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US Lower House Passes George Bush's Budget

Mike Godfrey, Tax-News.com, New York

29 March 2001

The US House of Representatives yesterday approved President Bush's budget outline on a largely party-line vote, 222 to 205. The bill holds government spending to a 4% increase in the year from 1st October 2001, leaving room for the President's 10-year $1.6 trillion tax-cutting programme, which the House has already approved. The annual budget resolution has no direct effect on its own account, but it tends to set spending levels for the 13 appropriations committees and provides an outline of the administration's priorities.

The House also voted against a proposal by Democrats for a $60bn tax rebate to be made this year, an idea which is gaining some currency even among republicans as they size up the likely difficulties of getting a tax-cutting bill through the Senate. The Democrats' proposal would have used nearly two-thirds of the estimated budget surplus for this year to provide a rebate that they predicted would amount to $300 per taxpayer.

Senate Democrats have also proposed the rebate plan, and it has been backed by some Republican senators, including Pete Domenici, the powerful budget committee chairman. But George Bush met Republican leaders yesterday at the White House to reiterate his view that a tax rebate, even if accompanied by a cut in the entry band of income tax to 10%, is not enough. Before the meeting the President said it was "a big day" because lawmakers were approving "a common-sense budget."

Mr Bush continues to defend his full-blown $1,600bn plan, saying that a big tax cut now would help the faltering economy "come roaring out of its doldrums". But he may yet be forced to accept some form of rebate, as leaders of his own party search for ways to advance his programme in the Senate, which is equally balanced between the parties. Senator Ted Stevens, an Alaska Republican, joked on Wednesday that it would take "an all-night prayer session" for Republicans to push their budget through the Senate.

 

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