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Hey, It Worked for the Romans

The Bush administration's foreign policy is centered around fighting a highly expensive counterinsurgency in Iraq. The administration's domestic policy is centered around driving federal tax revenues to ever-lower levels. Some observers say there's an unsolvable contradiction here. I say those people just aren't thinking creatively enough. There's a simple, logical way to reconcile President Bush's foreign and domestic policies: Start demanding tribute from foreign countries.

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Hey, It Worked for the Romans

BY JONATHAN CHAIT

The Bush administration's foreign policy is centered around fighting a highly expensive counterinsurgency in Iraq. The administration's domestic policy is centered around driving federal tax revenues to ever-lower levels. Some observers say there's an unsolvable contradiction here. I say those people just aren't thinking creatively enough. There's a simple, logical way to reconcile President Bush's foreign and domestic policies: Start demanding tribute from foreign countries.

01/07/2005
Privatized Accounts Moved to 'Fast Track'

WASHINGTON — President Bush on Thursday set the stage for a monumental legislative battle by placing Social Security reform at the top of his second-term agenda, even though he acknowledged that no long-term fix would be pain-free. Although he did not embrace a specific blueprint, Bush said the starting point for discussions was a set of recommendations that in all likelihood would run up the federal debt and reduce government-paid benefits for workers who chose to set up private retirement accounts.

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Privatized Accounts Moved to 'Fast Track'

BY Warren Vieth and Janet Hook

WASHINGTON — President Bush on Thursday set the stage for a monumental legislative battle by placing Social Security reform at the top of his second-term agenda, even though he acknowledged that no long-term fix would be pain-free. Although he did not embrace a specific blueprint, Bush said the starting point for discussions was a set of recommendations that in all likelihood would run up the federal debt and reduce government-paid benefits for workers who chose to set up private retirement accounts.

11/05/2004
Bush Makes His Pitch for 'Ownership Society'

WASHINGTON — In George W. Bush's America, there seem to be few societal problems a little ownership wouldn't help solve. Social Security in trouble? Let workers set up private accounts to partially finance their own retirements. Healthcare system broken? Get Americans to self-insure and monitor their own medical expenses. Communities in distress? Help more low-income people buy homes.

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Bush Makes His Pitch for 'Ownership Society'

BY Warren Vieth

WASHINGTON — In George W. Bush's America, there seem to be few societal problems a little ownership wouldn't help solve. Social Security in trouble? Let workers set up private accounts to partially finance their own retirements. Healthcare system broken? Get Americans to self-insure and monitor their own medical expenses. Communities in distress? Help more low-income people buy homes.

09/05/2004
Key idea for Bush agenda: Ownership, society

WASHINGTON -- With the Republican National Convention approaching, the lack of details offered by President Bush for a second-term domestic policy agenda has left some conservative activists worrying aloud about The Vision Thing. See more coverage of the Republican National Convention But others make the case that while the individual pieces of Bush's emerging agenda might not appear that weighty or new, they still add up to something big.

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Key idea for Bush agenda: Ownership, society

BY Warren Vieth

WASHINGTON -- With the Republican National Convention approaching, the lack of details offered by President Bush for a second-term domestic policy agenda has left some conservative activists worrying aloud about The Vision Thing. See more coverage of the Republican National Convention But others make the case that while the individual pieces of Bush's emerging agenda might not appear that weighty or new, they still add up to something big.

08/29/2004
Bush Yet to Flesh Out Domestic Agenda

WASHINGTON — With only a week to go before the Republican National Convention, the lack of details in President Bush's second-term domestic policy agenda has left some conservative activists worrying aloud about the Vision Thing. But analysts from both parties make the case that although the individual pieces of Bush's emerging agenda may not appear that weighty or new, they still add up to something big.

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Bush Yet to Flesh Out Domestic Agenda

BY Warren Vieth

WASHINGTON — With only a week to go before the Republican National Convention, the lack of details in President Bush's second-term domestic policy agenda has left some conservative activists worrying aloud about the Vision Thing. But analysts from both parties make the case that although the individual pieces of Bush's emerging agenda may not appear that weighty or new, they still add up to something big.

08/23/2004
FOR THE RECORD

Executive pay -- An article in Sunday's Business section about executive perks misidentified Scott Klinger's organization. Klinger is co-director of the responsible wealth project at United for a Fair Economy, not Citizens for a Sound Economy.

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FOR THE RECORD

Executive pay -- An article in Sunday's Business section about executive perks misidentified Scott Klinger's organization. Klinger is co-director of the responsible wealth project at United for a Fair Economy, not Citizens for a Sound Economy.

