WASHINGTON (Reuters) - Setting a milestone for President Bush's tax relief agenda, the Senate on Thursday gave final congressional approval to a budget plan that lays the foundation for $1.35 trillion in tax cuts and puts limits on government growth.
The Senate voted 53-47 for the $1.97 trillion fiscal 2002 budget that sets up 11 years of tax cuts, the biggest in 20 years but below the $1.6 trillion in 10-year cuts Bush sought.
The Republican-led House of Representatives passed the budget on Wednesday on an almost straight party-line vote.
"It's clear that the economic recovery package that the president has talked about is on the way, tax relief is on the way," White House spokesman Ari Fleischer said.
But passing the bill that actually cuts taxes will be tough, as Democrats blasted Republican proposals as skewed to the rich.
"We are going to try to get the tax bill completed by Memorial Day. That is a very difficult challenge," Assistant Senate Republican Leader Don Nickles, of Oklahoma said.
The House already has passed a series of tax cut bills, but must craft a package to match the Senate's.
Five Democrats tipped the balance to pass the Republican budget in theSenate that is split 50-50 between the parties. Two Republicans opposed it.
"My recommendation is that we pass this imperfect document," said Sen. John Breaux of Louisiana, who led a group of moderate Democrats in talks with the White House on the compromise. He was joined by Sens. Max Baucus of Montana, Max Cleland of Georgia, and Ben Nelson of Nebraska.
One Democrat, Sen. Zell Miller of Georgia, backed Bush's tax cuts from the start, while Republican Sens. James Jeffords of Vermont and Lincoln Chafee of Rhode Island said the compromise tax cut still was too large.
Most of the 15 moderate Senate Democrats who had supported a smaller tax cut that freed more money for education rejected the deal Breaux made with Bush.
DEMOCRATS SEE BENEFITS FOR WEALTHY
Democrats by in large have slammed the budget plan, saying it would sacrifice resources for schools, health care and other needs to finance tax cuts.
"This tax cut will savage our nation's real and growing needs. It will benefit the jet set, but leave the rest of America riding on rusty rails," said Sen. Robert Byrd of West Virginia.
Senate Democratic Leader Tom Daschle of South Dakota called the budget "a nuclear bomb for fiscal discipline" because Congress inevitably will break tight spending limits forced by the tax cuts.
But Republicans said it was an effort to control spending and return a share of projected surpluses to taxpayers.
"You didn't get everything you want, but I want to compliment you Mr. President because you have made us change direction," said Senate Budget Committee Chairman Pete Domenici of New Mexico. "In the end it's pretty clear we're going to have a significant tax reduction plan in place."
NOT BINDING
The budget is not binding law, but it protects the $1.35 trillion tax-cutting legislation that fits under it from filibusters. That means the bill needs a simple majority to pass, not 60 votes that would be hard to get in the Senate.
The Senate Finance Committee was working on details of the tax-cut bill that will include rate cuts, marriage penalty relief, estate tax repeal and a bigger child tax credit.
To get the tax cuts through the Senate, the package was scaled back and $100 billion of it was set aside to be used this year and next for a quick economic stimulus.
Democrats want the stimulus to come through rebates that would help lower-income people, instead of income tax reductions that would yield most for the higher tax brackets.
The stimulus plan must be worked out with the House, which gave its Ways and Means Committee more leeway to roll the $100 billion into 11-year income tax reductions Republicans favor.
The budget, which is a guideline that Congress often ignores when it allocates money later, limits spending increases for most programs other than automatic payments such as Social Security and Medicare to 4 percent in the next fiscal year that starts on Oct. 1.
That is just ahead of inflation and half this year's 8 percent growth that the Republican Congress and Democratic President Bill Clinton settled on last year.
Democrats said that was too low and would force Congress to raid Medicare and Social Security reserves, particularly as the Pentagon is expected to seek tens of billions of dollars more in coming years, and many lawmakers want more money for schools and to deal with natural disasters.
©Reuters May 10 2001 4:57PM