WASHINGTON (Reuters) - An "understanding" between the U.S. House of Representatives and Senate on a $382.8 billion tax cut package President Bush says will boost the economy lacks sufficient support in the Senate to pass, Senate Republican aides said on Wednesday.
Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, told House Ways and Means Committee Chairman Bill Thomas that the tentative agreement outlined earlier on Wednesday could not pass because the total tops the $350 billion limit set by the Senate.
Thomas left the meeting in anger, a Senate aide said.
"It was a real snot-flinger of a meltdown," he said.
(what, are these people in 1st grade?)
Thomas told reporters he believed he had an understanding with Grassley for $350 billion in tax cuts plus $20 billion in state aid and $11.9 billion in child tax credit refunds that are categorized as spending
The Senate has asked for some fine-tuning of the package to bring its total cost within the $350 billion. Without that, Senate Republican leaders could lose crucial votes of moderates who believe anything bigger would add to budget deficits.
Thomas, who has the backing of his House Republican leaders, will be reluctant to give in to Senate demands to win one or two votes.
FACING THE CONSEQUENCES
"Somebody has to face the fact that they may be the one that brings the package down," Thomas told reporters.
President Bush, looking to boost the economy, is urging Congress to pass a tax cut by the end of the week and appears ready to accept what he once derided as a "little bitty" package. He had been pushing for the $550 billion total approved by the House and wanted to keep the centerpiece of his original $726 billion package -- eliminating dividend taxes.
Democratic opponents say the proposed cuts will not be effective, favor the rich and will inflate the national debt. They note that in the same week Republicans hope to pass Bush's tax cut package, they will also be voting to raise the $6.4 trillion debt limit by a record $984 billion.
Thomas had told reporters his understanding of the deal was that it would follow the outlines of a $550 billion measure passed passed by the House that would lower the top rates on dividend taxes and capital gains to 15 percent.
The tax cut section of the package would keep within a $350 billion target set by the Senate but it also includes $20 billion in aid to states and $11.9 billion child tax credit refunds that are categorize as spending in the budget.
Thomas said revenue-raising proposals that had been part of the Senate's attempt to keep down the overall cost had been dropped. In order to make the tax cuts fit within the $350 billion limit the Senate had set, many of the tax breaks would expire before the end of the 10-year package.
Some senators have called such "sunset" provisions "gimmicks" aimed at disguising the true costs of tax cuts. Lawmakers assume any expiring provisions would most likely be extended.
The rate cuts for dividends and capital gains would expire at the end of 2009. For lower income people, the tax rate on dividends and capital gains would be 5 percent and that would drop to zero for one year before expiring, Thomas said.
Currently dividends are taxed at normal income rates, while most capital gains are taxed at 20 percent.
Senate aides suggested the changing the expiration date to 2008 would bring the package's total cost under the $350 billion total the Senate wants. |
