- The Washington Times - Wednesday, May 16, 2001

The Senate Finance Committee began work yesterday distributing the benefits of the 11-year, $1.35 trillion tax-relief program authorized last week when the Senate approved the fiscal 2002 budget resolution by a 53-47 margin, which, its worth noting, included several indispensable Democratic votes. On Friday, Committee Chairman Charles Grassley and ranking Democratic member Max Baucus unveiled a bipartisan proposal for distributing the tax relief. Their outline will be subjected to more than 150 amendments by the committee, after which the bill will move to the Senate floor for debate.
Senate Minority Leader Tom Daschle, who has bitterly opposed President Bushs tax plan from the beginning, lambasted Mr. Baucus for signing off on an outline that Mr. Daschle considered to be "nearly as flawed" as Mr. Bushs original proposal. Sen. Ted Kennedy, whose relentless opposition to meaningful tax relief is tantamount to a condemnation of the very tax policies pursued by President John F. Kennedy 40 years ago, criticized the Grassley-Baucus compromise plan as "excessive and unfair" and called it "a sham." Well, if Messrs. Daschle and Kennedy feel that way about the Grassley-Baucus handiwork, perhaps their compromise has some merit after all.
As it happens, upon first inspection, the details of the Grassley-Baucus plan made more than a few Republicans and their conservative allies wince as well. Gone was the determination to reduce the top marginal tax rate from the confiscatory level of 39.6 percent to 33 percent. Instead, the top rate would fall to 36 percent, while the current 36 percent rate would be reduced to 33 percent. In conformity with the presidents plan, the Grassley-Baucus compromise would lower the 31-percent rate to 28 percent and the 28 percent rate to 25 percent. It would also introduce a new 10 percent rate applicable to the first $6,000 of income for individuals and $12,000 of income for married couples. Unfortunately, with the exception of the 10 percent rate, which would become effective retroactive to Jan. 1 and thus provide tax savings this year of $300 for individuals and $600 for married couples, the other reduced marginal rates would be phased in more slowly than the president proposed. Ditto for the repeal of the estate tax and the increase in the child credit from $500 to $1,000. Moreover, in a gesture to several moderate and liberal Democrats and Republicans whose votes are essential to final passage in the evenly divided Senate, the child credit was made refundable for millions of families that dont even pay income taxes. In response to the demands of the same pivotal group, Messrs. Grassley and Baucus also raised by $3,000 the level of income workers may earn and still be eligible for the earned income tax credit. Regrettably, the marriage penalty will not be addressed until 2006.
In reality, what seems to Republicans to be excessive compromises were in fact preordained by the Senates earlier vote to reduce Mr. Bushs tax-relief proposal by $448 billion. The money simply was no longer available to implement the presidents full proposal. Moreover, when Republican Sens. Lincoln Chafee of Rhode island and James Jeffords of Vermont inexcusably refused to support the compromise tax-cut level of $1.35 trillion reached in discussions involving the House-Senate conference committee and the White House, the political dynamics changed dramatically. Moderate Democrats, including Mr. Baucus and John Breaux, became indispensable to the passage of the budget resolution. It should be no surprise that their support would come at the cost of compromising some Republican principles. Under the circumstances, Messrs. Grassley and Baucus produced a reasonable plan upon which their committee and the Senate can now build.


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