Snowe signs letter seeking reduced tax cut

WASHINGTON – A bipartisan group of senators Thursday released a letter saying they would accept a tax cut no larger than $350 billion over 10 years, signaling to Republican leaders they may have to cut the size of President Bush’s proposed “economic growth” tax cut by more than half.

The letter, signed by Sens. George Voinovich, R-Ohio; Olympia J. Snowe, R-Maine;, Max Baucus, D-Mont.; and John Breaux, D-La., emerged just as the Senate Budget Committee was completing work on a blueprint for spending and tax cuts designed to speed through the full $726 billion Bush tax package.

Parliamentary language in both the Senate and House budget resolutions covering tax and spending policy through 2013 would ensure that a $726 billion tax package would need only 51 votes for Senate passage rather than the 60 votes needed to overcome a filibuster blocking a floor vote.

But the bipartisan letter ensures that next week’s Senate floor battle over the budget will be tight even for 51 votes.

“With the international challenges our nation faces, including a possible military engagement with Iraq, continuing tension on the Korean Peninsula, and the ongoing war on terrorism … we believe that any growth package that is enacted through reconciliation this year must be limited to $350 billion,” the four senators wrote.

At least three other Republicans have voiced concern about a tax cut the size Bush wants or even one worth $350 billion, including Sens. John McCain of Arizona, Lincoln Chafee of Rhode Island and Susan M. Collins of Maine. So far, only one Senate Democrat, Zell Miller of Georgia, has voiced support.

If those numbers hold, GOP Senate leaders would almost certainly have to jettison Bush’s centerpiece proposal to end the so-called double taxation of corporate dividends, a proposal that would cost $396 billion through 2013.

“This is a real breakthrough for those who are concerned about the looming national debt,” said Baucus, the ranking Democrat on the tax-writing Senate Finance Committee.

Congressional Republicans had always been worried that the size of the tax cut would be whittled down in the Senate budget resolution. But they hoped it could be expanded again when House and Senate negotiators worked out a final budget blueprint to govern tax and spending legislation this year.

The bipartisan letter, however, raises questions about that, too.

In the letter, the senators said they would stand by the $350 billion figure both during the Senate floor debate and when a compromise package is up for final approval.

Senate Budget Committee Chairman Don Nickles, R-Okla., expressed hope that he could still win the votes for passage, as did the White House. White House spokeswoman Claire Buchan noted that in 2001, senators also succeeded in shrinking the president’s $1.6 trillion tax cut considerably, only to see it grow back to $1.35 trillion in its final form.

“We are confident that at the end of the day, the president’s proposal to create jobs and spur growth will prevail – just as it did in 2001,” she said.

But with the potential cost of a war with Iraq raising more budget questions daily on Capitol Hill, one senior Republican aide in the Senate said the GOP leadership might be wise to lock in a $350 billion tax cut before that number is cut as well.