This Week on Capitol Hill

President Bush’s economic growth and jobs creation plan is under attack from both sides of the aisle. Both chambers’ moderate Republicans concerned with the deficit and the price of war and reconstruction are looking to significantly alter the size of the tax cut during this week’s budget process. Chances for economic growth and future balanced budgets will we be severely handicapped if Congress fails to approve a budget conference report that carves out room for the entire $726 billion tax cut package. Presently, both resolutions prescribe for the entire tax cut and controls federal spending, but Democrats and moderate Republicans are doing their best whittle away at the tax cut.

In the Senate, a bi-partisan group of legislator led by Senators John Breaux (D-Louisiana), Max Baucus (D-Mont.), Olympia Snowe (R-Maine), and George Voinovich (R-Ohio) are whipping up votes for an amendment to the budget resolution that would slash the tax cut to about $350 billion; the amendment it would essentially eliminate the provision to repeal the double taxation of dividends. Needless to say, Democrats will offer up a surfeit of their own budget amendments.

It is impossible at this moment to predict the final makeup of the Senate’s budget resolution since events are so fluid. Republicans do not have a simple majority to pass the current resolution that includes the president’s entire tax cut package because of Sens. Snowe and Voinovich’s defection. However, the bi-partisan group lacks a majority too because the Democratic caucus is not fully on board with their tax cut plan. Sens. John McCain (R-Ariz.) and Lincoln Chafee (R-RI) are complicating matters further. They have stated that they will not support the current resolution with war imminent.

Meanwhile, the situation in the House does not look any better, as Republicans are jumping ship. The House resolution is similar to the Senate’s; however, the House version requires mandatory cuts from all federal programs – except for military and homeland security – over the budget’s 10 year period in order to balance the federal budget. Republicans are balking at this provision because of the potential political fallout from cuts in programs like Medicare, Medicaid, and government pension benefits.

Another obstacle in the budget process is the looming war with Iraq and its subsequent costs. Both budget resolutions as currently written do not include funding for the war or reconstruction; therefore, to fund the endeavor, the administration must submit a supplemental appropriation request to Congress immediately after war commences. Speculation has pinned the supplemental price tag at $95 billion, which would add to the nation’s very modest budget deficit.

However, this reality should be the impetus to pass a budget resolution that includes the president’s tax cut proposal. The only way the nation is going to get out of the red is through economic growth. Cutting the tax cut proposal in half by scuttling the repeal of the double taxation of dividends will result in minimal economic growth. The president’s has outlined a good plan to grow the economy and create jobs. Unfortunately, the way things are going in the House and Senate, the battle to get the full tax cuts enacted may be over in just a few more days.