A Senate committee Tuesday considered details of a $1.35 trillion tax cut. Kwame Holman reports from Capitol Hill.
KWAME HOLMAN: A majority of members in Congress agrees America deserves a sizeable tax cut. They declared that last week when both Houses passed the budget resolution. Approved at $1.35 trillion over 11 years, the tax cut would be the largest in 20 years.
SPOKESMAN: Good morning, especially good morning to the members of the committee who will have a big day ahead of them.
KWAME HOLMAN: Today, however, it fell to the Senate Finance Committee to figure out just how to deliver the tax cut and to whom. The Committee's chairman and ranking Democrat, Iowa's Charles Grassley and Montana's Max Baucus, are in their first year in those roles and for weeks their colleagues have pressured them on how to write the tax bill. This morning they said they'd done the best they could in an evenly divided Senate.
SEN. CHARLES GRASSLEY: Some people around here have been preaching bipartisanship, but then they turn around and attack bipartisan compromise reflected in this bill. So that begs a philosophical question for members: Is bipartisanship appealing only when you get exactly what you want? Well, of course, I hope not.
SEN. MAX BAUCUS: And of course, we are meeting here, in open committee for the purpose of debating and amending the bill. No back room kabuki. Debate and amendments, up or down. So I thank you, Mr. Chairman. I think you've done a great job.
KWAME HOLMAN: And many members of the committee also took turns praising Grassley and Baucus for their efforts, then criticizing what they finally produced. West Virginia Democrat Jay Rockefeller.
SEN. JAY ROCKEFELLER: I have to say that while I admire both of you so very much, personally, I believe that you are sadly misguided in the path that you have chosen.
KWAME HOLMAN: Texas Republican Phil Gramm.
SEN. PHIL GRAMM: Let me first say that, while I'm not happy with the bill as it now exists, I'm happy to be here talking about cutting taxes to the American people. As I listen to my Democrat colleagues, I feel a little better.
KWAME HOLMAN: The Grassley-Baucus plan preserves much of what President Bush proposed to reduce current income tax brackets, including the creation of a new 10% bracket. However, the top bracket - currently at 39.6% -- would be lowered only to 36%, instead of the 33% the President proposed. And taxpayers wouldn't feel the impact of some tax cuts for several years. The new tax brackets wouldn't go into full effect until 2007. That's why most Republicans complained about the bill.
SEN. PHIL GRAMM: I thought the Bush proposal of 33%, that no American should pay more than 33% of their income in income taxes was a reasonable proposal.
KWAME HOLMAN: Tennessee Republican Fred Thompson.
SEN. FRED THOMPSON: This 36% does not kick in fully until 2007-- a 1% reduction in 2002, another 1% reduction in 2004, and it doesn't get down to 36% until 2007.
KWAME HOLMAN: Majority Leader Trent Lott.
SEN. TRENT LOTT: I think that the rates remain too high. They don't actually take effect until too far out, and I think there are too many brackets.
KWAME HOLMAN: Some Democrats complained about the tax cut bill for completely different reasons.
SEN. JAY ROCKEFELLER: It spends too much, it saves too little, and it invests far too little in America's long term needs.
KWAME HOLMAN: North Dakota Democrat Kent Conrad.
SEN. KENT CONRAD: The rate where the vast majority of taxpayers pay taxes, the 15% bracket, is the only one that doesn't get a rate cut. And I guess we know why that would be true: Because they need the money to give the lion's share of the break to the wealthiest among us.
KWAME HOLMAN: Minority Leader Tom Daschle.
SEN. TOM DASCHLE: And there is no doubt, Mr. Chairman, this bill will raid Medicare and Social Security-- that is not even a question-- not to mention all the other important priorities: Education, prescription drug benefits, the array of investments and valuable services that we provide that the American people are counting on.
KWAME HOLMAN: There are, however, other elements of the bill that have broader appeal: A reduction in the so-called marriage penalty tax; the eventual repeal of the estate tax; an increase in contribution limits for Individual Retirement Accounts and 401(k) plans; and the doubling of the child tax credit to $1,000. Taken as a whole, the package of tax cuts written by Senators Grassley and Baucus received more favorable reviews by the committee's moderates. Louisiana Democrat John Breaux.
SEN. JOHN BREAUX: That is s a three-point reduction in all of the marginal rates. Obviously, to those in the top brackets, that means more money going back to them, but they in fact pay a lot more money. I have no problems with that.
KWAME HOLMAN: Maine Republican Olympia Snowe:
SEN. OLYMPIA SNOWE: And when I look at this tax package in its aggregate, I really do believe that it is structured with a political and fiscal balance that will be necessary, in this 50-50 committee and this 50-50 Senate, in order to achieve a significant tax package for the American people.
KWAME HOLMAN: New Jersey Democrat Robert Torricelli:
SEN. ROBERT TORRICELLI: It is a difficult enough assignment to lead this committee, but in your opening months as chair of the committee and ranking member, to have before you one the most significant pieces of legislation the committee has ever considered was an enormous challenge. The people of Iowa and the people of Montana should be very proud of both of your service. This is an extraordinary effort.
KWAME HOLMAN: However, neither Grassley nor Baucus was under the illusion that the plan would be approved as written. In fact, Finance Committee members filed some 170 amendments. But several agreed to withhold their efforts to change the tax bill until it goes before the full Senate.
SPOKESMAN: And these amendments, which I will withdraw and offer on the floor...
KWAME HOLMAN: This afternoon Chairman Grassley said he's committed to voting out the tax bill by tonight to give Republican leaders maximum time to push a final bill through the Senate well before Congress recesses for Memorial Day at the end of next week.