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U.S. Senate 107th Congress First Session

First Tie Broke By VP in Budget Debate
Senate Gives President's Tax Plan a Setback
Small Tax Relief Approved by Senate

U.S. House of Representatives 107th Congress First Session

Death Tax Elimination by the House

U.S. Senate 107th Congress First Session

First Tie Broke By VP in Budget Debate

On April 3, 2001, while supporting a plan to increase Medicare spending by over $300 billion over 10 years, Vice President Richard B. Cheney cast his first tie-breaking vote in the Senate, protecting President Bush's $1.6 trillion tax cut.

By warning that defeat would essentially hand over control of the Senate to Democrats, the Republican leadership secured the support of most wavering party members.

Senator Larry E. Craig (Republican-Idaho) said, "We have not spared that [argument] as part of our rhetoric with our colleagues. It is the beginning of where [Mr. Bush] wants to take the country."

For a prescription drug benefit under Medicare, the amendment in question sets aside twice the amount proposed by the President. However, compared with a Democratic amendment that would have done the same but also reduced the President's $1.6 trillion tax-cut plan by $150 billion to make up the difference, Republicans considered their vote to decide a better alternative.

The Vice President's vote caused the amendment to pass by a 51-50 vote.

In a second vote, the Democratic alternative failed by a 50-50 tie that was broken by Vice President Cheney. The sole party defectors on both sides were Senator Lincoln Chafee (Republican-Rhode Island), who voted with Democrats and Senator Zell Miller (Democrat-Georgia), who voted with Republicans.

For Fiscal 2002, the White House planned to limit discretionary spending to a four percent increase over Fiscal 2001.

The Senate also debated a 10-year, $88 billion entitlement program for farmers authored by Senator Grassley in addition to the $150 billion added to the budget resolution for Medicare benefits.

Adding one of the deciding votes for the President's plan was Senator Jeffords who was seeking about $180 billion over 10 years in special education spending.

Money that would not be counted against the four percent discretionary spending limit set by the President would result from declaring increases in agriculture and special education spending "mandatory."

Robert Bixby, executive director of the Concord Coalition said, "That is a very bad idea. It is very pernicious." Bixby said the problem with mandatory programs, or entitlements is that they go on auto pilot; spending for discretionary programs must be appropriated annually.

He said the President's goal of four percent is "reasonable" but if Congress is going to break it, it would be far better to do so "up front so you can see it."

(John Godfrey and Dave Boyer, "Cheney breaks first tie in Senate," The Washington Times, April 4, 2001)

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Senate Gives President's Tax Plan a Setback

Three dissenting Republicans who joined Democrats in voting to reduce the size of the 10-year, $1.6 trillion tax cut, handed President Bush a setback on April 4, 2001. To reduce the size of the tax cut by about $450 billion over ten years and to divide the money between education and debt reduction, the Senate voted 53-47 against the current form of the President's ten-year tax cut. (To see how your senators voted, visit http://www.senate.gov/legislative/vote1071/vote_00068.html)

A leading moderate Republican, Senator Jim Jeffords of Vermont, made a dramatic break with the administration just moments before the vote. To support a bipartisan plan that would reduce the tax cut to $1.25 trillion, Jeffords joined Democrats and a previous GOP defector, Senator Lincoln Chafee (Rhode Island). By offering more money for special education, GOP leaders worked into the night trying to change Jefford's mind.

The key Senate vote came following a proposal by Senator Tom Harkin (Democrat-Iowa) to redirect $225 billion to federal education programs and $225 billion to debt repayment. To educate children with disabilities, Jeffords had demanded that the Bush administration provide $180 billion more over the next ten years.

Voting for the amendment and against the President were Jefford, Chafee and a third moderate GOP Senator Arlen Specter (Pennsylvania).

(William M. Welch, "Bush's tax plan takes hit," USA Today, April 5, 2001)

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Small Tax Relief Approved by Senate

For this year, by a vote of 94 to 6, the Senate approved an $85 billion tax cut on April 5, 2001, (To see how your senators voted, visit http://www.senate.gov/legislative/vote1071/vote_00080.html) which is significantly more than the $60 billion upon which both parties had seemed to agree. The party's disagreement came over how this money would be returned to taxpayers - as a rebate check, for instance, or in the form of lower taxes withheld from paychecks in the last half of 2001.

