At a House-Senate conference committee, Democratic lawmakers abandoned
efforts to pay for the measures by either imposing a surcharge on
wealthy families or closing corporate tax shelters.
"I wish we could pay for them, but this is a political problem and we
have people up for re-election,'' said Representative Charles B. Rangel
of New York, the senior Democrat on the House Ways and Means Committee.
"If you have to explain that you voted for these tax cuts because they
benefit the middle class and against them because of the deficit, you've
got a problem.''
Fearful of being attacked as supporters of higher taxes, Democrats said
they would go along with an unpaid five-year extension of the $1,000
child tax credit; a four-year extension of tax breaks intended to reduce
the so-called marriage penalty on two-income families; and a six-year
extension of a provision that allowed more people to qualify for the
lowest tax rate of 10 percent.
Even as they pushed for the cuts that will add to the federal budget
deficit, House Republican lawmakers said Wednesday that they hoped to
have a vote soon on a constitutional amendment that would require the
government to balance the budget by 2010, except if the country is at war.
That proposed amendment has no chance of becoming law, but it would
conflict with even the Bush administration's rosiest goals for reducing
the deficit, which is expected to hit $420 billion this year, a record.
Mr. Bush has promised only to cut the deficit in half by 2009.
Approval of the tax cut package is a significant victory for Mr. Bush,
who champions the extension of the cuts at every campaign stop but whose
wishes had been thwarted by Democrats and a handful of Republican
moderates in the Senate.
As recently as July, the moderates demanded that such tax cuts be paid
for either with budget cuts or with higher taxes in other areas. By
teaming up with Democrats, the Republican moderates prevented their own
party leaders and the Bush administration from getting their way.
But with the election nearing, Congressional Democrats said they would
not let themselves be branded as supporters of tax increases, which
would occur if the expiring provisions were not renewed.
Senator Tom Daschle of South Dakota, the Senate Democratic leader,
announced this week that he would support a five-year extension of the
cuts even if they were not paid for.
With Democrats capitulating to the Republican majorities in both the
House and Senate, the handful of Republican holdouts have quietly
surrendered as well.
The Republican rebels - Senators John McCain of Arizona, Lincoln Chafee
of Rhode Island and Olympia J. Snowe and Susan Collins of Maine -
infuriated Mr. Bush and many Republican leaders. But their ability to
block action evaporated without the votes of Democrats.
The result of the reversal on the part of the Democrats and the
Republican moderates is likely to be a tax measure that will last longer
and increase federal deficits more than a two-year extension that
Republican Senate leaders offered this summer. The nonpartisan
Congressional Budget Office has estimated that debt will climb by $2.3
trillion over the next 10 years, and that making all Mr. Bush's tax cuts
permanent would cost an additional $1.9 trillion by the end of 2014.
In the conference committee, House and Senate Republicans added about
$13 billion worth of business tax breaks, the biggest of which was a
renewal of the investment tax credit for research and development.
House Republican conferees also rejected a proposed amendment by Senator
Blanche Lincoln, Democrat of Arkansas, that would expand the number of
poor families eligible for a refundable child tax credit. That measure
would have cost $7 billion over 10 years.
According to studies by Democrats on the Joint Economic Committee, four
million low-income families will have reduced benefits from the child
tax credit if the law is unchanged.
"These are working people we are trying to help," Senator Lincoln said,
adding, "The higher-income taxpayers get enormous benefits from the tax
code."
At issue in the case of the child tax credit was the extent to which it
should be made available as a refundable payment to low-income families
that have no federal tax liability.
To save money in last year's tax bill, Republican lawmakers decided to
offer a refundable tax credit to families that earn at least $10,000.
But that still left many poor families ineligible, and those numbers
would increase because the current law raises the minimum income
threshold each year in line with inflation.
"The tax credit is for taxpayers,'' said Senator Don Nickles, Republican
of Oklahoma. "If you want to change the welfare system, then change the
welfare system.''