House and Senate pursue different paths on tax cuts

The Senate is expected to vote tonight on its version. Then, the House and Senate bills must be reconciled.

The rush is on to get a tax bill to the president's desk by Memorial Day - a sprint for any tax bill, especially in a Congress so evenly divided.

Republicans in the House led the march, with quick and disciplined votes on a $1.6 trillion cut that is very close to President Bush's campaign proposal.

But the road has been rockier in the 50-50 Senate. Early on, Democrats and moderate Republicans signaled that a cut of that magnitude was unacceptable, and that the tax breaks were too heavily skewed toward the wealthy.

Senate Democrats thought they had the votes to defeat a big tax cut. But a deal negotiated between the chairman and the ranking Democrat of the Senate Finance Committee - over the opposition of the Democratic leadership - broke the anticipated deadlock.

A $1.35 trillion compromise package was worked out between Sens. Charles Grassley (R) of Iowa and Max Baucus (D) of Montana. The plan shifts the benefits to the lower tax brackets, especially to families with children. It also adds some tax breaks, such as a new $5,000 deduction for education expenses (including tuition and interest paid on student loans). To pay for these changes, the Senate version now being debated calls for a lower tax break for the top income bracket, phased in over a longer period of time, and delays the rate of repeal of the marriage penalty.

In the end, three moderate Democrats lined up with Senator Baucus to support this deal in the Finance Committee. If that coalition holds through tonight's vote - as expected - the compromise tax-cut package will pass the Senate. Then, both House and Senate bills will have to be reconciled in a conference committee.

This compromise has frustrated leaders in both parties in the Senate. Democrats worry that they have not been able to break the momentum of the Bush tax-cut juggernaut - sure to be pronounced a great victory for the president at the end of the week. And spokesmen for Senate Majority Leader Trent Lott say the Senate negotiators in the conference committee will argue for the president's higher tax cuts, not the lower levels likely to pass in tonight's Senate vote.

Whatever deal is finally negotiated between Senate and House representatives will have to pass a vote in both houses to become law.

(c) Copyright 2001. The Christian Science Monitor

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