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House likely will approve Bush's plan for tax cuts

WASHINGTON — The House moved toward embracing a $1.94 trillion budget for next year, mapping President Bush's vision of deep tax cuts and curbed spending, even as he dueled with Democrats over giving a fiscal nudge to the economy.

The Republican-led House planned to endorse the budgetary blueprint Wednesday afternoon. It would be the first vote by either chamber of Congress on Bush's overall tax and spending plans, which face a sterner test next week in the evenly divided Senate.

The measure lays the groundwork for Bush's proposed 10-year, $1.6 trillion tax cut plan, steers $2.3 trillion toward debt reduction over the same period and limits spending for many programs in 2002 to 4 percent more than this year. That is half the spending growth that lawmakers and former President Clinton approved last year.

"President Bush is at the helm, and he is making a great deal of history," said Rep. David Dreier, R-Calif., as Wednesday's debate began.

The GOP plan also sets aside Medicare surpluses for overhauling that program, including $153 billion over 10 years for a new prescription drug benefit.

Democrats readied their own budget with a smaller tax cut, more debt reduction and additional money for prescription drugs, aid for schools and other initiatives. Bush's tax cut is so big that it would crowd out other programs and risk reviving annual federal deficits and eroding the Medicare and Social Security trust funds, they argued.

"My Republican colleagues pretend they can give a tax cut to the very rich without hurting Social Security or Medicare, without hurting education or the environment," said Rep. Martin Frost, D-Texas.

The Democratic budget was fated for defeat, as were other alternatives by liberals, conservative Democrats and conservative Republicans.

Congress' budget, which does not need the president's signature, maps broad tax and spending goals that are enacted in detailed bills later. This budget covers fiscal 2002, which begins next Oct. 1.

Bush on Tuesday predicted the economy will "come roaring out of its doldrums" and lambasted Democrats for proposing a mere "pick-me-up" as a stimulus: one-time, $300-per-taxpayer rebate checks this year.

Bush endorsed the idea of a retroactive tax cut "to get cash into the consumers' hands as swiftly as possible." But he said he would not separate it from his 10-year plan to lower income-tax rates, eliminate the estate tax and reduce other levies.

"If we face facts and act boldly, I'm confident we can build the long-term prosperity we seek," he said in a speech in Kalamazoo, Mich.

At a White House technology forum Wednesday, Bush was expected to name California venture capitalist Floyd Kvamme to co-chair the President's Committee of Advisers on Science and Technology, aides said, speaking on condition of anonymity.

Bush was hosting more than 100 new economy leaders Wednesday in the East Room of the White House for a forum with top administration officials and lawmakers.

The discussion — much of it behind closed doors — was expected to focus broadly on trade, education, energy and the economy, administration officials said. Bush was touting his proposed permanent extension of the tax credit allowed for investment in research and development.

For a $60 billion price tag, Senate Democrats would provide rebates to everyone who pays income or Social Security and Medicare payroll taxes. Only taxpayers — not their dependents — would qualify.

Democrats also would immediately cut the lowest, 15 percent income tax rate to 10 percent for the first $6,000 of income for individuals, $12,000 for couples. This would produce additional savings for everyone who pays income taxes starting this year, costing the government another $400 billion over the next decade.

The proposal lets Democrats endorse Bush's goal of invigorating the economy while rejecting his long-term tax cut as too big and skewed toward the rich. They taunted Republicans for rejecting the Democrats' plan.

"Is it that tax relief for everyone is being held hostage by their commitment to a massive tax cut to the very few?" asked Senate Minority Leader Tom Daschle, D-S.D.

Bush's original plan, which has passed the House, would provide less than $6 billion in tax relief this year.

The Senate GOP's budget would allow $60 billion to be rushed to taxpayers this year, with details to be filled in later. But GOP leaders were still hunting for enough votes to push their budget through that chamber, where each party holds 50 seats. That debate should last all of next week.

Leaders were hoping to solidify support from moderate Republican senators with a provision that could ease some tax cuts if the government falls short of annual debt-reduction targets.

Senate Republicans also said getting their budget passed might require more spending than Bush has so far proposed for farm aid, education for the handicapped and defense.

Even so, Sen. Ted Stevens, R-Alaska, joked it would take "an all-night prayer session" for Republicans to push their budget through the Senate. And GOP leaders planned for the presence of Vice President Dick Cheney, who can vote to break Senate ties.