Tax and Budget Fight Explodes in House

Tax and Budget Fight Explodes in House

NewsMax.com Wires
Thursday, March 1, 2001

WASHINGTON (UPI) – The expected pitched political and fiscal battle over President Bush's budget exploded Wednesday as House Republicans announced they would immediately pass legislation reducing income taxes on the very day that Bush delivered a draft budget to Capitol Hill that Democrats called a "shell game."

The House Republicans prepared to split apart Bush's $1.6 trillion tax cut and swiftly move a $958 billion portion that would reduce income taxes in all tax brackets and leave the rest of Bush's tax cut plan – such as components that would eliminate the estate tax and reduce the marriage penalty – for later consideration.

The bill would also make the income tax cuts retroactive.

"I think there is general agreement that we want to lead off with marginal [income] tax relief," House Majority Leader Richard Armey of Texas said.

Republicans said they would move the bill through the powerful Ways and Means Committee today and on to the House floor next week.

But that plan has sparked a fierce response from Democrats, who received their first rough draft of Bush's budget Wednesday morning. Democrats said Republicans were trying to pass a tax cut before the "weaknesses" in Bush's budget prove how imprudent his fiscal plans are.

"I am just amazed that anybody who claims to have any sensitivity to the ramifications would consider that without any semblance of a budget context," Senate Minority Leader Thomas Daschle of South Dakota said.

"It is really one of the most irresponsible actions I have seen in some time. … They don't want to explore the numbers any more than they have to."

But House Speaker Dennis Hastert, R-Ill., predicted Bush's across-the-board tax cuts would clear Ways and Means this week and be debated by the full House next week. He said speed was essential because of the weakening economy.

"Obviously, there are some on the other side of the aisle that don't want us to have success,'' Hastert said. "They would like to see us go into a recession.''

Democrats said Wednesday they had just started reviewing Bush's budget outline but argued that it showed that Bush would use the entire $500 billion Medicare "surplus" to pay for other priorities and set aside only $2 trillion of the $2.6 trillion Social Security "surplus."

They said Congress should debate and pass a budget before considering any major tax cuts.

Treasury Secretary Paul O'Neil has argued that a quick, retroactive tax cut could boost an economy on the wane.

"It seems to the president and the rest of us that we should speed this money on the way back to the people who sent it in,'' O'Neill told the Senate Finance Committee on Wednesday.

Bush has said he will deliver his formal budget in April.

Bush said in his address to Congress Tuesday that there would still be an extra $1 trillion available over the next 10 years even if Congress passed all of his priorities, including his tax cut. But Democrats said Wednesday that Bush's budget proved that false.

"The contingency fund is a shell game," Daschle said. "Over half of it comes from Medicare."

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