President Bush won key congressional support Friday for his bid to make deep tax cuts, as the House narrowly approved his budget blueprint and the Senate beat back efforts to slash the tax cut package by more than half.
Senators did, however, vote to trim $100 billion from the president's proposed $726 billion, 10-year tax cut plan to help pay for the war and reconstruction in Iraq. GOP leaders said they will try to restore that amount when House and Senate conferees meet to reconcile differences in their fiscal 2004 budgets.
The biggest threat to Bush's tax plan came when many Senate Democrats and a few GOP moderates pressed an amendment to limit tax cuts to $350 billion over 10 years. The effort appeared to stall a vote or two short of a majority when several senators, including John McCain (R-Ariz.) and Ernest F. Hollings (D-S.C.), made it clear they would not vote for any tax cuts, especially as the country heads into a costly war.
The votes left Bush in a commanding position to get most if not all of what he wants later this year when Congress passes tax legislation to carry out the budget requirements. The president is calling for a $396 billion cut in taxes that investors pay on corporate dividends, plus an acceleration of previously approved rate cuts, which would cost $300 billion over 10 years.
A few hours before the Senate action, the House -- in an early morning session Friday on its version of the budget -- voted 215 to 212 to approve Bush's full $726 billion tax cut request.
The Senate planned to complete action on the budget legislation by Wednesday. A final version will be worked out in negotiations between the two GOP-controlled houses over the next few weeks.
While many Americans focused on the war in Iraq, the House and Senate debates went to the heart of the administration's domestic agenda. Bush contends the economy needs substantial tax cuts to spur growth and create jobs. Many Democrats say tax cuts will drive the federal deficit higher, drain spending from important programs, discourage investment and make the economy worse.
In the Senate, a bipartisan group of moderates, backed by Democratic leaders, tried to strike a compromise: the $350 billion tax cut proposal. But they got squeezed by the left and right, as some senators backed no tax cuts at all and some insisted on Bush's full proposal or something close to it.
Twelve Democrats and one independent joined 49 Republicans in voting against the moderates' proposal, while 36 Democrats and two Republicans -- co-sponsors George V. Voinovich (Ohio) and Olympia J. Snowe (Maine) -- voted for it.
The 52-47 vote to reduce the 10-year tax cut to $626 billion, in order to shift $100 billion to a reserve account for war costs, reflected many senators' concern that the budget was not credible without an accounting for the war. Democrats contended that Republicans intentionally left war costs out of the budget because they would balloon deficit projections, undermining support for Bush's tax cuts.
"We are in a war [and] the budget must reflect it," said Sen. Russell Feingold (D-Wis.), who proposed the war reserve. "It is no time for business as usual."
Senate Budget Committee Chairman Don Nickles (R-Okla.) responded that Congress rarely if ever provides funding for wars until military operations have begun. But the war has begun, Feingold noted later in a conversation with reporters. The margin was actually closer than 52-47, but Majority Leader Bill Frist (R-Tenn.) switched his vote to aye at the last minute so he could move to reconsider the measure if Republicans could reverse the outcome.
But supporters of Feingold's proposal held firm. They included three Republicans: Lincoln D. Chafee (R.I.), McCain and Susan Collins (Maine). By late yesterday, GOP leadership sources said Republicans will try to overturn the decision in a House-Senate conference rather than seeking another Senate vote. The House included no such provision and is considered likely to oppose it.
Maryland's Democratic senators voted for both proposals to reduce Bush's tax cut; Virginia's Republican senators voted against them.