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Archive for Friday, March 2, 2001

House panel OKs Bush tax cuts

March 2, 2001

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— Republicans have put President Bush's across-the-board tax cut on a congressional fast track that Democrats fear could prematurely commit a huge chunk of future budget surpluses and create pressure for deep spending cuts later.

Citing weakness in the economy, the GOP leadership in the House plans to bring the $958 billion, 10-year measure to a floor vote next week in hopes of passing it and giving it momentum for what is likely to be a troubled journey through the deeply divided Senate. The bill represents the major portion of Bush's $1.6 trillion tax cut proposal, and the rest is expected to be advanced later in the year.

Rep. J.C. Watts, R-Okla., left, House Majority Whip Tom DeLay of
Texas, center, and House Majority Leader Dick Armey of Texas lead
GOP calls Thursday for passage of President Bush's tax cut package.

Rep. J.C. Watts, R-Okla., left, House Majority Whip Tom DeLay of Texas, center, and House Majority Leader Dick Armey of Texas lead GOP calls Thursday for passage of President Bush's tax cut package.

While the House Ways and Means Committee approved the bill Thursday on a 23-15 party-line vote, Democrats protested the Republican strategy of trying to push through a major tax cut before Congress has adopted a budget.

"Some of us feel a tremendous mistake is about to be made," Rep. Charles Stenholm, D-Tex., one of the more conservative Democrats in the House, told House Majority Leader Dick Armey, R-Tex. "It seems to me we are getting the cart before the horse."

House Speaker Dennis Hastert, R-Ill., made a strong plea to Republican members in a closed-door caucus Thursday to show political support for Bush and give his tax cut swift approval, even though the House likely won't pass a budget for months.

The sharp political conflict over tax cuts and spending will severely test Bush's declared intention to reach out to Democrats and be a "uniter, not a divider." The partisan divide appears to be widening.

Republicans decided to split Bush's $1.6 trillion tax cut and move a reduction in tax rates first. The second part includes proposals to double the child tax credit to $1,000, repeal the estate tax and eliminate the marriage penalty.

The legislation approved Thursday by the committee would phase in tax-rate reductions over five years so that by 2006, the current five tax brackets of 39.6 percent, 36 percent, 31 percent, 28 percent and 15 percent would shrink to four 33 percent, 25 percent, 15 percent and 10 percent.

For most taxpayers, the phase-in would start in 2002, but the committee voted to cut the 15 percent rate, applying to taxpayers earning $12,000 or less, to 12 percent retroactive to Jan. 1, 2001. That would provide quick relief to low-income people who Democrats had said would be hurt by the Bush plan.

Democrats, who are pushing a smaller overall tax reduction, said they are concerned quick approval of the main element of Bush's tax cut proposal would consume too much of a projected $5.6 trillion surplus and lead to sharp reductions in many federal programs the party holds dear, as well as prevent paying down of the national debt.

Some Democrats compared Republican strategy with the way President Ronald Reagan's tax cut was handled in 1981. Thanks to Reagan's popularity at the time, the GOP managed to push it swiftly through a Democratic Congress that balked at spending cuts to finance the Reagan agenda. Succeeding administrations and Congresses were forced to struggle for years with the resulting large deficits.

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