CHN: Senate Budget Resolution Slashes New Tax Cut

SENATE BUDGET RESOLUTION SLASHES BUSH TAX CUTHouse Version Makes Deep Cuts to Anti-Poverty Programs

The House and Senate have completed work on their respective fiscal year 2004 budget resolutions, and conference negotiations between the two chambers have already begun in earnest. Republican conferees must craft a budget that satisfies the conservative wing of their party and appeases Senate moderates, who banded together this week with their more liberal counterparts to slash President Bush’s $726 billion tax cut proposal by more than half. GOP leaders would like Congress to approve a final resolution before the spring recess begins April 12. Meanwhile, the president is asking for quick action on a $75 billion emergency supplemental bill to fund the war with Iraq.

It is likely that Congress will adopt a budget resolution next week that contains a scaled-back version of Bush’s tax cut proposal – probably in the $500 billion range. Although anti-poverty advocates and most Democrats vehemently oppose tax cuts of this magnitude – which would primarily benefit the wealthy at the expense of poor and middle-income families – the Senate did deliver an unexpected blow to President Bush when it voted in favor of an amendment to greatly reduce the size of his original proposal. After defeating a similar measure last week, the narrowly divided chamber approved an amendment on March 25 offered by Senator John Breaux (D-LA) and supported by Republican centrists George Voinivich (OH) and Olympia Snowe (ME), to slash the tax cut to $350 billion. The amendment was adopted by a 51-48 margin. The overall budget resolution later passed, 56 to 44.

Although the centrists’ earlier effort to trim the tax cut failed, Senator Breaux reintroduced the amendment when it became clear that the costs of war with Iraq would be enormous. After refusing to put a price tag on the war for several weeks, President Bush asked Congress on March 24 for $75 billion to fund the nation’s military actions in Iraq. The monumental costs of the war and some tweaking of the amendment language led Senators Ernest F. Hollings (D-SC) and Lincoln D. Chafee (R-RI) to change their votes and support Breaux. When it became apparent that Breaux had secured these two key votes, several Democrats who opposed the amendment the first time because it was destined to fail, switched their positions as well.

Senate moderates will remain key during budget conference negotiations. Anti-poverty advocates are not only urging these Senators to hold firm on the $350 billion tax cut figure, but are asking them to reject the deep cuts to entitlement programs contained in the House budget resolution (H Con Res 95). That measure contains the entire $726 billion Bush tax cut proposal, which it affords by slashing spending on programs that benefit moderate and low-income Americans.

Under the House plan, $465 billion would be cut over the next ten years from Medicaid, Food Stamps, child care, school lunches, student loans, the Earned Income Tax Credit, veterans’ programs, Supplemental Security Income for poor elderly and disabled people, and other critical domestic programs. Advocates warn that these cuts will be devastating, especially since unemployment is high and states, facing serious budget shortfalls, have already cut spending on key social services.

Opponents of the plan also warn that the House budget resolution would result in deficits of at least $1.3 trillion over the next ten years, seriously undermining the nation’s ability to fund Medicare and Social Security and otherwise maintain vital domestic programs. The House approved its budget resolution by a narrow, 215-212 margin on March 21. Twelve Republicans joined all Democrats but one (Ralph Hall of Texas) in opposing the measure.

Budget and Appropriations
tax policy