Update: Budget Battle

KWAME HOLMAN:

This week's Senate debate on President Bush's $1.9 trillion budget outline for the next fiscal year already has placed in jeopardy the crown jewel of the plan, $1.6 trillion in tax cuts over the next ten years.

SPOKESMAN:

Mr. Bird, Mr. Bird aye.

KWAME HOLMAN:

Yesterday, Democrats led by Iowa's Tom Harkin succeeded in diverting $450 billion earmarked for the tax cuts to fund education programs and debt reduction instead. That issue is likely to be revisited. Today, Illinois Democrat Dick Durbin proposed using a portion of this year's budget surplus to give all Americans an immediate tax rebate.

SEN. RICHARD DURBIN:

America's economy needs a shot in the arm– it needs help immediately. What I'm proposing with the Durbin amendment is to take the surplus which we know we will have this year, in the budget we're debating of some $97 billion, to take $60 billion of that surplus and return it to the American people as quickly as we can prudently return it.

KWAME HOLMAN:

Durbin's amendment also would lower the current 15% tax bracket to 10% and reserve two-thirds of budget surpluses for debt reduction. But Republicans argued that, like other Democratic amendments, the Durbin plan would siphon off funds set aside for the President's tax cut. Utah Republican Robert Bennett countered by proposing to accept the Durbin tax rebate as long as the President's full $1.6 trillion tax cut also is preserved as a long-term stimulus to the economy.

SEN. ROBERT BENNETT:

The best thing we can do for a stimulus is to see that the people who control capital have confidence in the future. They will start making the capital investments that will create the jobs, they will start putting in place the structural pattern they have interrupted because they have lost confidence. And that can come by the passage of the Bush tax cut — the kind of impact that will produce both short-term stimulus and long-term stability.

KWAME HOLMAN:

But Bennett went on to echo a charge Republicans have made all week long: That the Democrats true goal simply is to defeat the President's tax bill.

SEN. ROBERT BENNETT:

In the name of stimulating the economy in the short-term, they want to kill the tax cut in the long-term. That's what this is about. It may be couched in other kinds of rhetoric but, basically, this is further attempt on the part of the Democrats in the Senate to see to it that President Bush will not get his tax cut. So the headline in the "Washington Post" will be "Bush Suffers Defeat."

KWAME HOLMAN:

Louisiana Democrat John Breaux also entered the fray. He has the support of two Republicans– Rhode Island's Lincoln Chafee and Vermont's James Jeffords– for a ten-year tax cut of $1.25 trillion. That's squarely between the President's $1.6 trillion and the $800 billion cut most Democrats favor. Breaux said it's nearly time for the evenly divided Senate to compromise.

SEN. JOHN BREAUX:

It is time that we stop thinking that any number under $1.6 trillion is a loss for the President, and a victory for the Democrats. That is simply not true. A number in between, what Democrats have offered and what the republicans have offered, that is available to all Americans, that receives a substantial degree support from both sides, is an incredible victory.

KWAME HOLMAN:

Votes on the tax rebate amendments, and perhaps the Breaux compromise, will come during a long evening just under way in the Senate. First up was a vote on so- called reconciliation, essentially a test vote on the Senate's willingness to accept the parameters of the President's tax cut plan. The final vote on the Senate's version of the budget is set for tomorrow.