The Tax Cut Debate
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KWAME HOLMAN: Throughout last night and today, senators stayed close to the chamber floor. Votes on amendments to the largest tax cut bill in 20 years were coming about every 25 minutes.
PRESIDENT PRO TEMP OF THE SENATE: The yeas and nays have been ordered. The clerk will call the roll.
KWAME HOLMAN: Some members, Republicans included, attempted to fine tune the bill. Others, primarily Democrats, tried to derail it. Yet after dozens of votes the past two days, the basic structure of the Republican- driven tax cut plan– $1.35 trillion over 11 years– remained intact.
PRESIDENT PRO TEMP OF THE SENATE: The yeas are 30; the nays are 69 and the motion is not agreed to.
KWAME HOLMAN: Included in the tax cut plan are provisions to: Reduce individual income tax rates, and create a new, lowest rate of 10%; reduce the so- called marriage penalty tax; repeal the estate tax; increase contribution limits for individual retirement accounts and 401(k) plans; and double the child tax credit to $1,000.
However, most of those provisions would not be phased in completely for several years. Fully reduced tax rates won’t take effect until 2007, marriage penalty tax relief wouldn’t be implemented completely until 2010, full repeal of the estate tax wouldn’t occur until 2011, and increases in IRA contribution limits, as well as child tax credits, also wouldn’t occur until 2011.
Democratic opponents have charged this so-called “backloading” masks the true cost of the tax cut bill.
SEN. KENT CONRAD: Mr. President, the cost in the first 10 years is $1.35 trillion, as advertised. But that is the tip of the iceberg, because the cost in the second 10 years goes up to nearly $4 trillion, right at the time the Baby Boomers are retiring, at the time the number of people eligible for Social Security and Medicare double. And this ticking time bomb is put right in the middle of that demographic time bomb.
KWAME HOLMAN: But it was Arizona’s John McCain, a Republican, who last night posed the most serious challenge to the tax cut plan. McCain wanted to restructure the tax rates, weighting them more toward lower- and middle-income earners.
SEN. JOHN McCAIN: When it’s finally phased in this amendment would place millions of taxpayers now in the 28% tax bracket to the 15% tax bracket. This amendment targets tax relief to the individuals who feel the tax squeeze the most, lower and middle income taxpayers.
KWAME HOLMAN: Four Republicans and most Democrats joined McCain in support of the amendment. But that support was offset by five Democrats joining most Republicans in opposition. On the McCain amendment, the 50- 50 Senate split 49-49.
PRESIDENT PRO TEMP OF THE SENATE: The motion is not agreed to.
KWAME HOLMAN: The two missing votes belonged to Alaska Republican Ted Stevens, who was off attending a graduation, and to Hawaii Democrat Daniel Inouye, who as a courtesy in light of Stevens’ absence, simply voted “present.”
MAJORITY LEADER TRENT LOTT: We should be close to finishing this legislation.
KWAME HOLMAN: Republican congressional leaders still hope to deliver a tax cut bill to the President before the Memorial Day recess. But last night, after consecutive votes on 16 amendments and with midnight fast approaching, the frustration of Senators began to show.
PRESIDENT PRO TEMP OF THE SENATE: The Senator from West Virginia.
SEN. ROBERT BYRD: Mr. President, we are not going to finish this bill tonight. We are just not going to finish it. I hope that the majority leader will let us go home. Now not everybody in this chamber has a wife who is as old as I am. We will be married 64 years next Tuesday. And I think it is time to go home. Let us come back in tomorrow, and we will all feel better. I need to get home. And I just plead with the leadership here. We don’t have to finish this bill tonight.
KWAME HOLMAN: Majority Leader Trent Lott was frustrated as well by the number of amendments Democrats insisted on offering.
SEN. TRENT LOTT: First of all, I think that it is unfortunate that we see there is a delay being forced. I understand that there are senators that feel that we have gone late enough tonight and would like for us to resume tomorrow. I think it is very important we complete this work, and if we have to go on into Friday or Saturday, I think we should be prepared to do that.
KWAME HOLMAN: Lott relented and the Senate adjourned. It reconvened this morning with primarily Democrats lined up to offer more amendments.
PRESIDENT PRO TEMP: The Senator from Wisconsin.
SEN. RUSS FEINGOLD: Thank you, Mr. President.
KWAME HOLMAN: Wisconsin’s Russ Feingold wanted to retain some estate taxes, increase money for Medicare and, like John McCain, shift the tax rates. Iowa’s Tom Harkin wanted to delay tax cuts until the solvency of Social Security and Medicare is ensured. And Connecticut’s Joseph Lieberman proposed dumping the tax cut plan and giving everyone a $300 check instead. Every attempt failed.
PRESIDENT PRO TEMP: The motion is not agreed to.
KWAME HOLMAN: But it was Republican Finance Committee Chairman Charles Grassley who displayed the most frustration.
SEN. CHARLES GRASSLEY: I don’t know how many amendments we’ve had on this bill to kill the marginal tax cut reductions we have. We have a flood of amendments from the other party. Not one amendment from the other party has passed yet. And I have to wonder what has happened to bipartisanship.
KWAME HOLMAN: But at a news conference just off the Senate floor, Minority Leader Tom Daschle said he would to do nothing to prevent Democrats from offering amendments.
SEN. TOM DASCHLE: These issues are too important to say, we ought to just for the convenience of the Senate or the convenience of somebody, to try to finish up because it’s a neat way to do it by Memorial Day. This is far more important than what we are doing on Memorial Day.
KWAME HOLMAN: But back on the Senate floor, John McCain had had enough.
SEN. JOHN McCAIN: I would urge all of my colleagues to recognize that it’s now time for us to move on. We can vote well into the night, or tomorrow, or into the weekend, but I think we all recognize that there’s been a sufficient number of votes now that the issues are pretty well decided. I hope that we could bring this issue to closure and get back on to the education bill. I think we fought the good fight here for those of us who have different views or different positions, but I think it’s time to move on.
KWAME HOLMAN: Nonetheless the amendment process, and shifting huddles of Senators on the floor, continued into early evening. If and when the Senate passes its plan, it still must be reconciled with the bigger package of tax cuts passed by the House. And both chambers must agree on the result of that negotiation before a final bill can be presented to the president.