WASHINGTON (Reuters) - A group of U.S. senators said on Friday they will seek to tie a $1.35 trillion 11-year tax cut package and new spending initiatives to reducing the nation's debt.
Sen. Olympia Snowe, a Maine Republican and Sen. Evan Bayh, an Indiana Democrat, said they are offering an amendment to the tax package pending in the Senate that would "trigger" a delay in scheduled tax cuts and new spending programs if targets for reducing the nation's $3 trillion public debt were not met.
The amendment's sponsors said they were concerned the projected 10-year $5.6 trillion budget surplus, which includes Social Security, might not materialize.
They argued the trigger would help lawmakers cope with the uncertainty of long-term budget projections, keep debt reduction on track and help protect Social Security and Medicare funds.
"If the surplus hasn't materialized we don't want to dip into Social Security and Medicare trust funds to pay for the tax cut," Bayh said.
The trigger would have no affect on spending or tax cuts already into effect. But if debt reduction targets were not met, future new spending and phased in tax cuts would be delayed until debt reduction was back on track.
WINNING SUPPORT FOR TAX PACKAGE
Democratic Senators Debbie Stabenow of Michigan and Mary Landrieu of Louisiana said the provision could help win Democratic support for the tax-cut package.
The Senate is scheduled to continue debate and vote on the compromise Senate tax cut package, which cuts income tax rates across-the-board and gives taxpayers a break this year, on Monday. The bill's sponsors have been striving to keep a fragile coalition of backers from fracturing and have warned lawmakers against making major changes in the bill.
Sen. Max Baucus, a Montana Democrat, said the trigger amendment would add uncertainty to the tax package.
"We cannot legislate certainty," he said during Thursday's debate. "We can only exercise good judgement. We as a Congress, in these next years, have to decide what to do according to the circumstances at the time and exercise good judgement as to what we should do."
Baucus, who sits on the Finance Committee, and committee Chairman Charles Grassley, an Iowa Republican, helped forge the compromise tax package under consideration in the Senate.
The Senate compromise bill would lower income tax rates across the board, including cutting the top 39.6 percent rate to 36 percent. That is a far smaller reduction than the 33 percent top rate sought by President Bush in his original $1.6 trillion tax cut proposal. Conservative Republicans have vowed to push for the president's request.
The compromise survived a number of test votes on Thursday. Moderate Democrats joined Republican backers to help fend off a number of amendments that would have scaled back rate cuts and estate tax relief in favor of expanding other tax benefits in the bill.
Amendments to accelerate relief for the marriage penalty -- provisions in the tax code that often result in working married couples paying more taxes than they would if they were single -- and to expand the bill's education benefits were rejected.
Grassley said he hoped support for the bill would hold. The next key vote will occur on Monday when the Senate will consider a Democratic amendment that would lower the current lowest 15 percent tax bracket to 14 percent and scale back reductions of the higher tax rates.
The House of Representatives has passed Bush's tax package along the lines of his original proposal and conservative Republicans hope to win a deeper cut in the top tax rate when the two bodies get together next week to work out differences.
©Reuters May 18 2001 3:17PM