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Two Democratic senators signal flexibility on tax cuts

Bush campaigns for deeper cuts

By Steve Turnham
CNN Washington Bureau

President Bush speaks to small-business owners at MCT Industries in Bernalillo, New Mexico.
President Bush speaks to small-business owners at MCT Industries in Bernalillo, New Mexico.

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A tax cut bill that has passed the House and is up for a Senate vote is a potential campaign weapon for either party. CNN's Chris Burns explains. (May 11)
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Interactive: Competing tax plans 

WASHINGTON (CNN) -- President Bush's tactic of pushing a bigger tax cut in the home states of key Democratic senators may be working.

Two of those senators told CNN Monday they are receptive, under certain conditions, to a tax cut larger than the $350 billion measure now making its way through the Senate.

"I'm flattered," said Indiana Sen. Evan Bayh, who will join the president Tuesday in Indianapolis, Indiana. "They obviously think I am a reasonable person and am willing to at least listen to what he has to say."

President Bush, meanwhile, continued to lobby for deeper tax cuts, urging an audience in New Mexico to call lawmakers in support of his plan.

"The unemployment rate hit 6 percent," Bush said. "That should serve as a warning signal for the reluctant members of the United States Congress that we need to hear the voices of those who are looking for work."

Bayh said he likes the idea of cutting taxes on dividends, a centerpiece of the White House plan, but said he would need to see a compelling reason for a tax cut above $350 billion and that he would want anything over that level to be offset by spending cuts.(Full story)

Nebraska Sen. Ben Nelson, who joined Bush at a later stop in Omaha, said he too could support a large tax cut if the details are right.

The White House needs all the help it can get. Senate Republicans are anticipating a tough floor battle over the tax bill, as Democrats begin to offer amendments that could throw the entire package in jeopardy. The House approved a $550 billion tax-cut plan on Friday.(Full story)

Democratic amendments

The tax-cut legislation before the Senate is less than half of what President Bush originally proposed.
The tax-cut legislation before the Senate is less than half of what President Bush originally proposed.

Sen. John Breaux, a moderate Democrat from Louisiana, said he would offer an amendment to kill a tax hike on Americans working overseas that was put into the package to hold its total price tag to $350 billion.

The tax increase hits Louisiana particularly hard because the state is home to many oil workers who work on foreign rigs. Asked how he would make up for the lost revenue, Breaux said "I'm going to change the dividend tax cut."

If Breaux succeeds, the total cost of the package would likely go over $350 billion, with potentially fatal consequences.

Moderate Republicans Olympia Snowe of Maine and George Voinovich of Ohio insisted on the $350 billion limit last month as the price of their support for the Senate's overall budget resolution.

Breaux would likely need support from conservative Republicans who are openly angry at the prospect of having to vote for a bill that includes anything that looks like a tax hike. But Democrats believe Republicans will hold their noses and vote against Breaux, knowing that to eliminate the tax hike on Americans working overseas would doom the bill and end any chance of negotiating a higher tax cut later in the legislative process.

"They'll probably keep their people together after the bloodbath," said a top Democratic aide, referring to the conservative uproar after the deal was struck to limit the tax cut to $350 billion.

Democratic aides said they now expect senators Nelson, Bayh and Blanche Lincoln, D-Arkansas, to vote for the tax package, enough to offset expected "no" votes from Republicans Lincoln Chaffee of Rhode Island and John McCain of Arizona.

The big question is whether those Democratic senators will vote for the final bill that eventually emerges from a House-Senate conference, since most observers expect conservatives to strip it of tax hikes and beef up the dividend tax cut.

And if the size of the tax package is significantly increased in the conference committee, Snowe and Voinovich will again need to decide whether to sign onto a tax cut or hold the line on deficits.

Possible delay

Two unrelated events may delay consideration of the bill this week.

A delegation of senators is headed to Baton Rouge, Louisiana, Tuesday morning to attend the funeral of the late Sen. Russell Long, who died Friday. An early vote scheduled for noon tomorrow has been put off.

The second wrinkle is more problematic. Republicans apparently introduced the wrong bill on the floor when the Senate convened Monday at 2 p.m. Instead of introducing the tax cut that emerged from the Finance Committee, they introduced President Bush's original $726 billion tax cut. Sorting all that out will take some time.

"They have an impasse that it would take a Russell Long out here to fix it," said Breaux.

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