Washington House and Senate negotiators struggled to complete work on a compromise version of President Bush's tax cut Thursday as lawmakers said the prospect of Democratic control of the Senate made it likely that the 11-year, $1.35 trillion package would be the last significant piece of tax legislation this year.
Both bills contain the main elements of Bush's original 10-year, $1.6 trillion plan: cuts in top tax rates, a doubling of the $500 child credit, marriage penalty relief and repeal of the estate tax.
But each chamber structured those elements differently, with the Senate adding items to build a bipartisan coalition for the bill. Lawmakers huddled in a series of meetings Thursday, trying to see what, if any, parts could be jettisoned to accommodate White House demands for deeper cuts in tax rates. Each trade-off runs the risk of alienating an important interest group.
Increasingly, it appeared no major element might be removed, but many would need trimming.
The Memorial Day recess, when many lawmakers plan to depart for their districts or overseas trips, added to the pressure. Bush urged lawmakers to complete the bill, saying they should not recess "until they have finished the job and passed tax relief for the American people."
An aide to one negotiator said there "was definitely movement on both sides" but it was unclear if an agreement could be reached by today. House and Senate leaders told lawmakers to prepare for a vote on a final deal late this afternoon.
Among major issues is how deeply to cut the top tax rate, currently paid by 0.7 percent of taxpayers. Bush sought to cut the top rate from 39.6 percent to 33 percent, which the House passed; the Senate bill brings it to 36 percent. The House demands it be no higher than 35 percent, the same as the top corporate rate.
House members insisted they would not make a string of concessions to the Senate.
"We are a party in this as well, and we expect to be heard," House Speaker Dennis Hastert, R-Ill., told reporters.
Throughout the day, rumors swirled about which parts of the bill were at risk.
One appeared to be provisions expanding retirement-based tax incentives, such as individual retirement accounts, which passed both chambers and in theory could possibly pass as a stand-alone bill.
But sources said advocates of the pension-tax breaks had pushed hard to return them to the bill.
Repeal of the estate tax, a key Bush objective, also was in danger of being squeezed.