- The Washington Times - Friday, April 6, 2001

President Bush will not accept the $450 billion cut in his $1.6 trillion tax reduction plan that Senate Democrats put into the budget bill, a senior White House official said yesterday.

"What the Democrats have offered is clearly unacceptable," said Karl Rove, the president's chief political strategist.

On Wednesday, four Republican senators joined 49 Democrats to pass a budget amendment that would shrink the tax cut to $1.15 trillion.

But in a lengthy interview with The Washington Times, Mr. Rove sent new signals to Capitol Hill that the White House believes the two sides are moving closer to a compromise tax cut figure that the president would accept.

Mr. Rove hinted that Mr. Bush at some point in the budget process would be ready to negotiate with the Democrats who proposed $1.15 trillion in total tax cuts over 10 years about three times larger than the tax cut proposal they supported last year.

Asked if the president was willing to meet the Democrats halfway on the size of the tax cut, Mr. Rove replied: "Well, the president proposed $1.3 trillion during the campaign, and due to economic circumstances and expansion of the surplus, that gave him the ability to talk about $1.6 trillion. Let's see something reasonable from the Democrats."

"We're always interested in hearing an interesting idea. Let's let the process go forward. There's plenty of time to come together," Mr. Rove said.

Asked if the Democrats' $1.15 trillion figure was negotiable, he said, "The president's listening. He's listening."

Mr. Rove said the White House did not see the Senate's approval of a smaller Democratic tax-cut amendment to the budget bill, with the support of three Republicans, as a defeat for the administration, but rather as a sign that the Democrats were getting closer to the president's larger plan.

Democrats have gone from "zero tax cuts to more than $1.1 trillion," Mr. Rove said, "We're winning. Things are moving in our direction. The president's proposal is gaining strength."

"The Democrats have gone from zero to $350 billion to $600 billion to $850 billion to $1.125 trillion. Now they are starting to get within range of that $1.3 trillion that he laid out in the campaign," he said.

Meanwhile, behind-the-scenes pressure was growing on at least two senators James M. Jeffords, Vermont Republican, and Ben Nelson, Nebraska Democrat both of whom voted for the smaller tax cut.

Mr. Nelson is a centrist-leaning Democrat who comes from a conservative state that went heavily for Mr. Bush in the election. Mr. Jeffords, a liberal Republican, had been expected to back the Republican budget in exchange for a major increase in special education funding, but the price tag $189 billion over four years was too much for Republican leaders.

A Senate Republican official said last night that Mr. Jeffords was considered "a lost cause."

Majority Leader Trent Lott of Mississippi echoed that sentiment on Capitol Hill last night, saying "I've about run that string out… . We're not in a bidding process. We're going to pass it. We're going to go to conference at whatever level the bill is at that time."

On the other hand, a key Republican senator said Sen. Arlen Specter, Pennsylvania Republican, who had backed the Democratic substitute, was now "on board with us."

Still, the White House was making offers to fund pet programs supported by key senators in an effort to switch some votes. One administration target was Sen. Max Cleland, Georgia Democrat.

Mr. Rove refused to say whom the White House was approaching in the final hours of the Senate budget debate, but said, "There are conversations going on."

Barring any success in overturning Wednesday's vote, White House strategists and Senate leaders said yesterday they were confident that a much higher tax cut figure could be worked out when the House and Senate meet in conference to iron out differences between the two budget bills. The House bill makes room for Mr. Bush's full $1.6 trillion package. The House and Senate usually come out with a compromise figure between the two versions.

Republicans will have a majority in the House-Senate conference and thus will control fashioning the final compromise agreement.

"In the conference, we're going to have a Republican majority and we can rewrite this thing to suit the nation's needs," said Sen. Phil Gramm, Texas Republican, a member of the Budget Committee who will be a key conference participant.

"So it may be that tomorrow we may improve the bill as we go to conference. But whether we do or don't, we will have the ability to write the final budget, and we will have a month to find that elusive senator to pass the final budget resolution," Mr. Gramm told The Times.

One other factor that may work to the president's advantage, he said, is that "when the budget comes back from the conference, it's not amendable. You have to say yea or nay. It's all or nothing."

Republican leaders think they will have the support of some Democrats for the compromise tax cut in that situation.

"Even in the worst-case scenario, that the tax relief package is even a little lower [than $1.1 trillion] … I feel very confident that when we get to conference, we're going to be negotiating with a House which has a position of a floor of $1.6 trillion, not a ceiling of $1.6 trillion. So there's going to have to be some compromise to get things done. My guess is we'll come out with a bill that is very close to what the president wants," said Sen. Rick Santorum of Pennsylvania, who is chairman of the Republican Conference.

Some Senate Republican officials yesterday were privately forecasting the size of Mr. Bush's tax cut that could emerge from the budget conference. "It could be around the $1.4 trillion range, which would be very close to what the president originally proposed," one official predicted.

• Dave Boyer contributed to this report.

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