Try our new search engine

Senators Approve Massive Tax Bill

House and Senate bills must now be reconciled in conference

WASHINGTON (AllPolitics, June 27) -- The day after the House approved a similar measure, the Senate on Friday approved the biggest package of tax cuts in 16 years. But the White House signaled a veto was possible.

Senators began voting early today on dozens of amendments, before approving the final package 80-18. The House voted 253-179 on Thursday on a package that contained similar elements, including a $500-per-child tax credit, education tax credits, and broad-based capital gains and estate tax relief. Cigarette taxes would be hiked 20 cents per pack to raise $8 billion for children's health insurance. The net tax cut would be $77 billion.

"I think this has been a historic week," declared Senate Majority Leader Trent Lott (R-Miss.). But it may take months before President Bill Clinton signs any of the provisions into law, as the two chambers' bills must be reconciled in conference, in consultation with the White House, and then approved yet again.

Among the amendments senators considered was one offered by Edward Kennedy of Massachusetts to raise cigarette taxes an additional four cents to 24 cents to provide an additional $4 billion for children's health. That was rejected 70-30.

Backed by the Clinton Administration, Kennedy said the added revenue was needed "to assure that all children not eligible for Medicaid but not able to afford insurance will be covered." But Majority Whip Don Nickles (R-Okla.), speaking for the opposition, complained, "When is a deal a deal? We can't trust this administration any more than a day."

The tax bill, part of the budget deal reached by the White House and congressional leaders on May 2, aims to balance the federal budget by 2002. Negotiators agreed to consider the tax provisions separately from the budget bill, which includes changes to Medicare, Medicaid and other federal programs.

After Minority Leader Tom Daschle (D-S.D.) announced support for the tax bill Thursday, Senate passage seemed assured. It still needs to go through another round of negotiations and votes, however, as lawmakers reconcile the House and Senate bills.

The White House sent out warnings of a possible veto.

"The president wants a targeted tax cut and the House and Senate bills don't quite measure up at this point," spokesman Mike McCurry told reporters. Reprising a line from earlier tax battles, McCurry said, "the president will veto legislation that blows a hole in the deficit."

A key point of contention is over capital gains. While Clinton wants a lower tax rate for small businesses and for the sale of a home, Republicans provided a broad-based cut from 28 percent to 20 percent, which the administration says will result in huge revenue losses.

Which side will budge?

"We're going to try to find everything we can to get the bill signed, and I have every reason to believe they'll be signed," House Speaker Newt Gingrich assured reporters Thursday.

Behind the scenes, negotiations are already underway, with Treasury Secretary Robert Rubin and White House negotiator John Hilley meeting with House Ways and Means Committee Chairman Bill Archer.

Taking a backseat throughout the recent tax debate, seemingly, has been the once-hot idea of tax code simplification.

"It's really impossible to argue that this tax bill simplifies the tax system," University of Michigan business school professor Joel Slemrod told The Associated Press. "It's because of the accumulation of tax bills like this the tax code is as complicated as it is now."