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Archive for Saturday, July 22, 2000

Senate passage of tax cut sets up veto showdown

July 22, 2000

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— The Senate passed a Republican bill Friday that would slash income taxes for 50 million married couples. The bill invites a veto confrontation over budget surplus politics with President Clinton as the GOP prepares for its national convention to nominate George W. Bush.

The vote was 60-34 to pass the "marriage penalty" bill, with seven Democrats joining all but one Republican in support. Even at a cost of $292 billion over 10 years, GOP sponsors portrayed the bill as a modest refund of a portion of the projected $2.17 trillion in non-Social Security surplus revenue to middle-class taxpayers.

"I would ask those who oppose this family tax relief: just how big will America's budget surplus have to get before America's families deserve to receive some of their tax dollars back?" said Sen. William Roth, R-Del., chairman of the Senate Finance Committee.

Republicans were rushing to send the bill to the White House so that the president would have to decide its fate about the same time as the GOP convention July 31-Aug. 3 in Philadelphia, where cutting taxes will be a major theme as the party nominates Bush for president.

On Friday, Clinton promised to veto the bill on grounds its benefits are tilted toward families in the top 1 percent income range, and it and other GOP tax cuts would consume surplus dollars that could be used better for priorities such as paying off the public debt and providing a Medicare prescription drug benefit.

"In the interest of fiscal responsibility, I will veto this and any subsequent legislation that threatens our ability to pay down the debt and strengthen Medicare and Social Security," the president said in a written statement.

Neither the Senate nor the House vote Thursday reached the two-thirds margin needed to override a veto.

There was a question Friday exactly when the bill would reach the president, complicated by Clinton's absence, in Okinawa at an economic summit. Under the Constitution, he has 10 days to veto it -- not counting Sundays and the day he gets it -- or it becomes law.

"I don't think the timing of it is the real issue," said White House Budget Director Jack Lew. "It's the content of the bill that's the real issue."

The bill would remedy features of the tax code that force 25 million married couples to pay higher income taxes than single people, mainly by enlarging the bottom 15 percent tax bracket and increasing the standard tax deduction for couples filing jointly. But it would also cut taxes for millions more couples who now enjoy a marriage "bonus" because one spouse earns the bulk of the family income.

Democrats seized on the GOP convention timing, the high cost and claimed benefits for wealthier couples as evidence that Republicans have no interest in compromise and mainly want to use the president's veto in the congressional and presidential campaigns.

"Never in the history of the Senate has so much gone to so few, with so little concern for working families," said Sen. Edward Kennedy, D-Mass.

But Republicans said the marriage penalty hits hardest at incomes between $20,000 and $75,000 a year, and couples who now enjoy bonuses also need tax relief as they raise children, pay mortgages and balance other needs.

"We are talking about tax relief for the hardest-hit among us," said Sen. Kay Bailey Hutchison, R-Texas. "They earned this money and they deserve to keep more of it."

Clinton has proposed more limited marriage-penalty relief but offered to sign an earlier version of the GOP bill if Congress also passed an acceptable prescription drug benefit for Medicare recipients. Republicans have rejected that deal.

Officially, the bill's cost was estimated at $89.8 billion over five years because it was passed under budget rules limiting it to that span. Over 10 years, however, the Joint Committee on Taxation projected the bill's cost at $292 billion.

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