a good budget.”

“We think this is a bill that certainly can pass the House and the Senate with a great deal of pride that we’re doing the right things for the American people,” House Speaker Dennis Hastert, an Illinois Republican, said after a White House meeting on Wednesday to close the deal.

The tax plan calls for US$100 billion in quick cuts or refunds over this year and next to boost the economy, followed by US$1.25 trillion in phased-in cuts through 2011.

While those tax cuts would be spelled out in later bills, they were expected to center on across-the-board rate reductions, cutting estate taxes, relief from a penalty paid by working married couples, and doubling the child tax credit.

The budget deal rolls back most of the 8 percent in additional spending on education, health care and other areas that Democrats maneuvered to add to the original Senate plan.

But it is about US$6 billion more for next fiscal year — that starts on Oct. 1 — than Bush wanted for programs that Congress and the president approve each year, boosting that spending to about US$667 billion.

Most of the nearly US$2 trillion federal budget is in automatic payment programs such as Social Security and Medicare and in interest payments on the national debt.

Senate Budget Committee Chairman Pete Domenici, a New Mexico Republican, said the plan provides for up to US$300 billion over 10 years for Medicare reform and a prescription drug benefit, up from Bush’s proposed US$153 billion.

It also provides nearly US$13 billion in emergency relief this year and next for the ailing farm sector, and has about US$66 billion in reserve for farm programs for 2003-2011, Republican budget statements said.

But Democrats said the 5 percent average growth, well under the 8 percent spending increase Congress and former Democratic President Bill Clinton settled on for this fiscal year, will not be enough for schools, health care and other needs.

They predicted the budget will be tightly stretched when the Pentagon makes expected demands for additional money.

“You can’t live with the national missile defense numbers he’s looking at and absorb it all in that small increase,” Senate Democratic leader Tom Daschle of South Dakota said.