The marathon budget process moved one step closer to conclusion early today as the Senate approved its bipartisan deficit-reduction measure. Earlier, the House overwhelmingly approved a stopgap spending bill that would keep the government operating at full force through Wednesday.
At about 1:25 a.m., the Senate voted 54 to 46 to pass the compromise package of tax increases and benefit program cuts after spending two days and nights turning back all attempts to change it significantly.
President Bush has said he would sign legislation similar to the Senate measure, and as it advanced largely intact, administration officials softened their earlier opposition to another stopgap funding measure.
Office of Management and Budget Director Richard G. Darman told congressional leaders that President Bush would sign the short-term funding bill if lawmakers are making progress on the details of a deficit-cutting plan to save $500 billion over five years, including $40.1 billion in the fiscal year that began Oct. 1. Otherwise, the federal government will run out of spending authority early Saturday morning, resulting in the second shutdown of the government in three weeks.
This morning's Senate vote shifts the action to a House-Senate conference committee that will today begin trying to reconcile the two chambers' widely divergent versions of the legislation into one measure that Bush would sign into law.
"We need to get moving toward the conclusion of this effort," said Senate Majority Leader George J. Mitchell (D-Maine).
The Senate bill, drafted by Senate leaders and administration officials, relies heavily on higher excise taxes, which Democrats argue hit lower-income Americans harder than the rich. It also includes an unpopular increase in the 9-cents-a-gallon federal gasoline tax and envisions saving $51.6 billion from Medicare over five years.
The House deficit-reduction bill, crafted by Democrats and approved Tuesday, relies heavily on tax increases aimed at the wealthy and includes a provision that would effectively raise income taxes across the board. It contains a smaller savings in the Medicare program than the Senate measure and would leave the gasoline tax unchanged.
The House last night voted 379 to 37 to approve a short-term spending bill that would fund the government until 12:01 a.m. Thursday. The measure would also delay automatic, across-the-board spending cuts mandated by the Gramm-Rudman-Hollings law until at least then.
As recently as Monday during a speech in Dallas, Bush vowed not to accept another stopgap spending bill to extend the current temporary spending authority beyond its expiration at 12:01 a.m. Saturday if lawmakers had not agreed to a final deficit-reduction plan by then.
But yesterday, Darman told aides to House Minority Leader Robert H. Michel (R-Ill.) that Bush would sign another extension through next week. At the White House, presidential spokesman Marlin Fitzwater said Bush would consider signing a new temporary spending bill "if satisfactory progress is being made on the budget."
All day yesterday, Mitchell and Senate Minority Leader Robert J. Dole (R-Kan.) mustered their troops to turn back politically popular assaults on the delicately balanced provisions of the Senate deficit-reduction bill.
The Senate voted 55 to 45 to rebuff an attempt by Sens. Albert Gore Jr. (D-Tenn.) and Barbara A. Mikulski (D-Md.) to raise income taxes on the wealthy and use the revenue to scale back the gasoline tax increase and Medicare cuts. "The middle class have no more to give," Mikulski said. "The poor have nothing to give. So let's go and get it from those who got it."
Democratic Senate leaders were sympathetic to the proposal, but had pledged to resist changes as part of a bargain to get enough Republican votes in the Senate Finance Committee to win approval of the bill's tax component.
"It's a painful choice," said Senate Budget Committee Chairman Jim Sasser (D-Tenn.). "I agree with the amendment . . . but some of us are bound to support this deficit-reduction package."
But as they voted against the amendments, Democratic senators urged their leaders to press in negotiations with the House to increase the tax burden the package would place on the wealthy.
Mitchell, who will go to the conference committee as a member of the Senate Finance Committee, pledged to do "the very best we can to produce the most fair, progressive result that we can."
"Let's go to conference and pick the best of each," said Senate Finance Committee Chairman Lloyd Bentsen (D-Tex.). "That has to mean increased progressivity" compared to the Senate bill.
Spreading the pain of deficit reduction across the income spectrum will be a major issue in the House-Senate conference. "That goes to the heart and soul of the dispute we've had for the last five months," said House Budget Committee Chairman Leon E. Panetta (D-Calif.).
The House bill would generate $82.4 billion in new revenue over five years by raising income tax rates on the highest income Americans from 28 percent to 33 percent, impose a 10 percent surtax on yearly taxable income in excess of $1 million and increase the amount of income subject to the 1.45 percent Medicare payroll tax from $51,300 to $100,000.
Bush has said he won't accept a package that raises income tax rates.
The Senate bill relies more heavily on higher taxes on gasoline, cigarettes and alcoholic beverages, raising a total of $57.6 billion from those items over five years. It also would generate $29.3 billion over that period by limiting the benefit of income tax deductions claimed by those earning more than $100,000. An additional $19 billion over that period would come from raising the income covered by the Medicare tax to $89,000.
Both measures contain competing plans to impose a 10 percent tax on part of the purchase price of such expensive goods as automobiles, boats, airplanes, jewelry and furs.
At a meeting of the House Democratic whip operation yesterday, lawmakers expressed enthusiasm for the political allure of their package, according to participants. Especially attractive is the surtax on millionaires. "This isn't marginal tax rates, this isn't difficult to understand -- this is taxing millionaires," Panetta said. But House Speaker Thomas S. Foley (D-Wash.) and Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) stressed the importance of producing legislation Bush would sign, lawmakers said.
Senate leaders preached the same message. "The American people are fed up with it," Bentsen said. "They want us to put the country first."
Other major issues to be resolved in the House-Senate conference will be whether to raise the federal gasoline tax and how much savings to achieve from Medicare. The Senate bill would more than double the federal gasoline tax to 18 1/2 cents-a-gallon; the House would leave it untouched.
But in order to make up the revenue lost when House leaders dropped the gasoline tax increase, the House measure would delay for one year the adjustment of income tax brackets and personal exemptions to reflect inflation. Staff writers Dan Balz and Steven Mufson contributed to this report.