Democratic Sen. Edward M. Kennedy today will propose freezing the Bush administration’s income-tax cut for the wealthiest Americans and spending the money instead on health care and education.
Two days after President Bush warned Congress not to repeal the tax cuts, Mr. Kennedy will call on lawmakers to halt the 2004 phase-in of tax relief for the highest income bracket, action he calculates would save the Treasury $350 billion over 10 years.
The tax cuts approved by Congress in June reduced the top rate from 39.6 percent to 38.6 percent. The rate for the top income-tax bracket is to drop to 35 percent by the end of the decade.
In a speech at the National Press Club in Washington, the Massachusetts Democrat also is expected to propose a freeze in estate-tax reductions. His plan would prevent a scheduled increase in the estate-tax exemption from $1 million to $1.5 million in 2004, to $2 million in 2006 and a full repeal of the tax in 2009, according to congressional sources familiar with the senator’s prepared remarks.
“Future additional tax breaks for the wealthy do not deserve higher priority than strengthening education or covering prescription drugs under Medicare, protecting Social Security or meeting other urgent national priorities,” Mr. Kennedy will say.
His address should provide a sharp contrast to the chummy relationship that Mr. Bush and Mr. Kennedy exhibited just last week during a trip on Air Force One to promote their education program. Mr. Bush has warned lawmakers that they will repeal the tax cuts “over my dead body.”
A spokeswoman for Senate Majority Leader Tom Daschle said yesterday that the South Dakota Democrat does not support Mr. Kennedy’s proposal.
“He’s been very clear, he is not calling for a rollback or a halt of the tax cut,” spokeswoman Ranit Schmelzer said. “While every senator has the right to their views, it’s not something [Mr. Daschle] has said.”
Senate Minority Leader Trent Lott, Mississippi Republican, nevertheless said it’s part of Mr. Daschle’s plan to increase federal spending. Republicans are vowing to defeat any effort to roll back the tax cuts.
“For 10 days, we’ve said the Daschle tax increase was coming,” Mr. Lott said. “And now we see that Senator Kennedy will propose it. While Senators Daschle and Kennedy want to raise taxes in order to increase federal spending, we agree with the 12 Senate Democrats who support President Bush’s tax cut.”
Six of the 12 Senate Democrats who voted for the tax cuts are running for re-election this year. Sen. Zell Miller of Georgia, the Democrat who co-sponsored the tax-cut bill in the Senate, this week condemned his party leadership for trying to repeal the tax cuts. In a speech to Georgia businessmen, he said he would push instead for a cut in capital-gains taxes.
“The Democratic leader is publicly blaming the tax cut for our economic slowdown,” Mr. Miller said. “This economic slowdown had begun before we passed the tax cut, and most of it hasn’t even gone into effect. Even hinting that we should somehow reverse it during an economic downturn is about the worst move we could make.”
Mr. Daschle called on Mr. Bush Jan. 4 to “restore fiscal discipline” to the federal budget in light of projected deficits for at least the next three years.
Mr. Daschle said the tax cuts created deficits and probably made the recession worse; Republicans say the recession and the war against terrorism have sapped most of the federal surplus.
Rep. Bob Barr, Georgia Republican, said it’s more than coincidence that both Mr. Daschle and Mr. Kennedy were giving their speeches in Washington.
“The problem with Senate Democrats is they never leave Washington,” Mr. Barr said. “If they left the Beltway now and again, they would see American workers and small businesses need help now.”