06/17/2003
Outgunned, Texas Democrats Vamoose

In an act of political subterfuge, at least 53 Democratic legislators packed their bags, disappeared from the Capitol and apparently scattered across the Southwest on Monday as Texas Rangers searched for them, bringing a divisive legislative session to an abrupt halt. Under state law, Republicans -- who control the governor's mansion, the state Senate and the state House for the first time since the 19th century -- need 100 of 150 legislators on the floor of the House before they can conduct the people's business. Now they don't have a quorum, and with Thursday the last day legislation can be sent to the Senate, the conservative agenda they've effectively waited 130 years to advance could die. The Democrats' maneuver came, not coincidentally, as Republicans were preparing to redraw congressional districts, allowing the GOP to take as many as seven congressional seats away from Democrats in the next election cycle. Democrats currently hold a slim majority of the state's congressional seats, and the GOP plan could cement the Republican Party's hold on power in Washington. Texas House Speaker Tom Craddick, a Republican, was not impressed by the walkout. "Get back to Austin and get back to work," he warned the Democrats. As his compatriots whistled the Star Spangled Banner on the floor of the House, Craddick ordered the chamber's doors locked. Then, citing an obscure provision in the Texas Constitution allowing members of the House to demand a quorum of their peers, he asked the chamber's sergeant-at-arms to find the Democrats. Texas Department of Public Safety spokesman Tom Vinger confirmed Monday night that three of his department's law enforcement divisions, including the fabled Texas Rangers, were on the case. The Democrats had vowed to stay in hiding until the Thursday deadline passed. But according to Associated Press, troopers were sent to a Holiday Inn in Ardmore, Okla., late Monday to tell 40-plus members gathered there to return to Austin. It was unclear how Republicans learned of the Democrats' whereabouts. The rebel lawmakers were planning a news conference today. At midnight, legislators in jeans and casual shirts milled about a conference room near the rear of the Oklahoma hotel lobby. Rep. Pete Gallego of Alpine said the lawmakers, whose numbers he wouldn't release, arrived Sunday night. Asked how long they would stay, he said, "That remains to be seen." According to published reports and interviews with aides and legislative officials, the Democrats not only hatched a secret plan to escape Austin, they leaked false plans to the Republican leadership in recent days to cover their tracks. According to published reports and interviews with aides and legislative officials, the Democrats not only hatched a secret plan to escape Austin, they leaked false plans to the Republican leadership in recent days to cover their tracks. Some of the legislators didn't know where they were going until they left, said aides who have since spoken with them by telephone. And correctly assuming that Craddick would send troopers and rangers to arrest them, they split into groups and headed for several states, including Oklahoma and New Mexico. Texas Gov. Rick Perry dispatched his attorneys Monday to ask neighboring states whether his troopers and rangers could make arrests there. Though other states were looking into it late Monday, New Mexico's Atty. Gen. Patricia A. Madrid said no. She said Texas authorities would need to issue warrants for the legislators' arrest. Only then, she said, would New Mexico authorities be able to arrest them -- and even then the two states would need to discuss extradition proceedings. "I have put out an all-points bulletin for law enforcement to be on the lookout for politicians in favor of health care for the needy and against tax cuts for the wealthy," said Madrid, a Democrat. Asked in an interview where his bosses are, Dean Rindy, a political advisor to the Democratic House Caucus, said: "I don't know. And I don't want to know." "They vanished into the night," he said. "Gone with the wind." Rindy dismissed rumors circulating that the Democrats ditched their cellular phones en masse in case any of them, in a moment of weakness, call home and give away their whereabouts. "To pry a cell phone from a politician's hand would be unprecedented," he said. "I doubt that." In a ploy audacious even by the standards of Texas politics, one of the GOP's new congressional districts would be composed of two Republican-leaning areas, one north of Austin and one in the Rio Grande Valley -- 300 miles away. The two areas would be connected by a mile-wide ribbon of land and have been dubbed a "community of interest." Democrats say U.S. House Majority Leader Tom DeLay, a Republican from Sugar Land, Texas, is behind the push for the new congressional districts. DeLay could not be reached for comment. "We did not choose our path. Tom DeLay did," the missing Democrats said in a prepared statement. "Our House rules, including those regarding a quorum, were adopted precisely to protect the people from what is before the House today -- the tyranny of a majority... The redistricting plan ... is the ultimate in political greed -- it is undemocratic, unjust and unprecedented. It's a power grab by Tom DeLay, pure and simple." It's not that simple, however, and the Democrats' walkout was about more than redistricting. Texas had long been a bastion of Democratic power, but the party began to falter in the 1980s, largely when white, suburban voters turned away from liberal social policies and toward the conservative wing. In 2002, Democrats assembled what they termed a "dream team" of candidates and declared it the "year of the comeback." It was a monumental flop. Largely because of President Bush's influence and fund-raising prowess, the Democrats did not capture a single statewide election. Politically, Republicans may be more powerful here than they are in any other state but they could not have picked a worse time to take control. Texas, though it spends less per capita than almost any other state, is in dire financial trouble, facing a $10-billion budget shortfall over the next two years. Many Texans, however, expect little more from their government than properly operating traffic lights, and raising taxes is tantamount to political suicide for Republicans. The alternative to raising taxes, though, is a series of dramatic cuts in social services that have shocked even many moderates here. The Republican leaders say they are trying to be good fiscal wards in difficult economic times. But they have proposed, among other things, reclassifying 56,000 elderly and disabled people so they are no longer "frail" -- making them ineligible for Medicaid. An estimated 250,000 children from low-income families would be removed from the rolls of the Children's Health Insurance Program. Money set aside to replace antiquated textbooks in public schools has been cut, and teachers' health insurance benefits are expected to drop considerably. The budget bill containing those provisions is among those that could die this week because of the Democrats' walkout. Democrats also disagree with a host of other Republican legislation that is expected to pass, including one bill that limits damages in medical malpractice cases, restricts class-action lawsuits and shields some corporations from defective product claims. "The Democrats in the Texas House of Representatives have taken a stand on principle," said Texas Democratic Party Chairwoman Molly Beth Malcolm. "They are not going to allow themselves to be run over by Tom DeLay, Tom Craddick and the rest of the far right-wing Republicans who care more about their party's agenda than what is best for Texas. The Republicans will attempt to call them obstructionists. They are heroes." According to Craddick, they are cowards. "It's not a disgrace to stand and fight, but it is a disgrace to run and hide," he said. The Texas Legislature meets just once every two years, for 140 days, during which, on average, more than 8,000 bills are proposed and more than 1,000 are debated and approved. That means every day counts, said Peggy Venable, the Austin-based state director of Citizens for a Sound Economy, which fights for lower taxes and less government regulations. "They are supposed to do the people's business. Instead they are taking a vacation at taxpayer expense," she said in an interview. "They are acting like truant schoolchildren. Democrats don't seem to know how to be in a minority. It is time they grow up." The Democrats' maneuver is not without precedent. Twenty-four years ago, 12 Texas state senators went on a similar strike, refusing to work at the Capitol. They hid in an Austin apartment for several days while Texas Rangers and other law enforcement authorities searched for them.

