Congress OKs Record $2.27 Trillion Budget


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Posted by Jeff from d53-152-230.try.wideopenwest.com (64.53.230.152) on Friday, April 11, 2003 at 8:57PM :

Congress OKs Record $2.27 Trillion Budget
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By MARY DALRYMPLE, AP Tax Writer

WASHINGTON - Congress approved a record $2.27 trillion federal budget Friday, winning a razor-thin Senate victory after Republican leaders promised to limit new tax cuts to half the amount President Bush (news - web sites) has proposed.

The deal that won just enough votes to approve the overall budget restricted new tax cuts over the next decade to $350 billion. It was negotiated by Sen. Charles Grassley (news, bio, voting record), R-Iowa, chairman of the tax-writing Senate Finance Committee, and required the vote of Vice President Dick Cheney (news - web sites) to break a 50-50 tie.

Having initially sought $726 billion in tax cuts, the White House and House Republicans had reluctantly acceded earlier to tax cuts of $550 billion and were caught off guard by the lower final figure.

Bush issued a statement after the Senate vote reaffirming his commitment to getting the biggest tax cut he can.

"The budget resolution provides for a jobs and growth package of up to $550 billion, and we will work with the Congress to provide the greatest amount of tax relief to stimulate the economy," he said.

House Speaker Dennis Hastert called Grassley "irrelevant," saying he has an agreement with Senate Majority Leader Bill Frist of Tennessee that the tax cuts could reach the larger figure when Congress begins working on them in May.

"Our agreement was made with the Senate leadership, and they have the power to keep it," Hastert said.

Grassley, however, also claimed commitments from Frist and Senate Budget Committee Chairman Don Nickles, R-Okla., in promising moderate Sen. Olympia Snowe (news, bio, voting record), R-Maine, the cuts won't exceed $350 billion.

House Budget Committee Chairman Jim Nussle, R-Iowa, said he was offended that he wasn't told about Grassley's promise to Snowe, whose vote became pivotal in winning Senate approval of the budget. The House passed it a few hours before dawn Friday.

The budget language allows for new tax cuts up to $550 billion over the next decade, a figure supported by the House only as part of an effort to win over more senators. Bush sought $726 billion in cuts, including an elimination of taxes that investors pay on stock dividends, saying that amount was needed to revive the economy.

"There would be no budget and no growth package without our agreement," Grassley said, expressing regret that the reductions would not be larger.

Meanwhile, House and Senate negotiators were still working to break a stalemate over millions of dollars in projects attached to separate legislation to spend $80 billion for war and domestic security. That bill would make a $2.5 billion down payment on the costs of reconstruction in Iraq (news - web sites) and give $3.1 billion in aid to the airline industry and its laid-off workers.

Lawmakers want to complete both measures before a two-week spring recess and were aiming to conclude their efforts as soon as this weekend. The House and Senate will return from the break to settle deep differences between the chambers over key pieces of the president's domestic policy.

Also on Friday, the House passed a comprehensive energy package that would allow oil exploration in an Alaska wildlife refuge, one of Cheney's top priorities. The Senate rejected the Alaska drilling policy last month.

The House also sides more closely with the administration on taxes, having passed a budget would allow cuts of as much as $550 billion through 2013. Last month, the House agreed to all of the $726 billion that Bush says is needed. But after the deal struck in the Senate on Friday, House tax-writers will have to accept smaller reductions.

The Senate has shown little appetite for passing a large tax cut this year and voted earlier to slash the president's original plan to $350 billion. Moderate Republican Snowe of Maine and George Voinovich of Ohio refused to accept anything more.

Acknowledging the impasse between the House and the Senate, Grassley persuaded Senate Republican leaders to back the smaller cut.

"As much as I wish it weren't so, that is the political reality," Grassley said while announcing the budget deal. "The reality is that the Republican caucus is split."

"Logic prevailed," Voinovich said.

The House voted narrowly, 216-211, to pass the budget early Friday morning.

Grassley said he would use the $350 billion to accelerate already scheduled income tax reductions, marriage penalty relief and child tax credit increases. He also plans to allow small businesses to write off more of their new investments.

The Senate will not have room to include the president's proposal to reduce taxes on corporate dividends unless its cost is offset by increasing taxes or closing tax loopholes.

The budget is a nonbinding resolution used by Congress to outline tax and spending policy. It projects deficits will peak next year at $385 billion, then decrease gradually until a $10 billion surplus is reached in 2012.

It permits the spending controlled by Congress to grow less than 3 percent next year, to $785 billion. More than half that money $400 billion will go to defense.

The blueprint also budgets $400 billion for lawmakers to develop a Medicare prescription drug benefit later this year.

-- Jeff
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