Negotiations Held Between House And Senate On Budget And Tax

by Mike Godfrey, Tax-News.com, Washington

04 April 2003

Negotiators from the House of Representatives and the Senate met Wednesday to thrash out a deal for the budget and the fiscal year 2004.

A budget resolution, though not binding, will set spending and revenue targets, and would then form the basis for consideration of what will stay in President Bush's tax cut plan.

The Republicans are known to want a swift conclusion to the negotiations, and are keen to see a deal being reached by - at the latest - next week so that a vote by both halves of Congress can then take place. There is a possibility that the Democrats, the minority party in both houses, may be excluded from the negotiations.

However, substantial differences remain between the House and Senate proposals.

The House has proposed a $1.3 trillion tax cut over the next ten years, with the full $726 billion Bush plan included in the economic growth part of the measure. It is intended that reductions in spending will be made to pay for the deeper tax cuts.

The Senate, on the other hand, has proposed a programme of tax cuts amounting to $775 billion over the coming decade. Some $350 billion of this will be given special protection.

On the expenditure front, the Senate proposals contain $35 billion more in spending plans than the House proposals. This is mainly due to proposals to cut spending on programmes such as education, social services, the environment and income security by the House. The Senate also proposes a $10 billion increase in the transportation budget, and steeper rises in spending on healthcare.

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