- The Washington Times - Wednesday, May 21, 2003

House and Senate Republicans said yesterday evening they have finally reached a deal on a $350 billion tax-cut deal that can pass both the House and Senate this week.

“We have an arrangement,” said Senate Majority Leader Bill Frist, Tennessee Republican, who said they “do have 50 votes” to pass the plan through the Senate.

The announcement came after hours of negotiations between House and Senate leaders, sometimes attended by Vice President Dick Cheney.

An actual agreement will have to wait for final numbers to come back from congressional analysts, but the basic direction of the plan had the support of one key Republican, Ohio Sen. George V. Voinovich.

Marcie Ridgway, a spokeswoman for Mr. Voinovich, said yesterday evening that the senator will have to see the final details before signing off, but she said he liked the direction of the arrangement.

“The senator is very encouraged where we’re going now,” she said. “He supports the $350 billion with offsets, so if that’s something we’re able to work out and he sees the cost and its 350 he’s encouraged.”

Democrats objected to the bill and the “backroom talks” that led to it.

“Those who are putting it together are not just excluding House and Senate Democrats, they are excluding almost all Republicans, too,” said Rep. Charles B. Rangel, New York Democrat.

At $350 billion the package is less than half of the $726 billion plan President Bush proposed, and $200 billion short of the plan House Republicans passed. The plan also does not eliminate the tax individuals pay on dividend income, as the president proposed, but instead adopts the House approach of treating dividends like capital gains and then dropping the tax rate on capital gains from 20 percent to 15 percent for upper-income taxpayers, and from 10 percent to 5 percent for lower-income individuals.

That tax reduction would expire in several years, though the expiration date was still being calculated last night.

According to the tentative agreement, the final bill will total $350 billion, including $20 billion in state aid and about $14 billion in refundable child-tax credits.

By including the state aid and targeting it for states to spend on Medicaid costs Senate Republicans hope to maintain the support of Sen. Ben Nelson, Nebraska Democrat, who voted for the initial bill last week and has considered the state aid a must-have.

Republicans also are counting on Sen. Zell Miller, Georgia Democrat, who has staunchly supported their tax-cut efforts. Mr. Miller and Mr. Nelson will be needed to offset the three Republicans who voted against the bill last time — Sens. John McCain of Arizona, Lincoln Chafee of Rhode Island and Olympia J. Snowe of Maine.

Most of the negotiations yesterday, though, centered on trying to win the support of Mr. Voinovich, who has insisted he cannot go higher than a net package of $350 billion.

House Republicans had thought they could secure a $382 billion package yesterday morning, but the deal fell apart when senators said they could not secure 50 votes — the threshold that, along with the vice president, will allow a bill to pass the Senate.

Earlier yesterday House Republicans clearly put the burden on Mr. Voinovich either to assent or to be the one that defeats the Senate package.

“At some point, based upon the dynamic that has occurred on the Senate side, somebody has to face the fact that they may be the one that brings the package down,” said House Ways and Means Chairman Bill Thomas, California Republican, yesterday afternoon. “Until and unless that understanding is clear, there will be negotiations, as the chairman of the Senate Finance Committee might say, until the cows come home.”

But after an afternoon meeting between Mr. Thomas and Mr. Voinovich, which Mr. Cheney also attended, a deal began to take shape.

The votes for the tax cut in the House are considered secure.

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