- The Washington Times - Thursday, May 1, 2003

Senate Majority Leader Bill Frist, after meeting with President Bush yesterday, said he will push for a tax cut higher than the $350 billion limit he had promised two weeks ago.
"We want to fight for as high a number as possible," Mr. Frist, Tennessee Republican, told reporters after a 45-minute meeting between top Republican congressional leaders and the president.
He said a $550 billion tax cut the number House leaders and the president have endorsed "is a goal we'll shoot for."
Even as Mr. Frist and other Republican leaders were recounting the meeting, Federal Reserve Chairman Alan Greenspan was telling a House panel that he backed the president's tax-cut plan, but not at the expense of an increasing deficit.
"I find much to support in the president's program provided it is matched by cuts in spending," he told the House Committee on Financial Services. He also repeated his earlier warnings that growing deficits could raise interest rates and cut into any stimulative effect the tax cuts might have.
In order to pass the federal budget two weeks ago, Senate Republican leaders had to promise to limit tax cuts to $350 billion over 10 years less than half the $726 billion sought by the president, and $200 billion less than what House and Senate Republicans had settled on earlier. The deal means that any tax cuts worth more than $350 billion will need 60 votes to pass.
Now that the budget is passed, the two chambers have turned to writing the tax-cut bills.
Sen. Jon Kyl, Arizona Republican, who was in the White House meeting, said the deal Mr. Frist had struck with two Republican senators remains in effect. He said Republicans hope to pass popular tax cuts at the 60-vote threshold and offset other tax cuts by cutting spending or finding new revenue elsewhere in the tax code.
"The promise is the promise, and we're trying to work within that," Mr. Kyl said. He said he sees a "pretty good chunk" of money available in offsets.
Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican, and House Ways and Means Committee Chairman Bill Thomas, California Republican, are searching for ways to write a tax bill that delivers most of what the president wants at a cost that can pass Congress.
Mr. Grassley has proposed offsetting tax cuts above $350 billion with spending cuts something the liberal Republicans who balked at higher tax cuts have said they would accept.
But House Republicans have been cool to some of the particulars, including one that would raise revenue by penalizing companies that move their operations overseas to avoid U.S. taxes. However, they have promised to look at anything the Senate passes
"I think it's counterproductive to raise taxes on one side and lower taxes on another," said House Majority Leader Tom DeLay, Texas Republican, though he said he would support offsets if they were spending cuts.
As another alternative, Mr. Thomas wants to treat dividends like capital gains and then cut the tax on capital gains, which would be less costly than the president's proposal to tax dividends just once as corporate income rather than also taxing as individual income.
Mr. Thomas said he was looking at lowering the 20 percent capital-gains rate to 15 percent.
Low-income taxpayers who currently pay a 10 percent rate would pay 5 percent. Dividends would be taxed at those capital-gains rates rather than the higher rates on earned income.
Democrats have been nearly united in opposing even the shrunken $350 billion tax cut.
Many of them also take issue with the president's centerpiece a tax cut on corporate dividends arguing that it won't produce any short-term economic boost.
"This is not a big deal in a $10 trillion economy," said Sen. Jon Corzine, New Jersey Democrat and chairman of the Democratic Senatorial Campaign Committee.
Now that war in Iraq is winding down, the administration is devoting substantial time to stumping for the tax cuts.
In addition to yesterday's meeting, the president spent 75 minutes with Mr. Frist and House Speaker J. Dennis Hastert, Illinois Republican, on Tuesday night.
He also traveled to Ohio last week and held two campaign-style events to rally support for his tax cut in the home state of Sen. George V. Voinovich, Ohio Republican, who is one of the senators insisting on offsets for any tax cuts above $350 billion.
"I think you can anticipate the president will travel the country to continue to make his case. He will continue to work the phones and meet with members," White House Press Secretary Ari Fleischer said.
In addition to the president, Treasury Secretary John W. Snow, Commerce Secretary Donald L. Evans and White House chief economic adviser Stephen Friedman have fanned out on Capitol Hill and across the country to push the president's package.
Senators say the administration has been telling them that the White House's priorities are passing the full dividend-tax cut and speeding already-planned cuts in income-tax rates. The White House has consistently said the president is still seeking the full elimination of double taxation of dividends.
After yesterday's meeting, Republicans said they were encouraged about Mr. Frist's agreement to go beyond the $350 billion tax cut.
One aide who attended the meeting described Mr. Frist's tone as "apologetic."
This article is based in part on wire service reports.

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