Congressional Split Develops on Bush Tax Relief Plan

By Christine Hall | July 7, 2008 | 8:29 PM EDT

( - With the war in Iraq dominating attention, votes late last week in the House and Senate set up more clashes here at home over President Bush's plan for tax relief.

Democrats, who for months have criticized Bush's plan as a giveaway to wealthy workers, could not convince enough of their colleagues to prevent the House early Friday morning from passing the $2.2 trillion budget blueprint

However, the Senate later on Friday voted to take $100 billion over 10 years from the tax relief package and use the money to pay for the war with Iraq. The GOP-led Senate rejected a bid by moderates to take even more money away from the tax relief plan.

The amendment to cut in half the president's proposed 10-year, $726 billion tax relief package failed 62-38. Moderates had argued that the war and record deficits made bigger tax cuts unwise.

The earlier 52-47 Senate vote to take $100 billion from the tax relief plan set the White House and congressional Republicans on a mission to restore the money.

What Does America Think?

Just half of Americans say they're familiar with the president's economic recovery plan, according to a new poll by Republican pollster Ed Goeas for Citizens for a Sound Economy.

CSE spokesman Paul Hilliar chalks it up to the war. "There was just so much about the war that the president's economic message was just getting drowned out."

Of those familiar with the Bush plan, half of them say what they heard would make them more likely to support the plan, while 42 percent say what they heard would make them less likely to support it. Married voters are more supportive of the plan than their single counterparts, according to the survey.

The centerpiece of the Bush economic plan is the elimination of double taxation on dividend income, which administration economists believe will spur investment and, ultimately, job growth.

Neither the House budget resolution (nor the tax cut itself) is binding until Congress passes it, either in the form of a bill or embedded in one of the regular 13 appropriations bills Congress must attend to this year.

White House spokesman Ari Fleischer, in his Friday press briefing, said: "The president believes that no matter what happens in pursuit of the war," it's vital to create jobs.

However, the ranking Democrat on the House Budget Committee, Rep. John Spratt (S.C.), scolded the Bush administration for failing to include in its budget any cost estimates for the war in Iraq and any subsequent occupation.

Budget Committee Chairman Jim Nussell (R-Iowa) "calls this a wartime budget," said Spratt. "But everyone should understand there is nothing in this budget to pay for the war in Iraq that is now underway. There is not even anything in this budget to pay for the war against global terrorism, which is being waged in places like Afghanistan.

"The administration deliberately omitted any provision for those costs in this budget," Spratt charged. "They claim that they could not estimate accurately what those costs are likely to be, but we all know will run into billions of dollars, maybe $50 to $100 billion for the war in Iraq itself."

The Congressional Budget Office (CBO) has estimated that postwar occupation will cost between $1.8 billion and $3.8 billion a month, Spratt added.

Concord Coalition National Field Director Harry Zeeve reckons that the Bush administration is deliberately postponing war estimates until after the tax cut is passed.

"The prime thing is to get that key political goal in place before you add another however many billions of dollars to the deficit," said Zeeve, an opponent of deficit spending.

Instead, Zeeve argued, Congress should hold back on tax cuts and new spending, such as a Medicare drug benefit, until the administration provides war cost estimates.

But whether all deficit spending is bad for the economy is a disputed matter, Zeeve acknowledged. "In their defense, the administration argues that these are small, manageable deficits that...we can easily absorb," he said.

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