Senate Votes to Cut President’s Tax Cut in Half

After rejecting a similar measure earlier in the week, senators voted 51-48 in favor of a plan offered by Sen. John Breaux, a Louisiana Democrat, to reduce the tax reduction’s price tag to $350 billion through 2013. Mr. Bush has said his plan — which would eliminate taxes on corporate dividends and reduce income taxes — is needed to create jobs, boost investment and spur the slumping economy.

The plan rejected Friday would have taken the additional money the president wanted for tax cuts and used it for deficit reduction. Tuesday’s successful amendment was slightly different, saying it would take those funds and use the money to either overhaul Social Security or put them towards deficit reduction.

The two senators who changed their votes were moderate Sen. Lincoln Chafee, (R-R.I.) and deficit hawk Sen. Ernest Hollings (D-S.C.)

The vote was a major victory for Democrats who have been arguing that a tax cut of the magnitude the president wants isn’t feasible at a time when federal deficits are expected to surge to a record high and when U.S. troops are engaged in a war with Iraq.

The move came on the same day that Mr. Bush formally sent Congress his request for $74.7 billion to pay for the initial costs of the war and for other expenses in the war on terrorism.

Republicans in favor of the president’s budget plan argued that the Democratic amendment would harm the economy.

“It would cut the growth out of the growth package,” Senate Budget Committee Chairman Don Nickles, R-Okla., pleaded before the vote. “We need to be growing our economy.”

When the tax plan was introduced on Capitol Hill on Feb. 27, Senate Minority Leader Tom Daschle (D-S.D.) said, “Without a question, this will exacerbate the debt and complicate our fiscal circumstances beyond anything, I would say, in history.”

The setback for the president came a day before the Senate planned to vote final passage on a $2.2 trillion budget blueprint for next year.

That outline originally provided for $726 billion in tax reductions through 2013 — the full figure requested by the White House. Last week, $100 billion was taken out of it to pay for the costs of war with Iraq, and earlier Tuesday another $13 billion was diverted to finance enhanced veterans’ benefits.

The budget document maps Congress’ overall tax and spending plans, which are put into effect by other bills later in the year.

The Senate’s smaller version of the tax cut will probably be adjusted upwards during the House-Senate bargaining over the budget outline.

The House version, approved last Friday, includes the president’s full $726 billion in tax reductions.

“There are a series of events that are under way in the Senate,” White House spokesman Ari Fleischer said Tuesday. “Let’s see what the ultimate outcome is. That vote is not the final vote. There are many more to come.”