Yielding to what the Associated Press called "the realities of the divided Senate," the administration gave up on the $1.6 trillion tax cut that had been the centerpiece of the Bush economic plan since he began seeking the Republican nomination, and settled for "the best deal he could get." The agreement worked out among White House officials and congressional leaders of both parties was nearly identical to what Sen. John Breaux of Lousiana and other moderates had said was the largest tax package they would support. It called for a $1.25 trillion tax cut over the next ten years, plus $100 billion this year and next.
While calling the agreement "a step in the right direction" because it reduced the president's proposed tax cut, Senate majority leader Tom Daschle said he would oppose the budget because of inadequate provisions for education and other programs. Republicans were expected to claim credit for one of the largest tax cuts in decades, but the 22% reduction in the Bush proposal highlighted the limitations on the administration's power that comes with an evenly divided Senate.
On April 6 the Senate handed the Bush administration what the Associated Press called a "stinging defeat," the when it approved a budget that reduced the administration's "Goldilocks" $1.6 trillion tax cut by 25%. Despite Bush's road trip to 22 states, and having made the tax cut the centerpiece of his campaign and economic program, two Republican Senators refused to side with the administration. Lincoln Chafee of Rhode Island backed the Democrats' alternative proposal, and James Jeffords of Vermont refused to support the administration's tax cut without guarantees of $150 billion in education aid for the disadvantaged.
Although Senator Zell Miller of Georgia sided with the Republicans, without the support of Senators Chafee and Jeffords the administration's proposal could not pass the evenly divided Senate. A compromise measure passed by a vote of 65 to 35. The bill provides for $25 billion more spending than the administration wanted, with the additional funds to be used for programs ranging from education to assistance for nations battling AIDS epidemics. It represents a spending increase next year of 8% -- double the 4% the administration had sought. The measure also increases to $85 billion the funds designated for tax relief in the current year, or an increased refund of about $200 to the average taxpayer.
Earlier it had appeared that the administration might have the votes to pass the entire $1.6 trillion tax cut. Democrats lost what was regarded by some as a test vote on a proposal to reduce the tax cut by $158 billion and apply the funds to a prescription drug plan. Democrat Miller and Republican Chafee each voted with the opposing party, creating a 50-50 tie which Vice President Cheney broke. Senator Jeffords defection from Republican ranks on April 4, however, tipped the balance, leading to a proposed $450 billion reduction in the tax cut by the Democrats. Republicans worked throughout the day attempting to round up supporters, and expected to be able to reverse the vote. Their efforts throughout the week, characterized as "frantic" and "fitful" by CBS News ultimately failed to do so, however.
The loss in the Senate nearly a month ago came at the end of a week that also saw the largest loss of jobs since Dubya's father was President -- a fact that had underscored the inflexibility of the Bush position. The administration's blind insistence that its huge tax cut, conceived during an economic boom, was some kind of economic ideal, and its refusal to modify its position in the face of political or economic realities, was seen by some observers as having set themselves up for defeat. The Washington Post reported in March that Bush advisors believed early victories would demonstrate Bush's stature as a leader who could produce results. As Tom Mann of the Brookings Institution put it, "He's not setting himself up on the big issues for big concessions later on. He's setting himself up to win or lose."
Republican legislators and administration officials had declared the April 6 vote a victory, calling the result "fairly close to what the president wanted." Democrats pointed out that the 25% reduction was significant. Minority leader Tom Daschle said, "If this is a victory for them then we want more victories just like it." Daschle also chided the administration for holding campaign-style rallies in states with Democratic senators. "They chose to take an approach that was far more confrontational.," he said. "And he got beat." Stan Collender, a budget analyst at the Fleishman-Hillard Inc. public relations firm called the earlier Senate action, "a real political body blow to the White House."
A key figure in the compromise legislation was Senator John Breaux of Louisiana. Senator Breaux characterized the April 6 vote as a rejection of the administration strategy to try to push legislation along party lines and use Vice President Cheney to break ties. But Breaux was able to bring Senators Chafee and Jeffords together with 14 Democrats to support a tax cut somwhere between what the administration advocated and what Democratic congressional leadership was proposing. Breaux and Chaffee, whose father John was a noted moderate during his long Senate career, have often been allied. Jeffords is regarded as something of a maverick, and refused to side with the administration because he wanted more funds for education.
While the "budget resolution," only describes the outline of a budget, the process established two important facts. It showed that the administration did not have enough votes in the Senate to pass the full $1.6 trillion tax cut. And it showed that in this evenly divided Senate, every vote can be crucial.
Following the April 6 vote Senator Bennett of Utah was among the Republicans suggesting that the Democrats were only interested in seeing "that President Bush will not get his tax cut," and in promoting news headlines proclaiming Bush's defeat. Democratic motives notwithstanding, headlines described the earlier Senate action as a defeat for the administration. And today's headlines reinforce the limitations of administration power with the Senate evenly divided.
"GOP Leaders Hope to Wrap Up Budget" Associated Press. 2 May 2001
Rosenbaum, David E. "Senate Approves a Budget Lower Than Bush Proposed" New York Times 6 Apr. 2001.
Rosenbaum, David E. "Senate G.O.P. Leaders Cite Lack of Votes for Bush's Full Tax Plan" New York Times 6 Apr. 2001.
Roberts, William, Robert Gravely and Rob Wells. "Senate Approves Budget Reducing Bush Tax Cut by 25% (Update 4)" Bloomberg.com 6 Apr. 2001.