Snowe, Collins discuss taxes with treasury secretary

WASHINGTON – Less than a week after the House passed a key part of President Bush’s $1.6 trillion tax cut, the Senate Centrist Coalition met Wednesday with Treasury Secretary Paul O’Neill to talk about possible amendments to the tax package and the outlines of a reasonable budget.

“No one is quite sure at this point what is doable, and everybody is talking about different options and alternatives,” Sen. Olympia Snowe said, including possible approaches to improve the ailing economic situation.

Snowe emphasized that O’Neill had asked to meet with the coalition, adding that this told her that the White House recognizes the importance of the coalition in passing both a budget and a tax package.

During the meeting, O’Neill raised the idea of moving ahead with tax rate reductions before worrying about other aspects of the tax cut, Snowe said. But the priority of the coalition, she stressed, remains adopting a budget resolution before dealing with any details of the tax package.

“The budget resolution has to come first,” Snowe said. “That process is really going to dictate the shape and the direction of the tax package.”

Sen. Susan Collins said she talked to O’Neill about redistributing the tax cut so that more relief goes to middle- and low-income families. “I don’t think we should drop the top rate by as much as the president proposes,” she said, adding she would support cutting the top rate from 39 percent to 36 percent; Bush has proposed a cut to 33 percent.

What was important about this meeting was having an “open and frank discussion” about aspects of the tax relief package, Snowe said, adding that O’Neill got to hear a variety of views today.

“If the Senate coalition comes up with a realistic compromise on the budget and the tax package, our recommendations would carry some weight in the White House,” said John Breaux, D-La., who is co-chairman of the coalition together with Snowe.

Calling it a “really lovely session,” O’Neill said he learned “an awful lot about the reasons” members of the coalition have for pushing amendments to the Bush tax plan, including a possible trigger mechanism that Snowe is promoting.

The trigger would allow Congress to delay the implementation of tax proposals if national debt reduction targets are not met. Once the efforts are back on track, the tax cuts would automatically resume.

“I think we need to have some sort of mechanism to ensure we don’t return to the era of big deficits, given that economic forecasting is such an imprecise science,” Collins said.

Just last week, Collins, Snowe and other members of the Senate Centrist Coalition introduced a bipartisan trigger resolution and promoted it as a possible way to “help bridge the partisan divide and bring about a bipartisan agreement on tax and spending policies in the budget.”

“With a $5.6 trillion surplus projected by the Congressional Budget Office for the next 10 years, we have an obligation to be responsible stewards of that surplus,” Snowe said, adding that Congress cannot just rely on estimates and must have a backup plan if the estimates prove to be too optimistic.

Snowe said she did not know if she would support Bush’s tax package without the trigger mechanism.

So far Bush does not think a trigger would solve possible problems, according to White House spokesman Ken Lisaius. “The best trigger is self-discipline in federal government spending,” Lisaius said. “There are only two reasons why the surplus would not materialize,” he said. “Either Congress spends too much or we experience an economic downturn. And in that case the last thing you would want to do is raising taxes, because it would hurt the economy even more,” he said.

Collins agreed it would be difficult to implement the trigger in a way that would improve the economic situation, but she added that the coalition is working hard to figure out the details. “I want to make sure we continue the debt reduction,” she said.