Senate pares $100 billion from Bush tax cut to pay for Iraq war

WASHINGTON -- The Republican-run Senate dealt President Bush's $726 billion tax-cutting proposal a surprise blow on Friday by plucking out $100 billion to finance the war with Iraq. An effort to slice the tax plan in half was resoundingly defeated.

The votes made it likelier that Congress will ultimately produce tax cuts in the range that Bush wants. After a marathon debate that ran well past midnight into Friday morning, the House approved by 215-212 a GOP-written $2.2 trillion budget for next year that made room for the entire $726 billion in tax reductions over the decade that Bush proposed.

Senators debating their own version of the budget decided by a mostly party-line 52-47 vote to shave the tax cut to $626 billion to pay for the U.S. drive to topple Iraqi President Saddam Hussein. White House officials and top Republicans decided to try to restore the money when House-Senate bargainers write a compromise fiscal blueprint over the next few weeks.

The overall tax package, the heart of the plan that Bush says will fortify the economy, would end levies on corporate dividends and accelerate already scheduled cuts in income taxes.

The vote underlined the political potency of an argument Democrats had made in a week of budget debate: That the plan should not map tax reductions while lacking a single penny for the war, especially as budget shortfalls climb toward record levels.

"The largest deficit in American history, and one of the biggest wars in our history, and we're handing out a giant tax cut. This is sort of the definition of irresponsible budgeting," said Sen. Russell Feingold, D-Wis., the sponsor.

Democrats succeeded in delaying Senate approval of the budget until Wednesday. By then, Democrats are hoping to have received more ammunition for their argument: Bush's request for financing the war, a measure expected to approach $90 billion.

After days of lobbying by both sides aimed at a handful of moderates from each party, senators voted 62-38 against slashing the tax cut's price tag to $350 billion through 2013. That amendment had represented the gravest threat to Bush's proposal, threatening to pare it to a level where its Republican sponsors said it would have little stimulative effect.

"There is a war going on," said Sen. Charles Grassley, R-Iowa, chairman of the tax-writing Senate Finance Committee. "When these men and women come home from the battlefield, we want a growing economy so these folks will have jobs."

When the House and Senate approve a compromise budget, it will clamp overall limits on revenues and expenditures for next year. It will take separate bills later this year to cut taxes or alter spending programs.

On the fifth day of debating its budget, the Senate was embroiled in a so-called vote-a-rama, voting in machine-gun fashion on one amendment after another with little debate. There were 15 roll calls by late afternoon and more on the way.

Many were defeated. But several were approved, adding to the budget's projected deficits and nibbling away at its tax cuts.

One amendment, by Sen. Kit Bond, R-Mo., which would boost highway spending and red ink by about $10 billion annually for six years, was approved by 79-21. Sen. Robert Byrd, D-W.Va., won 51-49 approval for doubling federal aid to Amtrak next year to $1.8 billion, taking a small bite from the tax cut.

Feingold's amendment to finance the war was the day's biggest surprise, succeeding because it won support from three moderate Republicans.

But the day's biggest flop was the defeat of the drive to halve Bush's tax cut, sponsored by moderate Sens. Olympia Snowe, R-Maine; John Breaux, D-La.; Max Baucus, D-Mont.; and George Voinovich, R-Ohio. Eager to reduce the size of the tax reduction as far as possible, top Democrats including Minority Leader Tom Daschle, D-S.D., urged colleagues to support it.

All week, the amendment teetered on the brink of enough votes for passage in the Senate, which Republicans control by 51-48, plus an independent who leans toward Democrats.

But two pivotal senators voted "no," Ernest Hollings, D-S.C., and John McCain, R-Ariz., with both saying they wanted no tax cuts at all. When defeat seemed certain, 11 other Democrats who would have supported halving the tax cut voted "no" instead, preferring to avoid showing support for tax reductions at any level.

"I was prepared to take one for the team if we could reduce it, but it was clear the votes weren't there," said Sen. Richard Durbin, D-Ill., who voted "no."

Both the House and Senate budgets plot savings from a host of domestic programs -- many unspecified -- that their GOP authors said would end annual deficits a decade from now. Democrats and many nonpartisan analysts have said the proposed reductions are unlikely to get enough votes to become law, especially the deeper-cutting House plan.