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Moderates want a lid on Bush's tax-cut plan

WASHINGTON — Four Senate moderates dimmed the chances that President Bush will win his plan for a $726 billion tax-cutting economic package, pledging to vote against it unless its price tag is cut by more than half.

In a letter Thursday to Senate leaders, the four lawmakers — including two Republicans — said the measure they would support must be limited to a cost of no more or no less than $350 billion over 10 years. Anything exceeding that must be paid for by savings from elsewhere in the budget, they wrote.

"All signatories to this letter are committed to defeating floor amendments that would reduce or increase this $350 billion amount," the letter said.

Signing the note were Sens. Max Baucus, D-Mont.; John Breaux, D-La.; Olympia Snowe, R-Maine; and George Voinovich, R-Ohio.

"With $350 billion, you can put together a very good package," Voinovich told reporters.

The group's stance is important because the GOP controls the Senate by a slim 51-48 margin, plus a Democratic-leaning independent. Several other moderate Republicans who did not sign the letter have questioned the size of Bush's tax plan at a time of ballooning federal deficits, including Sens. Lincoln Chafee of Rhode Island, Susan Collins of Maine and John McCain of Arizona.

In January, Bush proposed a $726 billion plan whose centerpiece was the elimination of taxes on corporate dividends. The White House has cast the package as a crucial step to jump-starting the economy, creating jobs and nurturing long-term economic growth.

Breaux and Baucus said they believed the letter dimmed the chances that the corporate dividend proposal would survive.

"It is in serious jeopardy," Baucus told reporters.

Bush's proposal to end corporate dividend taxes, at a cost to the Treasury of $396 billion, has been criticized by Democrats and some moderate Republicans as a sop to the wealthy. The other key component of Bush's economic package, accelerating previously approved reductions in income tax rates, has been treated more warmly.

The senators' letter to Senate Majority Leader Bill Frist, R-Tenn., and Senate Minority Leader Tom Daschle, D-S.D., said "international uncertainties and debt and deficit projections" make it necessary to restrain federal red ink.

"We welcome their thoughts," said Bob Stevenson, spokesman for Frist. "We also appreciate their willingness to vote for a 2004 budget framework that would include a significant economic growth package."

The letter was the latest blow on the tax front to Bush. He has proposed $1.57 trillion in overall tax reductions this year for the next decade, but as federal deficits race toward record levels, the GOP-run House and Senate Budget committees on Thursday approved deficit-reduction plans with smaller tax cuts.

The two Republicans, Snowe and Voinovich, did not rule out voting for a Senate budget next week that exceeds $350 billion.

Congress' budget sets revenue and spending targets and can protect tax bills from filibuster — delays that end only with the votes of 60 of the 100 senators. Actual changes in tax law would come in a later bill lawmakers are expected to work on this spring, and it is there that the moderates could make their stand.

The letter comes despite weeks of lobbying by the White House and top Senate Republicans, who were hoping the moderates would take a less definitive stance.

So far Sen. Zell Miller of Georgia is the only Democrat to say he supports Bush's full $726 billion package.

In a party-line 12-11 vote, the Senate Budget Committee approved a GOP plan for balancing the budget in 10 years that would trim the overall tax cut to $1.3 trillion. Earlier Thursday, the House Budget Committee voted for a seven-year budget-balancing blueprint with a $1.4 trillion tax reduction.

Both budget committees would bar filibusters only against the economic growth portion of the tax cut. That means the rest of Bush's tax proposal — chiefly making permanent the tax reductions enacted in 2001 — has little chance of becoming law this year.