- The Washington Times - Wednesday, May 10, 2006

The House yesterday approved $70 billion in tax-cut extensions, and the Senate is expected to follow suit today, giving Republicans and President Bush a victory on a key piece of their agenda in a tough election year.

“We’re preventing Americans from [undergoing] tax increases,” said House Speaker J. Dennis Hastert, Illinois Republican. “We know what our tax relief has done for the American economy — just look,” he said, citing job creation and low unemployment rates.

After a bitter partisan floor debate, the bill was approved 244-185, with 15 Democrats voting yes. Reps. Jim Leach of Iowa and Sherwood Boehlert of New York were the only two Republicans to vote no.

The bill is also expected to pass the Senate, even that chamber’s Democrats concede.

The measure would extend for two years the lower 15 percent rate on capital gains and dividends income, which expires in 2008. It also would extend for one year a fix to prevent millions more middle-class Americans from having to pay the alternative minimum tax.

Democrats wanted more of the bill devoted to AMT relief and didn’t like the capital gains and dividends portion, which they saidbenefits the rich.

But Mr. Bush praised the House for passing the bill, and especially touted those portions.

“The tax cuts we passed in recent years are working to fuel America’s economic expansion,” Mr. Bush said.

Other provisions in the tax package would end a long-running U.S.-European Union trade fight by eliminating a U.S. tax subsidy ruled illegal by the World Trade Organization. Aircraft manufacturer Boeing Corp. was the biggest beneficiary of the tax subsidy, which had led to European sanctions against U.S. goods in retaliation.

“We want to still look closely at the details of the bill, but at a glance it looks OK. It would put an end” to the dispute, said Peter Power, spokesman for EU Trade Commissioner Peter Mandelson.

Amid sagging poll numbers, the deal this week on the tax bill was a welcome relief for Republicans, who negotiated with each other for months to agree on a final bill. Under special budget rules, it’s protected from Senate filibuster as long as it stays at $70 billion or less.

Democrats said the bill is mainly another round of tax breaks for the rich, a policy they said resulted in the current federal deficits.

Rep. Charles B. Rangel, New York Democrat, said it’s “tax cuts no one’s asking for, except the administration and K Street.”

“This is for the rich and famous,” agreed Senate Minority Leader Harry Reid, Nevada Democrat.

“This blatantly unfair and grossly irresponsible legislation represents the last gasp of the Republican Party’s failed economic policies, which have … driven our nation into the fiscal ditch over the last 5 years,” said House Minority Whip Steny H. Hoyer, Maryland Democrat.

Republicans shot back that Democrats just want to tax and spend and that Republican policies, including the investment income-tax breaks, have caused economic growth and created jobs that have benefited all Americans.

“These cuts have spurred spectacular economic growth,” said Rep. Eric Cantor, Virginia Republican, accusing Democrats of “class warfare.”

“Whose money is it anyway? It is the taxpayers’ money.”

Another tax-cut extension bill is still being negotiated, and Republicans expect the proposal, a smaller package of tax breaks that could not fit into the current bill, such as college-tuition and business research breaks, to move through Congress in coming weeks.

• Jeffrey Sparshott contributed to this report.

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