The following article was written before the vote by several hours. But the vote happened. The good guys held. We picked up Voinovich from the group of RINOs who were being difficult, and got Zell Miller and Don Nelson.
http://quote.bloomberg.com/apps/news?pid=10000103&sid=avzWFaa5OZMM&refer=us Washington, May 15 (Bloomberg) -- Senate Republicans found enough votes to replace a dividend tax reduction in their tax cut bill with outright repeal for three years.
Republicans, who control the Senate 51-49, picked up the support of fellow party member George Voinovich, an Ohio senator who opposed the size of President George W. Bush's original $726 billion tax reduction plan. They earlier won backing from Nebraska Democratic Senator Ben Nelson.
``He sees it as an improvement over the original bill,'' Voinovich spokesman Scott Milburn said.
Voinovich's decision sets up a 50-50 tie vote later today when the measure is offered by Oklahoma Senator Don Nickles as part of an amendment that also would make other parts of the Senate's tax cut temporary, including reductions for parents and married couples. That would bring in Vice President Dick Cheney to cast the deciding vote in favor of the Republican plan.
The Nickles amendment would replace the Senate Finance Committee's $80 billion dividend tax reduction proposal with a $124 billion measure that would exclude half of dividend income from taxes this year and repeal the tax in 2004-2006. The tax would revert to current levels, as high as 38.6 percent, in 2007.
The maneuvering scores a legislative victory for the Bush administration, which had called the Senate's original proposal ``insufficient.'' The White House lobbied for the temporary repeal because once it's part of the law lawmakers will feel pressure to renew it when it's due to expire.
Later Negotiations
The victory may be short-lived. The Senate bill still must be reconciled with the $550 billion House-passed tax-cut bill, which lowers the dividend tax rate to 15 percent rather than eliminates it. The House bill also would reduce the capital gains tax on appreciated assets held longer than a year to 15 percent from 20 percent.
House Speaker Dennis Hastert of Illinois and other Republicans in the House signaled opposition to the Senate plan.
``My view is that it doesn't solve the problem,'' Hastert said.
The Senate bill also relies on $72 billion in tax increases to help pay for its $421 billion gross tax cut. The House won't accept those so-called offsets and opposes the $30 billion in financial aid for the states contained in the package.
``It doesn't really matter what the Senate approves and doesn't approve because it will have to be substantially changed to merge with the House bill,'' said Rick Grafmeyer, a principal with lobbying firm Tax Solutions. ``In conference they're not going to have these $72 billion in revenue raisers.''
More Time Needed
If the House succeeds in stripping the $30 billion in state aid from the bill or if the net tax cut exceeds $350 billion once final negotiations are done, there may not be enough votes in the Senate for a compromise package, he said.
Hastert said it ``may be a little quick'' to expect the House and Senate to send a tax bill to Bush by next week, as Republican leaders had planned.
For now, Republicans pulled off a coup. They started the week lacking two votes for the dividend repeal, a concept that had been the centerpiece of Bush's original tax-cut proposal.
They won support from Nelson yesterday by agreeing to include aid to the states and got Voinovich today.
Their support was critical for the dividend proposal because only one other Democrat, Senator Zell Miller of Georgia, is backing the president's plan and at least three Republicans have expressed opposition to all or some parts of the tax cut.
Republican Senators John McCain of Arizona and Lincoln Chafee of Rhode Island have rejected cutting taxes while the government faces a budget deficit forecast to exceed $300 billion this year. Senator Olympia Snowe of Maine has opposed temporarily eliminating the dividend tax, calling it a ``gimmick.''
Senate Limits
The Senate is limited to approving a tax cut with a net cost of no more than $350 billion because of deficit concerns raised by Snowe and Voinovich and opposition from almost all Democrats.
Republicans tried to contain the cost of the bill, even voting against popular provisions such as making permanent a research and experimentation credit for businesses. They later face a vote to preserve a $35 billion tax increase on Americans working abroad that Democrats are vowing strip from the bill.
This morning senators added a provision to the bill to ban companies like Enron Corp. and MCI Inc. from claiming tax refunds after making tax payments on billions of dollars they falsely said they earned. It was approved by voice vote.
Senators rejected a Democratic amendment to repeal a 1993 tax increase on Social Security benefits by 51-49 vote along party lines after Republicans complained the measure would explode the cost of the bill and force removal of other components, such as the dividend tax cuts.
The vote counts are so close that Senate Democratic leader Tom Daschle asked Senator John Kerry of Massachusetts to cut short two days of campaigning for the 2004 Democratic presidential nomination in Iowa and return to Washington.
``Kerry was advised by Daschle's office late last night that they needed him,'' Robert Gibbs, a spokesman for Kerry said.
While Bush would prefer his original $396 billion plan to permanently rid investors of the dividend tax, administration officials said yesterday he wouldn't oppose temporary abolition.
``The president is going to continue to push to get 100 percent dividend exclusion, and we'll see what duration that may be and how that can be worked,'' spokesman Ari Fleischer said.
Is that Ben Nelson from D-NE because he actually should walk across the aisle as he seems to regularly vote for the Bush agenda.