Senate Leaders Attempt To Sway Moderate Republicans Over Budget Tax Cuts

by Mike Godfrey, Tax-News.com, Washington

03 June 2004

In a bid to revive the stalled $2.4 trillion 2005 budget plan, Senate leaders are offering a compromise to moderate Republicans whereby they will be allowed a separate vote which would change Senate procedures so that the 'PAYGO' rules would apply to all future tax cuts.

Whilst the House passed a compromise version of the budget last month that effectively extended President Bush’s tax cuts for just one year, the Senate has yet to take up the plans, as the Republican majority remains two votes short of pushing the measures through.

Mainstream Republicans in the Senate want to see the budget passed as it provides procedural protection, making it easier to pass essential measures such as an increase in the federal borrowing cap by $690 billion to $8.1 trillion.

However, four moderate GOP senators, namely Olympia Snowe (R – Maine), Lincoln Chafee (R – R.I), John McCain (R – Ariz) and Susan Collins (R – Maine) are continuing to side with the Democrats, who insist that tax cuts must be accompanied by the PAYGO rule ensuring that they are offset by spending cuts or increases in other taxes.

One of the leading Senate moderates, Sen. Olympia Snowe, R-Maine, said leaders were offering a separate vote to change Senate rules so the requirement would apply to all tax reductions - and expanded benefits like Medicare - over the next five years. She said the details were still in flux.

Negotiations on a possible compromise are expected to continue into next week.

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