US Senate Passes Tax-Cutting Budget Resolution

by Mike Godfrey, Tax-News.com, New York

11 May 2001

After passing easily through the House earlier in the week, the compromise budget resolution which incorporates $1.35 trillion of tax cuts yesterday also made it through the Senate by 53 votes to 47, with five Democrats voting for it and two Republicans against it. The resolution, which is non-binding, and doesn't need the President's signature, calls for nearly $2 trillion in federal spending in the fiscal year that begins Oct. 1, almost precisely what Mr. Bush had proposed.

Senator Pete V. Domenici of New Mexico, chairman of the Budget Committee, welcomed the victory: "This is a budget for prosperity now and prosperity in the future. For America to prosper, we have to have low taxes." Then he addressed the President directly: "You have made us change direction," he said, "You have moved us in the direction of giving back taxes to the American people."

"Now that both the House and the Senate have acted, it's clear that the economic recovery package that the president has talked about is on the way," Ari Fleischer, the White House spokesman, said.

Leaders of the Senate Finance Committee said they expected the committee to approve a detailed tax- cut bill next week. Tax legislation has already passed the House, and Republicans hope to have a tax bill ready for the president's signature by Memorial Day.

It still remains to be decided exactly how much the top tax rate will be reduced and how quickly the lower rates will be put into effect. Under procedural rules, any tax cut that fits within the envelope established by the resolution can be passed by a majority vote in the Senate after limited debate instead of facing the prospects of a filibuster, which can only be ended by an unreachable 60-vote majority.

On the spending side, the budget resolution is likely to be ignored by legislators. Both parties agree that the 4% spending increase contained in the resolution figure is certain to be exceeded.

The five Democratic senators who voted for the plan were John B. Breaux of Louisiana, Max Baucus of Montana, Ben Nelson of Nebraska and Zell Miller and Max Cleland, both of Georgia. It was Mr. Breaux who delivered the vital Democratic allowing the measure to be approved.

"This is an imperfect document," he declared. "But it is written on paper; it is not written in concrete."

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