| Topic: |
Politics > Politics-USA |
| User: |
"N. Czerniak" |
| Date: |
04 Mar 2004 02:23:01 PM |
| Object: |
GOP Lawmakers Aim to Scale Back Bush Tax Cuts |
http://www.washingtonpost.com/wp-dyn/articles/A20791-2004Mar1.html
GOP Lawmakers Aim to Scale Back Bush Tax Cuts
by Jonathan Weisman
March 2, 2004
Confronted with ever-widening deficit forecasts, some key congressional
Republicans worried about the long-term budgetary effects of President
Bush's tax cuts are preparing legislation to scale back the cuts by the end
of the decade.
Don Nickles (R-Okla.), chairman of the Senate Budget Committee, said he will
try this year to pass legislation to cut -- but not eliminate -- the tax on
inherited estates. The House and Senate budget committees will begin
drafting tax and spending blueprints this week that decline to extend Bush's
tax cuts beyond 2011, as the president has requested. And former Senate
Budget Committee Chairman Pete V. Domenici (R-N.M.) is preparing amendments
to the budget plan to demand that tax cut extensions be offset by spending
cuts or other tax hikes.
"Everything is on the table, ranging from changes in how we do business
around here to the tax cuts themselves, particularly as it regards
higher-income Americans," said Sen. John McCain (R-Ariz.).
Although not endorsed by the Senate or House Republican leadership, the
discussions mark a growing shift in GOP and conservative attitudes about
taxes and spending as Congress begins to grapple with projections of record
deficits. The nonpartisan Congressional Budget Office told Congress last
Friday that Bush's 2005 budget proposal would generate $2.75 trillion of
additional federal debt over the next decade, while failing to cut the
deficit in half by 2009, as the president has promised.
Federal Reserve Chairman Alan Greenspan's statement last week that Congress
should begin cutting promised Social Security benefits also has elevated
concern over the deficit.
"I think it's getting through to people," said Kent Conrad (N.D.), the
ranking Democrat on the Senate Budget Committee. "There seems to be an
uncomfortability about where all this is heading."
Until now, Republicans have confined their deficit reduction talk to the
spending side of the ledger. Leaders of both the House and Senate budget
committees intend to draft plans that would order cuts in mandatory social
spending programs, including legislative language to ensure such cuts could
not be filibustered in the Senate. Nickles and House Budget Committee
Chairman Jim Nussle (R-Iowa) have also said their budgets will include cuts
in spending at Congress's discretion that go deeper than those proposed by
Bush.
But now, some Republicans say they are willing to reexamine the tax cuts, as
well.
"We're looking at $500 billion deficits, and people are saying that's
totally not acceptable," said Nickles, who will unveil his budget blueprint
tomorrow. "We have to get it down."
Nickles, who came to the Senate in 1981 vowing to fight the estate tax, said
he is ready to settle for a reduction in the inheritance tax rather than an
outright repeal -- a position considered blasphemous among many of the
business groups, farm interests and wealthy families in the "death tax
repeal" movement.
The tax cut that passed in 2001 slowly raises the value of an estate exempt
from taxation to $3.5 million by 2009, while lowering the estate tax rate
from 55 percent to 45 percent. In 2010, the tax law repeals the estate tax,
but in 2011, the estate tax would reappear with exemption levels and rates
back to 2001 levels.
With the CBO projecting a record $478 billion deficit this year and the baby
boom beginning to retire by decade's end, Nickles said full repeal may no
longer be realistic. Instead, he said he will draft legislation to
immediately raise the exemption to $3.5 million and lower the tax rate on
estates by 2 percent a year until the rate reaches about 20 percent. The
proposal is similar to legislation drafted by Sen. Jon Kyl (R-Ariz.),
another fervent estate tax opponent.
"I think if we could pull off an exemption that's permanent and a rate close
to 20 percent, people would take it in a heartbeat," Nickles said.
Rep. Christopher Shays (R-Conn.), vice chairman of the House Budget
Committee, said similar sentiments may be growing in the House. "I have no
interest now in eliminating the estate tax," he said.
Nickles's budget plan will make room to move the scheduled repeal date
forward by one year, to 2009.
Domenici plans action that would similarly scale back tax cuts in the
future, Senate GOP aides said yesterday. Under his "amendments for our
children's and grandchildren's future," tax cuts set to expire over the
course of the decade could be extended only if their costs were offset by
spending cuts or revenue increases.
"We would be foolish to extend all the tax cuts now," Shays said.
Both budget panels are drafting budgets that cover only five years, stopping
well short of 2011, when the bulk of Bush's tax cuts expire. The budget
blueprints will extend some popular tax cuts that expire in 2005, such as
the "marriage penalty" repeal, the $1,000-per-child tax credit and the
expanded 10 percent income tax bracket. But by ending in 2009, the budgets
will not extend the tax cuts past their final expiration date of Dec. 31,
2010. That way, Congress will not have to overtly rebuff Bush's calls to
extend all the tax cuts, but also will not have to cover the costs of such
an extension.
McCain called that decision a lamentable ducking of responsibilities: "It's
a classic example of our failure to make tough decisions."
But budget aides said it is a prudent decision in an election year.
© 2004 The Washington Post Company
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