After widespread criticism that President Bush's proposed tax cuts, already approved in the House of Representatives, are too generous to high-earners, Republicans tried yesterday to make the tax cuts more favorable to low-income taxpayers and to get money into people's pockets quicker.
The chairman of the House Ways and Means Committee, Representative Bill Thomas of California, announced that he had rewritten two of the main aspects of the Bush plan to give more benefits to the less affluent. Mr. Thomas's plan would give a tax reduction to almost all couples, whether or not they faced a penalty from the Alternative Minimum Tax rules. It is almost identical to a measure that Congress approved last year and that was vetoed by President Bill Clinton. The Committee is likely to vote on the measure today.
Republicans in the Senate, where the tax-cutting bill has yet to be voted on, have also been tinkering with the President's legislation to find ways of making it more immediate and more effective for lower-paid workers.
Not that anything is going to be immediate: the Senate is not likely to vote on a bill until May, and any bill that can succeed in the divided Senate will probably look very different to the legislation emerging from the House. Eventually there will be a joint House/Senate conference to agree on a final version that can be sent to the President for his approval. It is not easy to imagine this process being completed before the summer.
The House Budget Committee yesterday passed its annual budget resolution on a party line basis 23 to 19 after a lengthy debate that saw many Democratic amendments defeated during the evening. The budget resolution doesn't go to the President, and doesn't have legal force, but it sets guidelines for the administration, and acts as a framework for spending resolutions throughout the session.
Yesterday's resolution generally followed the budget sent to Congress this month by Mr. Bush, but altered it in a few respects. The resolution holds down government spending and cuts taxes by $1.6 trillion over the next decade, but left open the option of providing more money later in the year for two areas with powerful constituencies, the military and agriculture. The resolution places more restrictions than the White House version on the use of temporary surpluses being generated by Medicare, allowing them to be used only for reducing the national debt or to expand the system of health insurance for the elderly and the disabled. The House budget provides for total spending for the fiscal year starting Oct. 1 of $1.977 trillion, an increase of 3.7 percent from the current fiscal year. Discretionary spending on most government programs outside Social Security and Medicare would rise 4 percent next year, to $660 billion.
The Budget Committee limited the tax cut for this year to the amount in the income tax bill passed by the House earlier this month, about $5.6 billion, but would allow the tax cut to increase next year to $64 billion, more than twice what Mr. Bush originally sought. Most of the tax cut would not take effect until the middle of the decade.
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