THE TAX TALK CONTINUES

	July 29, 1999
	Correspondent Betty Ann Bowser reports on the ongoing debate over tax cuts in the U.S. Senate.

JIM LEHRER: Republicans moved ahead with tax cuts and toward a showdown with the President. Betty Anne Bowser reports on today's action. BETTY ANN BOWSER: President Clinton will be on his way to Sarajevo when the Senate approves nearly $800 billion in Republican-sponsored tax cuts late tonight or tomorrow. So before leaving the White House this morning, the President issued one last promise: To veto that bill or any other that contains tax cuts approaching that size. PRESIDENT CLINTON: I hope again that we can get a bipartisan agreement that will save Social Security, save and reform Medicare, continue to invest in education, and get this country out of debt. If we do those big things first, there's still money left for a good-sized tax cut, but what is being done now is wrong. BETTY ANN BOWSER: An alternative tax cut bill, sponsored by Senate Democrats, was more to the President's liking. Those cuts totaled only $290 billion. But Senate Republicans unanimously rejected that plan last night. Six Democrats voted against it as well. This morning Senate Republicans moved to prevent future Congresses from spending the Social Security surplus on other government programs. But Democrats frustrated that attempt by employing a procedural rule requiring 60 votes for the motion to pass. SEN. SPENCER ABRAHAM, (R) Michigan: I would note that once again this morning another procedural roadblock has been put in place to prevent us from getting a straight up-or-down vote. I regret that. I was prepared to come here today and to offer both sides the opportunity to have straightforward votes. If one side or the other in their various lock box proposals got 50 plus votes, they would win and we could give the American people what I believe they want, and that is protection for their Social Security dollars sent to Washington. BETTY ANN BOWSER: The majority of Senators did vote in favor of the lockbox idea, but not the 60 needed under the procedural rule. Democrats then made a move of their own to put off tax cuts until the solvency of Social Security and Medicare are insured. SEN. CHARLES ROBB, (D) Virginia: This amendment simply delays the effective date of the tax cut that is proposed. There are many who believe that a tax cut of this magnitude at this time would be ludicrous, but that's not the issue here. The issue is whether or not we ought to go ahead with a tax cut notwithstanding the fact that we haven't protected Social Security and Medicare. BETTY ANN BOWSER: The Senate voted to go ahead with the tax cuts. The Democratic motion was defeated in a party line vote. The Senate then turned to an amendment by Texas Republican Phil Gramm, an attempt to push through tax cuts similar to what the House approved last week. SEN. PHIL GRAMM, (R) Texas: I believe we need to define very precisely what we would like to use this tax cut to do, and rather than running around trying to stick a nickel in everybody's pocket with a targeted program, I would prefer to have a tax cut that has clear themes. BETTY ANN BOWSER: Like the House plan, the Graham amendment calls for a 10 percent across-the-board tax cut over ten years; the repeal of inheritance taxes, indexing capital gains taxes for inflation; and making health insurance costs fully deductible for the self-employed. SEN. PHIL GRAMM: Now I know our Democrat colleagues are going to jump up and down and say, "well, first of all 32 million American families pay no income taxes and so if you have an across-the-board tax cut, they will not get a tax cut." And that's right. Tax cuts are for taxpayers. If you don't pay taxes and we have a tax cut, you don't get a tax cut. Most Americans don't get food stamps. Most Americans don't get AFDC, most Americans don't get Medicaid because they don't qualify for those programs. If you don't pay taxes, you don't qualify for a tax cut. BETTY ANN BOWSER: Wisconsin Democrat Russ Feingold didn't jump up and down but argued Senator Gramm's tax cut proposal leaves no money to spend on any future emergencies. SEN. RUSS FEINGOLD, (D) Wisconsin: The assumptions underlying the tax measure we will debate depend on Congress making cuts of $775 billion in real spending over the next ten years compared to current levels. And let me note that this level of cuts that would have to be made does not include any additional cuts that might have to be made in order to offset the cost of unanticipated emergencies, but for the most, let us suppose there will no hurricanes or earthquakes or tornadoes or floods in the next ten years. Let us suppose there will be no international emergency that requires our assistance. Even assuming all that, will Congress find the political will to cut spending by three-quarters of a trillion dollars over the next ten years? I doubt it. BETTY ANN BOWSER: Even Finance Committee Chairman Bill Roth admitted Senator Gramm's tax cut proposal would not attract bipartisan support. SEN. BILL ROTH: Senator Gramm's substitute, though popular with many in the Senate Republican Caucus, would not pick up support on the other side of that aisle, and for that reason, his proposal would not be a blueprint or tax cut in the form of a signable bill that we can deliver to the American people now. BETTY ANN BOWSER: Senator Roth was one of nine Republicans who teamed with all 45 Democrats to defeat Senator Gramm's version of the tax cut. The Senate finally took up a package of tax cuts totaling $500 billion, introduced by Louisiana Democrat John Breaux and Rhode Island Republican John Chafee. It was the one tax cut alternative that appeared to have support among an equal number of Republicans and Democrats. The question was, how many of each? SEN. ROBERT TORRICELLI, (D) New Jersey: It is termed the bipartisan tax deduction plan but it should be better known as the October plan because we may spend July and August debating our partisan proposal. And members of the Senate may not endorse this proposal today. But I would suggest that by the time we reach October, it is a plan like this that will bring us together. BETTY ANN BOWSER: However, conservative Republicans argue that tax cuts in the bipartisan plan weren't big enough. SEN. FRANK MURKOWSKI, (R) Alaska: For example the middle class families would receive less relief under this amendment, the $500 billion, because the 15 percent bracket is not reduced. BETTY ANN BOWSER: And liberal Democrats maintained opposed to tax cuts of any size. SEN. PAUL WELLSTONE, (D) Minnesota: We want to have environmental clean-up. We certainly want to make sure -- we certainly want to sure that we deal with what is becoming a crisis of affordable housing. And then all of us forever and ever and ever are talking about children and education. And we talk about all those people who don't have any health insurance. And we talk about prescription drug benefits for the elderly. How are we going to do all that at the same time that we're going to have $500 billion of tax cuts? We're not. BETTY ANN BOWSER: Senate moderates found themselves outnumbered by those in the extreme wings of their parties, and early this evening pulled their bipartisan package of tax cuts from the debate. Their hope is to generate more support during the upcoming August recess. That move, however, now clears the way for final action the Republicans' tax-cut plan, possibly attracting a handful of Democratic supporters as well.