The votes were for a budget resolution. Although the measure would never become law, it serves as a planning tool for lawmakers, setting the outline for how much can be allotted for taxes and spending in legislation over the rest of the year.

Often ignored when the actual legislation is considered is the amounts in budget resolutions.

For education, an addition of $70 billion over 10 years was approved. Most Republicans were opposed and almost all the Democrats voted for the extra money.

The Senate approved a budget on April 6, 2001, by a vote of 65-35 in favor of a blueprint that leaves room for a tax cut of about $1.2 trillion (To see how your senators votes, http://www.senate.gov/legislative/ vote1071/vote_00086.html)

The smaller package still represents "meaningful, real tax relief" and the President is pleased with the vote. President Bush said at an awards presentation in the White House East Room, "The fact that both houses of Congress have committed to finding significant relief is good for the American people and good for the economy. I applaud today's action and congratulate the Republicans and Democrats who helped make it happen."

In negotiations with the House, which has already approved a budget along the lines that the President sought, GOP officials said they would attempt to increase the tax cuts.

Vice President Dick Cheney told reporters moments after the vote, "I would emphasize, this is one step among many."

In days of negotiations, the Vice President made no mention of the $1.6 trillion that he had tried to salvage. However, the Senate's action would lead to "a significant reduction in taxes for the American people as well as the approval of important spending programs going forward," said the Vice President. While all 35 no votes were cast by Democrats, a total of 50 Republicans and 15 Democrats supported the proposal that passed.

A proposal by Senator Dick Durbin (Democrat-Illinois) to provide an immediate $60 billion tax cut stimulus to help the faltering economy was defeated by the Senate by a vote of 61 to 39. (To see how your senators voted, visit visit http://www.senate.gov/legislative/vote1071/ vote_00076.html) Also, close to the figure, Democrats say is most appropriate if the government is to pay down public debt while meeting spending priorities, it would have sanctioned additional tax cuts over the next ten years of about $745 billion.

(Jim Abrams, "Senate Approves Smaller Tax Cuts," The Associated Press, April 6, 2001; David E. Rosenbaum, "Senate G.O.P. Leaders Cite Lack of Votes for Bush's Full Tax Plan," The New York Times, April 6, 2001)

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U.S. House of Representatives 107th Congress First Session

Death Tax Elimination by the House

Legislation that would repeal the estate and gift tax (H.R. 8) over the next ten years was passed in the House by a vote of 274-154. (To see how your representative voted, see http://clerkweb.house.gov/cgi-bin/vote.exe?year=2001&rollnumber=84)

Through the measure passed by the House, beneficiaries would save approximately $186 billion through 2011. However, in the decade after, the measure would save nearly six times that amount.

Representative Philip M. Crane (Republican-Illinois) said, "This is the most unfair, obscene and immoral tax. No American should have to pay 55 percent of his or her savings, business or farm when he or she dies."

On over $675,000 in estate assets, the estate tax effectively starts at 37 percent and builds to 55 percent for assets over $3 million. In any given year, about two percent of all estates will owe taxes.

Those hurt hardest are families in the middle. Even Republicans agree that the very wealthy might be able to afford the tax.

Often, children are forced to sell the small businesses and farms created by their parents, representing an unfair tax on money and assets that have already been taxed before according to Republicans.

The House defeated the Democratic alternative plan on a 227-201 vote that would immediately increase the current $675,000 estate-tax exemption to $2 million for an individual, $4 million for a married couple. (To see how your representative voted, visit http://clerkweb.house.gov/ cgi-bin/vote.exe?year=2001&rollnumber=82) According to the Democrats, their plan provides more relief for smaller estates than the Republican plan, which begins to phase in the tax by lowering the top rates first.

Since it leaves the estate tax in place, the Democratic plan ultimately fails argue Republican supporters. House Majority Whip Tom Delay (Republican-Texas) said, "Without full repeal, any death tax measure is a placebo. You've got to kill it by ending it once and for all."

In 2002, the measure would be worth about $4 million and in 2011 would be about $49 billion.

(John Godfrey, "House approves repeal of estate tax," The Washington Times, April 5, 2001; Curt Anderson, "House Eliminates Estate Tax by 2011," The Associated Press, April 4, 2001)

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