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Senate resolves disputes on 3 bills

2 lawmakers held up tax and disaster relief measures

WASHINGTON — The Senate late Sunday resolved a dispute delaying passage of a sweeping corporate tax bill and two spending bills for disaster relief and homeland security, clearing the way for senators to adjourn Monday to hit the campaign trail.

The agreement removed parliamentary roadblocks thrown up by Sen. Mary Landrieu, D-La., to express her unhappiness that the tax measure did not include pay support for members of the Reserves and National Guard, and by Sen. Tom Harkin, who was blocking passage of two spending bills.

The agreement, announced by Majority Leader Bill Frist, will allow the Senate to vote on Monday on a bill that will provide $136 billion in new tax breaks for businesses and other groups and $10.1 billion separately to buy out tobacco farmers' government quotas.

It will also allow votes on a bill helping hurricane victims and farmers suffering from drought, flood and other emergencies and a bill to fund the homeland security.

Landrieu was seeking to get approval for another bill that would give employers a tax credit if they made up the pay their employees lose when they are called to active duty in the Reserves or National Guard.

Landrieu's proposal would provide a 50 percent tax credit to employers for up to $30,000 in salary payments a year and was estimated to have a $2.5 billion cost over 10 years.

Under the agreement, the Senate will take up and approve on a voice vote Monday her proposal on active duty pay, sending it to the House where Republican leaders are opposed to the measure.

In an agreement reached with Harkin, both of the spending bills are scheduled to be approved on voice vote Monday afternoon, and he will get a vote on a motion to instruct Senate conferees to seek to restore cuts in an agriculture conservation program that had triggered his weekend filibuster.

The hurricane and farm disaster package includes $14.5 billion in spending while Congress is seeking to spend $33 billion to finance the Department of Homeland Security.

Senate Minority Leader Tom Daschle, who helped engineer the deal, said that Democrats understood "this has been a very difficult and trying time for the entire Senate" but he said it was important to deal with the issues that had been raised.

Earlier, tempers had grown short during the Senate's rare Sunday session. Republicans fumed about the delay that was forcing the Senate into overtime when they had hoped to adjourn on Friday to go home and campaign. The House wrapped up business on Saturday.

Sen. Rick Santorum, R-Penn., complained that "what is going on in the United States Senate is political demagoguery at the highest levels."

The tax package offers $136 billion in tax breaks to beleaguered U.S. manufacturers and an array of other interests.

Both sides predicted lopsided approval of the bill in the Senate, which will send the measure to President Bush for his signature. The package, the most sweeping overhaul of corporate tax law since 1986, provides a wide range of tax benefits for native Alaskan whalers, importers of Chinese ceiling fans and NASCAR race track owners.

The centerpiece of the tax legislation is $76.5 billion in new tax relief for the battered manufacturing sector, which has lost 2.7 million jobs over the past four years. But manufacturing is broadly defined to include not just factories but also oil and gas producers, engineering, construction and architectural firms and large farming operations.

The bill was seen as must-pass legislation because it repeals a $5 billion annual subsidy for U.S. exporters that has been ruled illegal by the World Trade Organization. Because of that ruling, 1,600 American exports to Europe have been hit by penalty tariffs that now stand at 12 percent and are rising by 1 percentage point a month.

Some senators were also upset that the final version of the corporate bill dropped a provision that had been in the Senate version of the bill that would have given the Food and Drug Administration the power to regulate tobacco, a change they saw as critical in the campaign to stop children from getting hooked on cigarettes. The bill does provide a $10.1 billion buyout for tobacco farmers.

"This bill is of the elite corporate interests, by the elite corporate interests, for the elite corporate interests," said Sen. Edward Kennedy, D-Mass. "It's a lobbyist's dream and a middle-class nightmare."

But as part of the overall agreement, the Senate approved on voice vote Sunday night a measure that would give the FDA power to regulate tobacco, sending that proposal back to the House. That proposal has little chance in the House,where Republican leaders oppose FDA regulation.

Also approved was another bill putting the Senate on record for the third time this year as opposing new overtime rules put into effect in August by the Bush administration. Opponents claim the rules will deny overtime pay to millions of people who now qualify for it.

While the House has also voted against the overtime rules, it was considered unlikely that Republican leaders would allow the proposal to be taken up again either before the election or in a special session after the November election. The House adjourned on Saturday to hit the campaign trail.

In addition to the $76.5 billion in tax relief for manufacturing, the measure would also provide $42.6 billion in tax relief to multinational companies.

Supporters argued that the tax relief for multinational corporations would boost the competitiveness of U.S. companies, but opponents argued that it would simply provide more tax benefits to support the movement of U.S. jobs overseas.

To pay for the $136 billion total of new tax relief over the next decade, the legislation would rely on the savings from repealing the export subsidy and would close corporate loopholes and tax shelters — thereby raising an estimated $82 billion over the next decade.