House And Senate Reach Compromise Agreement On Bush's Budget

by Mike Godfrey, Tax-News.com, Washington

20 May 2004

A compromise deal struck between House and Senate negotiators on President Bush’s 2005 $2.4 trillion budget proposals was filed on Wednesday, and after weeks of debate between lawmakers, final approval now looks close at hand.

The compromise plan lifts restrictions on the extension of the three most popular tax breaks among both Republicans and Democrats: the $1,000 child tax credit; the elimination of the marriage penalty; and the 10% tax bracket.

However, deficit-wary Republicans in the Senate, who earlier in the year voted with Democrats to insist that ‘pay go’ rules are re-imposed in fiscal 2005, have sought successfully to restrict the extension of further tax cuts.

The pay go rule stipulates that new spending or tax changes must not add to the federal deficit. New proposals must either be ‘budget neutral’ or offset with savings derived from existing funds.

President Bush’s budget plan calls for $183 billion in tax cuts over the next five years by extending tax cuts passed in 2001 and 2003. The House-approved version makes provision for $138 billion in cuts.

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