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Press Release

    This Week on Capitol Hill

    03/27/2003

    President Bush’s tax cut took a short detour on Tuesday, when an amendment offered by Sen. John Breaux (D-La.) to cut the tax cut to $350 billion was approved by a 51-48 vote. Three Republican Senators, Olympia Snowe (R-Maine), George Voinovich (R-Ohio), and Lincoln Chafee (R-R.I.) all voted with the majority to reduce the size of the tax cut. Democratic Sen. Zell Miller (D-Ga.) missed the vote. Though it seems the president’s tax cut number is in jeopardy, there are more steps in the budget process that may provide an opportunity to gain back the lost dollars.

    First, a brief explanation on the budget process is in order. Simply put, the budget process goes like this: Both the House and Senate debate their respective budget resolutions that includes government spending levels for the next fiscal year and the price of any tax cuts. Each chamber will vote on their respective resolutions. If approved, each resolution will go to a budget conference committee to iron out the differences between the two resolutions. The conference committee will agree to a compromise resolution and then each chamber will have to vote on the new compromised resolution. If both chambers approve, the Congress has a new fiscal budget to work from when they appropriate funding for the federal government, and when they write tax cut legislation. Reaching an agreement on the federal budget is the first step to enact new tax cuts. The budget does not create the tax cut bill; it merely sets overall government spending for the next fiscal year. The House Ways and Means and the Senate Finance Committees actually write any tax cut legislation.

    One more important feature on the budget: if legislators can agree to a tax cut number during the budget process, it’s much easier to pass tax cut legislation in the Senate, because the tax cut plan is then filibuster proof. Without a budget resolution that includes directives called reconciliation instructions, any tax cut legislation marked up by the tax writing committees will need 60 votes in the Senate to pass.

    Today, the Senate will vote on their budget resolution, and more likely than not, they will vote to set overall government spending for fiscal year 2004 at $2.2 trillion, and include in it the $350 billion tax cut language. Conversely, the House passed their budget resolution last week, which set government spending at $2.2 trillion for fiscal year 2004, and included $726 billion in tax cuts over ten years. When the Senate passes their resolution, it will go to conference. There, the president may get some of his tax cuts back.

    Because the House has hewed to the president’s tax cut number, House budget conferees will surely push their Senate counterparts to increase the tax cut from their $350 billion position. Though it’s not certain, the final tax cut number that comes out of conference will be higher than the $350 billion that the Senate supported. The House should approve the conference resolution without much fanfare; as for the Senate, it will be difficult, but things look favorable.

    You may be asking, “how will senators support a number higher than $350 billion that comes out of conference?” Well, though Senators Snowe and Voinovich voted for the Breaux amendment to cut the tax cut, they both have stated that they will vote for a final budget conference resolution – even if it contains a higher tax cut number. That is because both favor having a budget than not having one. Remember, Senate Republicans blasted their Democratic counterparts all last year because the Democrats, then in control of the Senate, failed to pass a budget, which wreaked havoc in the Senate. In fact, Republicans used this fact as an election issue, though it was a minor one. The last thing Republicans want is a reversal of fortune. Moreover, the odds are very good that Sen. Zell Miller will vote with the Republicans on the conference budget resolution. That will put the Senate in a deadlock 50-50 tie, which by Senate rules, the vice-president must break.

    A conference on the budget should take place on or near April 1. Legislators hope to have a conference report voted on and approved by the April recess, which starts on April 14.

    Medical malpractice legislation in the Senate

    Action on medical malpractice insurance reform is taking place in the Senate. Sen. Diane Feinstein (D-Calif.) is pushing a proposal intended to follow the House’s lead on addressing the serious crisis affecting the healthcare community. Unlike the House measure passed a few weeks ago, which limits “non-economic” awards for “pain and suffering” $250,000, Sen. Feinstein’s plan would cap “non-economic” damages at $500,000, and would make special exemptions for severe disfigurement, disability, or death due to gross medical errors.

    Though history has not been kind to medical malpractice reform measures in the Senate, bipartisan sponsorship may just be the key to making reform a reality. (The House has passed reform legislation the last couple of years only to see the issue die in the other chamber.) Senate Majority Leader Frist (R-Tenn.) and Majority Whip Mitch McConnell (R-Ky.), who has in recent years led malpractice reform in the Senate, are both are supporting Feinstein’s effort. Feinstein should introduce her proposal to the relevant Senate subcommittee in the very near future.