Senate Democrats Preparing Tax Cut Plan
Washington Post Staff Writers
Thursday, July 15, 1999; Page A7
Senate Democrats are preparing to unveil a $300 billion tax cut plan that is far more modest than the huge GOP proposals but that could provide the basis for a bipartisan deal this fall, according to some lawmakers and aides.
Although the Senate Democrats and the GOP are as much as $564 billion apart on the overall size of a 10-year tax plan, both sides agree on the need for broad-based tax relief, elimination of the so-called marriage penalty, a reduction in the estate tax and a raft of other health care, education and agricultural tax breaks.
The Senate Democrats' seemingly gung-ho approach to tax cuts contrasts sharply with the more partisan posture of House Democrats. As the House Ways and Means Committee voted 23 to 13 last night for an $864 billion tax cut plan drafted by Chairman Bill Archer (R-Tex.), angry Democrats were united in their opposition to anything but President Clinton's relatively modest proposal of $250 billion of targeted tax cuts.
Sen. Daniel Patrick Moynihan (N.Y.) and other Finance Committee Democrats are putting the finishing touches on a plan to be offered as an alternative to a $792 billion plan of Chairman William V. Roth Jr. (R-Del.).
While House and Senate Republicans appear determined to pass a massive tax bill, some Senate Democrats predicted yesterday that their plan will provide the basis for a compromise this fall, when Congress and the White House attempt to negotiate a comprehensive deal on Social Security, Medicare and domestic spending. And some signaled that the White House and congressional Democrats will have to give additional ground to get a deal.
"Right now $300 billion seems to be the upper limit on the Democratic side," said Sen. Bob Kerrey (D-Neb.), a Finance Committee member. "But personally, I think we can get it higher than that and I think we're going to need to get it higher to find common ground."
"Clearly there's a group of moderate Democrats that would like to be part of a moderate and responsible tax cut," added Sen. Robert G. Torricelli (D-N.J.), a tax cut proponent.
Between 10 and 15 of the Senate's 45 Democrats would likely support a larger and wider-ranging tax package than favored by the administration, according to some Senate Democrats and aides -- potentially a critical bloc of votes in passing a final compromise between the GOP and the White House.
Traditionally the Senate has been more bipartisan than the House on tax issues, partly because senators represent far broader constituencies than individual House members and are more inclined to compromise. "There's a realization that at the end of the day, there will be some kind of tax cut," explained a Senate Democratic aide. "People don't want to vote against a tax cut when there will be one eventually."
Moreover, Roth has enjoyed more cordial and cooperative relations with the Finance Committee Democrats than Archer has had with the Ways and Means Committee Democrats. Until recently, Sen. John Breaux (La.), Kerrey and other committee Democrats thought there was a chance that Roth would join them in offering a bipartisan tax plan totaling roughly $400 billion over 10 years.
While Archer and Senate GOP leaders ultimately decided to go with a plan nearly twice that size, Democrats say they find Roth's plan more acceptable than Archer's because it provides more benefits to middle- and lower-income taxpayers and doesn't include a reduction in the capital gains tax.
The Democratic approach is still undergoing last-minute changes, but the vast majority of the $300 billion would go for some type of broad-based tax relief -- most likely an increase in the standard deduction. Torricelli has advocated an alternative approach that would increase the number of taxpayers who fall within the lowest income tax rate of 15 percent.
The plan also would include roughly $30 billion for breaks in health care costs, $25 billion to minimize the so-called marriage penalty, $11 billion for education, $10 billion to reduce the estate tax and $5 billion for agriculture.
Meanwhile in the House, Archer amended his tax package to include a major GOP initiative on prescription drugs for the elderly that was aimed at countering Clinton's plan to expand drug coverage to the one-third of Medicare beneficiaries who do not now have it.
But the initiative quickly ran into a barrage of criticism from Democrats as the Ways and Means Committee debated Archer's overall tax cut plan. They charged that Republicans had neither firm estimates of the costs nor a plan for offsetting those costs in other areas.
In a heated exchange with Rep. Bill Thomas (R-Calif.), who chairs the Ways and Means health subcommittee, Rep. Sander M. Levin (D-Mich.) charged that Thomas "has no idea what this is going to cost." He said the committee was being asked to vote on a "pig in a poke."
Under prodding from Democrats, Lindy L. Paull, chief of staff of the Joint Committee on Taxation, said the budgetary cost of the plan had not been determined, but might come to about $18 billion over 10 years, based on previous, though unrelated studies.
The Ways and Means Committee also voted to increase the amount of tax credits for low-income housing at a cost of $3.8 billion over 10 years.
© 1999 The Washington Post Company