The House passed its FY 2004 budget resolution last week, officially kicking off the Congressional budget debates for the coming fiscal year. The Senate voted to preserve all but $100 billion of the President’s tax cut, but won’t complete work on the budget resolution until Wednesday, March 26. Though the budget resolutions of each chamber reflect much of the President’s own budget proposals, and especially his $726 billion tax cut, neither resolution passed without a great deal of effort among Republican leaders to ensure that Congressional members voted together.

The House passed its FY 2004 budget resolution last week, officially kicking off the Congressional budget debates for the coming fiscal year. The Senate voted to preserve all but $100 billion of the President’s tax cut, but won’t complete work on the budget resolution until Wednesday, March 26. Though the budget resolutions of each chamber reflect much of the President’s own budget proposals, and especially his $726 billion tax cut, neither resolution passed without a great deal of effort among Republican leaders to ensure that Congressional members voted together.

House Proposals
In the House, the budget resolution passed on a very tight vote of 215-212, following an effort by 11 Republican moderates to limit the size of the tax cuts. In a letter to House Speaker Denny Hastert (R-IL) and House Budget Committee Chair Jim Nussle (R-IA), the 11 noted that the “the resolution reflects a significant imbalance between tax cuts and spending for federal mandatory and discretionary programs” and does not adequately recognize “the value of the federal role in critical programs impacting millions of Americans.” According to George Krumbhaar, of Gallery Watch’s USBudget.com, despite these reservations, which did not even reference the massive costs of the war in Iraq and the rebuilding effort to follow, “Ultimately, the leadership persuaded enough members to support it on the grounds of patriotism, and that some of their concerns would be taken care of in conference.”

The House Budget Committee’s budget resolution, which provides for the President’s $700 billion new “growth plan” of tax cuts by protecting it under special the Congressional budget reconciliation rules, all but guarantees that some very large tax cut will be enacted later this year. Included among the programs that the House proposes to cut to pay for these and other proposed tax breaks are veterans benefits, Medicaid, Food Stamps, and farm programs. This budget resolution also marks its effort to proceed to reduce the long-term budget deficits by eliminating one percent of spending that falls under the vague characteristics of “waste, fraud or abuse” in mandatory programs. (For more on these cuts, see the Center on Budget and Policy Priorities analysis.)

Support for this budget resolution defeated the 4 alternatives put forth by various House coalitions. The House Democrats proposed an alternative that would have included a much smaller tax cut – the $136 billion proposed for 2003 earlier this year as an alternative to the President’s “Economic Growth” package – and funding for domestic security, the environment, and many other domestic programs that the Republican budget cut, as well as $528 billion for a prescription drug plan (compared to the Republicans’ $400 billion). The proposal offered by the House Blue Dog Coalition (comprised of moderate to fiscally conservative Democrats), while maintaining spending levels suggested in the President’s budget, would have accelerated tax cuts in the lower rates, provided “immediate estate tax relief,” and delayed the tax cuts in the upper brackets to allow for funds for the war in Iraq or domestic security. At opposite ends of the spectrum, the House Congressional Black Caucus and the Progressive Caucus (comprised mainly of liberal Democrats) offered a proposal to freeze all of the tax cuts, but include a $300 billion economic stimulus package, while the conservative House Republican Study Group actually provided for more guaranteed tax cuts (a full $1.6 trillion over the next 10 years) and proposed a 1-year freeze on discretionary spending.)

Senate Debate
Like the House budget resolution, the Senate Budget Committee’s budget resolution provided for the protection of reconciliation rules for the President’s $726 billion tax cut, while also including an additional $600 billion to provide for tax cuts (such as making the 2001 tax cuts permanent) outside of these rules. A bipartisan group, led by Sens. John Breaux (D-LA) and Olympia Snowe (R-ME), concerned about the impact on the deficit of these massive tax cuts, offered an amendment that would have limited the tax cuts to $350 billion. Arguing that the Senators were faced with a very different situation than in June 2001, when they passed the President’s $1.35 trillion tax cut, Breaux reminded his colleagues that, “tax cuts are not free” and that “we do not reduce taxes in a time of war.” Senate Budget Committee chair Don Nickles (R-OK) responded that reducing the tax cut down to a relatively smaller $350 billion would “take the growth out of the growth package.” This effort to limit the damage caused by the President’s tax cuts failed 38-62. As noted in the Washington trade publication BNA, however, the “lopsided final vote tally on the amendment was deceiving because several Democrats who originally favored it switched their votes to ‘no’ when it became clear the amendment would lose.” Some senators, including John McCain (R-AZ), Fritz Hollings (D-NC), and Lincoln Chafee (R-RI) opposed any tax cuts and refused to support this smaller tax cut package, resulting in the passage of the Nickles plan. Had they voted for the $350 billion in tax cuts, the smaller tax cut package would have prevailed

The one successful effort to limit the $726 billion tax cut came in the form of an amendment offered by Sen. Russ Feingold (D-WI). Feingold’s amendment, which passed in a 52-47 vote, sets aside $100 billion of the tax cut in a reserve fund “for possible military action and reconstruction in Iraq.”

On Wednesday, March 26, the Senate will resume voting on the remaining amendments and then will vote on the overall budget resolution. As noted in an op-ed in the Washington Post on March 23, there is great concern that many of the original opponents to the larger tax cut will support the budget resolution, huge tax cut and all, just to move the budget resolution along. These Senators must be reminded that the budget they are voting on will set the priorities of our nation for years to come and that we don’t want and can’t afford massive, unending and costly tax breaks at the expense of all the other needs that exist right now.