A compromised version of tax-package
By Kaleem Omar

US President Bush introduced a tax bill holding a compromised version of tax-cut plan - a $350 billion package. He stated that the package is "good for American workers, good for American families." He said the package will also "aid investors and businesses." Democrat lawmakers criticised the plan as a giveaway to the well off. They have offered alternative plans roughly one-third the size of the GOP bill.

"This bill misses a real opportunity to get the economy back on track and help Americans who are struggling," Senate Minority Leader Tom Daschle, Democrat-South Dakota, said in a statement. "Instead, it gives away billions to those who least need it and does very little for those who need it most."

But Senate Finance Committee Chairman Charles Grassley, Republican-Iowa, said the package will "help ease economic anxiety." "It'll pump up our consumer-driven economy," he said in a statement. "It'll put more money in individuals' and families' pockets."

House of Representatives and Senate leaders reached tentative agreement on the bill on Wednesday, overcoming a dispute over the size of the package. "We do have the 50 votes," said Senate Majority Leader Bill Frist, Republican-Tennessee.

Earlier, according to an NBC News report, House Republicans said they thought they had a deal on a $383 billion package, but it fell apart when key senators said they could not support anything over $350 billion.

According to NBC, the concession that gained the vote of a key moderate Republican senator, George Voinovich of Ohio, and put the package back on track was the reduction of one year in the length of time that taxes on stock dividends would be cut. The earlier compromise had cut those taxes through to 2009.

"Voinovich gave the measure his imprimatur after meeting on Wednesday with Vice-President Dick Cheney and Hose Ways and Means Chairman Bill Thomas, Republican-California," NBC said. "The GOP may need Cheney's tie-breaking vote if other wavering moderates oppose the bill. Senate leaders count Democrats Ben Nelson of Nebraska and Zell Miller of Georgia as votes for the bill, but lost the support of three Republicans - Lincoln Chafee of Rhode Island, John McCain of Arizona and Olympia Snow of Maine."

According to NBC, passage of the bill appears all but certain by week's end, when lawmakers begin a week-long Memorial Day break.

The congressional plan would reduce taxes on wages by accelerating planned cuts to income tax rates. It would cut taxes for married couples and give parents a $1,000 child tax credit through fiscal 2005. The proposal also would temporarily allow small businesses to write off up to $100,000 of new equipment investments.

In an astonishing turn of events, the House and Senate budget committee chairmen entered the joint-conference negotiations in the wake of Senate tax writers' discovery that they had made a $70 billion error (!) while calculating the cost of the dividend tax cut in their version of the bill.

Democrats said the mistake showed that Republicans were working too hastily, under pressure from the administration to pass a tax cut before Memorial Day. "It shows this was done hastily and not thought through," said Senator Max Baucus, Democrat-Montana.

The error in the Senate's version of the bill will not be quickly fixed because Senate Democrats refused to give their consent, Senate Finance Committee Chairman Charles Grassley, Republican-Iowa, said on Tuesday. "It would have taken 60 seconds to make this correction, but they wouldn't give 60 seconds to save $70 billion," Grassley said. The mind boggles.

Analysts traced the $70 billion error to language that would suspend taxes on dividends based on accumulated earnings. Lawmakers had intended to make the policy apply only to dividends based on the current year's earnings, meaning the tax cut would have been smaller.

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