House GOP Defeat Tax Cut Conditions

WASHINGTON – The Republican-led House defeated a fresh Democratic effort Tuesday to limit Congress' ability to approve new tax cuts (search), averting an embarrassing setback to President Bush's agenda of continued tax reductions.

By a near party-line 209-209 vote — one vote short of the majority Democrats needed to prevail — the House turned down the Democratic provision urging budget bargainers to reimpose rules requiring that tax cuts or benefit increases be paid for with other budget savings.

Republican leaders held the voting period open an extra 23 minutes to persuade a handful of Republicans who initially supported the Democratic move to instead vote with their party.

The Senate included the strictures in the budget it approved earlier this month, while the House did not. And though the defeated language was nonbinding, its approval would have made it harder for GOP congressional leaders to leave tax-cutting restraints out of the compromise budget that negotiators are trying to write. It also would have underscored the growing concern among moderate Republicans about record federal deficits (search) approaching $500 billion this election year.

Democrats said Republicans were simply defending their treasured tax cuts while denying the obvious — that both the spending and revenue sides of the budget must be constrained to trim the mammoth shortfalls of recent years.

"I think it's a conscious failure to accept reality, or perhaps worse, an attempt to spin, to deceive," said Rep. Ed Case, D-Hawaii.

Republicans argued the rules would make it harder for Congress to extend tax cuts that will begin expiring after this year — in effect, they said, paving the way for tax increases.

"Now is not the time to make it easier to raise taxes," said Rep. Adam Putnam, R-Fla. He said for the House to adopt the "half-baked, cockamamie, crazy scheme to deal with this issue is nuts."

The vote came as top Republican negotiators from both chambers explored whether they could craft a watered-down version of the curbs the Senate has approved on new tax cuts. Approval by the GOP-dominated Senate came after four moderate Republicans joined forces with the chamber's Democrats to prevail.

The dispute over restricting tax reductions is the major impediment to completion of a compromise $2.4 trillion budget for next year.

The White House and Republican congressional leaders want to avoid any strong restraints on tax cuts, which remain the heart of Bush's plans for helping the economy create jobs.

But they may have to settle for some version of the restrictions — sure to be weaker than the ones the Senate approved — in order to win needed support from moderate GOP senators.

Congressional leaders want a deal to be struck so the House can approve a compromise budget before beginning a two-week spring recess on Friday.

House Budget Committee Chairman Jim Nussle, R-Iowa, met informally Monday with his Senate counterpart, Don Nickles, R-Okla., to begin looking for a solution to the fight over limiting tax cuts. Nussle said no decisions were made.

Congressional aides, speaking on condition of anonymity, described different options under discussion by Nussle and Nickles. Under each, the House and Senate could simply vote to ignore the restrictions, by a majority in the House and a harder to attain 60 votes in the 100-member Senate.