Senate a major threat to Bush tax plan

There was little sign of bipartisanship on the floor of the House this week as Republicans triumphantly railroaded through some…

There was little sign of bipartisanship on the floor of the House this week as Republicans triumphantly railroaded through some $985 billion in tax cuts. This is the first part of President George Bush's $1.6 trillion 10-year package.

At the end of the day on Thursday, in the face of bitter Democratic complaints that the new administration was pandering to the rich and spending money it did not know it had, the bill was approved by 230 to 198. Ten Democrats and one Independent defected to the ranks of the majority.

It was an important symbolic victory, but Bush supporters will know only too well that the next hurdle was always going to be more difficult, the evenly divided Senate.

On Thursday Mr Bush fired the first shot by taking his nationwide hustings-like campaign for his tax cuts to South Dakota, the home state of the Senate minority leader, Mr Tom Daschle.

READ MORE

His purpose, in a style reminiscent of the Bill Clinton "permanent campaign", was to put pressure on first-term senator Mr Tim Johnson, who was elected with a 51 per cent vote and faces the electorate again next year.

There is an sense among the Democratic leadership that they have given Mr Bush too much freedom in his early days and a new determination to toughen up in the Senate. There, with the party balance at 50-50 and some 20 senators in the centre from both parties liable to cross the lines, Mr Bush will have an almost impossible time preserving his proposals intact.

Some Republicans in the Senate have already come out against the scale of tax cut proposed and life has been further complicated for the President by the emergence of a group of 11 senators who are saying their support will be conditional on tax cuts being linked to a "trigger" mechanism. If budget performance does not match up to predictions, the tax cuts would be trimmed accordingly.

The conservative "Blue Dog" Democrats, whom the Republicans had hoped to woo, have been distancing themselves rapidly. Although passionate advocates of tax cuts, they are even more passionate about paying down the national debt.

The Senate Majority Leader, Mr Trent Lott's problems are exacerbated by the growing concern about the state of health of the 98-year-old Mr Strom Thurmond, South Carolina's once formidable but now failing senator. His attendance record in the chamber is deteriorating and he appears at times to be very confused. Mr Thurmond's vote would be crucial in a likely tie situation.

Meanwhile, arguments about the effect of the tax cuts have not been resolved by new figures from the Treasury. These confirm the claims by the Administration that in percentage terms the lower-paid get bigger concessions than the rich - a worker on less than $30,000 would actually get a tax break equivalent to 136 per cent (in effect a pay increase, once changes in health contributions are factored in).

On the other hand, someone on $200,000 plus would get a tax cut of 8.9 per cent. Quod erat demonstrandum, say the Bush team: the tax breaks are geared to those most in need.

True, but looked at another way, the opposite conclusion is also valid, perhaps more valid: as a share of total tax concessions those earning less than $30,000 will receive some 9.3 per cent of the cash being handed back, while those on over $100,000 will receive 45.2 per cent of the same.

Patrick Smyth

Patrick Smyth

Patrick Smyth is former Europe editor of The Irish Times