WASHINGTON — The GOP-controlled Senate Tuesday dealt President Bush and business a setback by cutting more than half the proposed $726 billion tax cut he argues is needed to pull the economy out of its torpor.
The 51-48 vote to keep tax cuts at $350 billion over 10 years reflected an increased concern in the chamber about the cost of the war in Iraq. Just a week ago, the body voted 62-38 to reject a similar attempt to reduce the size of the tax cuts.
"We’re at war and the deficit continues to grow," said Sen. Max Baucus of Montana, the top Democrat on the Senate Finance Committee. "This is not a time for massive tax cuts or runaway spending. With today’s vote, we’ve reached a positive middle ground."
"We are going to become a lot more serious" about watching costs, said Sen. George Voinovich (R., Ohio), one of three Republicans to favor of scaling back Bush’s stimulus plan.
Steve Pfister, senior vice president of government relations at the National Retail Federation, said it’s unclear what will happen next in the tax cut debate on Capitol Hill.
"We’re in uncharted waters right now from a national standpoint," he said.
The vote was on the size, not the type of tax cuts, and came as Bush sent a request to Congress for $74.7 billion to fund the Iraq war for the next six months, if it should last that long, and to pay for anti-terrorism expenses.
The House on Friday approved Bush’s full $726 billion tax-cut request.
There are chances for Bush’s full tax cut plan to make it out of Congress and Senate GOP leaders have vowed to bring the issue back for a vote. The amount could also be increased during House and Senate negotiations to reconcile differences.
"The process is far from over," said the NRF’s Pfister.
Bush’s bid for war funding included a request for $1 billion in cash grants to Turkey. That unexpected development appeared to reverse an administration decision made last week not to offer Iraq’s northern neighbor an economic aid package, which included trade breaks on textiles and apparel, in exchange for war support.It’s unclear how Congress will vote on the issue, as many lawmakers are upset at the Turkish parliament’s refusal last week to allow U.S. troops to use that country as a base from which to attack Iraq.
Turkey did, however, vote to allow the U.S. to use its air space.
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