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House Republicans Pass Final Part of $95 Billion in Tax Cuts

By Edmund L. Andrews


The House passed the last and biggest part of $95 billion in tax cuts on Thursday, a move that reflected the willingness to place tax cuts above the risk of higher deficits in years to come.

Voting 234-197, almost purely along party lines, the House approved $56 billion in tax cuts over five years, one day after it passed other tax cuts totaling $39 billion over five years. The biggest provision would extend President Bush’s 2001 tax cut for stock dividends and capital gains for two years at a cost of $20 billion.

That was welcome news for a president whose tax plans looked all but dead a few weeks ago. All the maverick Republican conservatives in House, who had pushed party leaders to pass $51 billion in spending cuts, voted enthusiastically for tax cuts costing nearly twice as much.

“Clearly, tax relief is part of the deficit solution, not part of the problem,” said Rep. Jeb Hensarling, R-Texas and one of the mavericks. “More economic growth and more jobs means more tax revenue flowing into the federal Treasury. Tax revenues are up close to 15 percent, the highest level in U.S. history, and the budget deficit has shrunk by more than $100 billion.”

That view is not shared by all. Alan Greenspan, chairman of the Federal Reserve, urged lawmakers last month not to approve more tax cuts unless they cut spending by at least the same amount.

The budget that the House passed just before Thanksgiving would cut $51 billion over five years from programs like Medicaid, food stamps, farm subsidies and child-support enforcement. The Republican-controlled Senate passed a much more cautious tax package just before Thanksgiving. The Senate bill would cut taxes by $60 billion over five years, and it would not extend the tax cut on stock dividends.

The conflict between the House and Senate bills is unlikely to be resolved before Congress recesses for Christmas.

Lawmakers made progress in another area as House and Senate negotiators reached a compromise to extend the anti-terrorism law known as the Patriot Act. Experts expect a vote on the question early next week, but some Democrats are threatening a filibuster.

The conflict between the tax bills means that taxpayers will face uncertainty about a long list of popular tax cuts that are set to expire at the end of 2005.