GOP, Dem leaders OK keeping tax cuts - East Valley Tribune: Business

GOP, Dem leaders OK keeping tax cuts

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Posted: Thursday, September 23, 2004 11:49 am | Updated: 5:44 pm, Thu Oct 6, 2011.

WASHINGTON - Putting aside efforts to control the federal deficit before the elections, Republican and Democratic leaders agreed Wednesday to extend $145.9 billion worth of tax cuts sought by President Bush without trying to pay for them.

At a House-Senate conference committee, Democratic lawmakers abandoned efforts to pay for the measures by either imposing a surcharge on wealthy families or closing corporate tax shelters.

Fearful of being attacked as supporters of higher taxes, Democrats said they would go along with an unpaid five-year extension of the $1,000 child tax credit; a four-year extension of tax breaks intended to reduce the so-called marriage penalty on two-income families; and a six-year extension of a provision that allowed more people to qualify for the lowest tax rate of 10 percent.

House Ways and Means Committee chairman Bill Thomas, R-Calif., and Senate Finance Committee chairman Charles Grassley, R-Iowa, both predicted quick passage.

The House will take up the measure today, and Grassley said the Senate will follow either on Friday or early next week.

Approval of the tax cut package is a significant victory for Bush, who champions the extension of the cuts at every campaign stop.

His wishes had been thwarted by Democrats and a handful of Republican moderates in the Senate.

But with the election nearing, congressional Democrats said they would not let themselves be branded as supporters of tax increases, which would occur if the expiring provisions were not renewed.

Sen. John Kerry, D-Mass., their party’s presidential nominee, has said he supports extension of the tax reductions, though he would roll back Bush’s tax cuts for the top 2 percent of income earners — families with annual incomes above $200,000.

Sen. Tom Daschle, D-S.D., the Senate Democratic leader, announced this week that he would support a five-year extension of the cuts even if they were not paid for.

With Democrats capitulating to the Republican majorities in both the House and Senate, the handful of Republican holdouts have quietly surrendered as well.

The Republican rebels — Sen. John McCain of Arizona, Sen. Lincoln Chafee of Rhode Island and Sens. Olympia J. Snowe and Susan Collins of Maine — infuriated Bush and many Republican leaders.

But their ability to block action evaporated without the votes of Democrats.

The result of the reversal on the part of the Democrats and the Republican moderates is likely to be a tax measure that will last longer and increase federal deficits more than a two-year extension that Republican Senate leaders offered this summer.

The nonpartisan Congressional Budget Office has estimated that the national debt will climb by $2.3 trillion over the next 10 years, and that making all Bush’s tax cuts permanent would cost an additional $1.9 trillion by the end of 2014.

In the conference committee, House and Senate Republicans added about $13 billion worth of business tax breaks, the biggest of which was a renewal of the investment tax credit for research and development.

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