- The Washington Times - Thursday, May 16, 2002

Congressional Republicans have all but given up for this year on making permanent the Bush administration's income-tax cuts.
"It would be a real stretch to see how we could do that," said Rep. Patrick J. Toomey, Pennsylvania Republican and a prominent fiscal conservative. "Politically, it's definitely harder to do."
The House approved a bill last month to extend permanently the administration's tax relief. But since then, Republicans say, opposition in the Democrat-led Senate, forecasts of increasing federal deficits and a shrinking legislative calendar have combined to work against the permanent reductions in income-tax rates, the largest item in the overall tax relief.
Rep. Jennifer Dunn, Washington Republican, said enacting permanent income-tax relief is "unlikely" and would be "tougher than the targeted" tax cuts such as repealing the estate and gift taxes.
President Bush proposed permanent tax relief as a key part of his fiscal 2003 budget. Congress last year approved tax cuts totaling $1.35 trillion over 10 years, but that relief was scheduled to expire in 2011.
House Republicans plan to hold a vote in early June to repeal permanently the estate and gift taxes, a measure that Senate Democrats have agreed to consider by the end of June. But Republican leaders increasingly acknowledge that a permanent reduction in income-tax rates is probably beyond their reach in this election year.
"Our general attitude is we want to pass the comprehensive [income-tax rate] reduction, but we also want to remain flexible and seize the opportunity," said House Majority Leader Dick Armey.
"When you try to cut taxes, recognizing there is a Democratic majority in the Senate, you take every opportunity you can find that presents itself," the Texas Republican said. "My advice to my colleagues is just to remain ready, and if there is something else that we can see as an opening, let's be sure we are ready to move on it."
Tax-cut proponents say the political reality is that the Senate will not approve a permanent reduction in marginal rates this year.
"We likely don't have the votes to do everything," said Grover Norquist, president of Americans for Tax Reform. "I don't think you'll get beyond [the death tax] because of the Democrats' partisan nature."
Senate Majority Leader Tom Daschle and other senior Democrats have vowed not to allow a vote on the permanent income-tax relief, saying the federal government and Social Security system cannot afford to lose the revenue in the next decade and beyond.
Republicans say blocking the permanent tax cuts would present them with a potent election issue.
"It's up to Senator Daschle," Mrs. Dunn said. "He's either going to keep the logjam in place, or he's going to let people vote the way their constituents ask them to vote."
Said a top House Republican aide, "There are floor wins and there are political wins. If this tax cut is not made permanent, Daschle is going to be wearing it around his neck."
Sen. Edward M. Kennedy, Massachusetts Democrat who has advocated rolling back the income-tax cuts, said the mood of the nation toward tax cuts has shifted since the terrorist attacks.
"Main Street understands we've got a different world we're living in since September 11," Mr. Kennedy said. "We've got to deal with our national security. Investing in our homeland is a top priority, as is education and health care."
Some Republicans are not ready to pronounce the permanent rate reductions dead for this year. Asked if the issue was too much to take on this year, House Majority Whip Tom DeLay replied, "I don't know yet. Obviously, the next one [after the estate tax] will probably be the marriage penalty."
The so-called marriage penalty is a feature of tax law that results in married couples paying higher taxes if they file jointly than if they were unmarried and living together but filing separate tax returns.
Mr. DeLay said the House Republicans' strategy is to approve separate items of permanent tax relief for the Senate to consider.
"The Senate and Daschle have already expressed interest in making the death tax permanent, so on the list of all the things we'd like to do, you'd have to put that one at the top of the list," Mr. DeLay said.
Republicans will have their hands full even attempting to eliminate the estate tax permanently. In the Senate, supporters of the measure count 58 votes in favor of it, but 60 votes are required to defeat objections to the bill.


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