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Outgunned, Texas Democrats Vamoose

BY Scott Gold

In an act of political subterfuge, at least 53 Democratic legislators packed their bags, disappeared from the Capitol and apparently scattered across the Southwest on Monday as Texas Rangers searched for them, bringing a divisive legislative session to an abrupt halt. Under state law, Republicans -- who control the governor's mansion, the state Senate and the state House for the first time since the 19th century -- need 100 of 150 legislators on the floor of the House before they can conduct the people's business. Now they don't have a quorum, and with Thursday the last day legislation can be sent to the Senate, the conservative agenda they've effectively waited 130 years to advance could die. The Democrats' maneuver came, not coincidentally, as Republicans were preparing to redraw congressional districts, allowing the GOP to take as many as seven congressional seats away from Democrats in the next election cycle. Democrats currently hold a slim majority of the state's congressional seats, and the GOP plan could cement the Republican Party's hold on power in Washington. Texas House Speaker Tom Craddick, a Republican, was not impressed by the walkout. "Get back to Austin and get back to work," he warned the Democrats. As his compatriots whistled the Star Spangled Banner on the floor of the House, Craddick ordered the chamber's doors locked. Then, citing an obscure provision in the Texas Constitution allowing members of the House to demand a quorum of their peers, he asked the chamber's sergeant-at-arms to find the Democrats. Texas Department of Public Safety spokesman Tom Vinger confirmed Monday night that three of his department's law enforcement divisions, including the fabled Texas Rangers, were on the case. The Democrats had vowed to stay in hiding until the Thursday deadline passed. But according to Associated Press, troopers were sent to a Holiday Inn in Ardmore, Okla., late Monday to tell 40-plus members gathered there to return to Austin. It was unclear how Republicans learned of the Democrats' whereabouts. The rebel lawmakers were planning a news conference today. At midnight, legislators in jeans and casual shirts milled about a conference room near the rear of the Oklahoma hotel lobby. Rep. Pete Gallego of Alpine said the lawmakers, whose numbers he wouldn't release, arrived Sunday night. Asked how long they would stay, he said, "That remains to be seen." According to published reports and interviews with aides and legislative officials, the Democrats not only hatched a secret plan to escape Austin, they leaked false plans to the Republican leadership in recent days to cover their tracks. According to published reports and interviews with aides and legislative officials, the Democrats not only hatched a secret plan to escape Austin, they leaked false plans to the Republican leadership in recent days to cover their tracks. Some of the legislators didn't know where they were going until they left, said aides who have since spoken with them by telephone. And correctly assuming that Craddick would send troopers and rangers to arrest them, they split into groups and headed for several states, including Oklahoma and New Mexico. Texas Gov. Rick Perry dispatched his attorneys Monday to ask neighboring states whether his troopers and rangers could make arrests there. Though other states were looking into it late Monday, New Mexico's Atty. Gen. Patricia A. Madrid said no. She said Texas authorities would need to issue warrants for the legislators' arrest. Only then, she said, would New Mexico authorities be able to arrest them -- and even then the two states would need to discuss extradition proceedings. "I have put out an all-points bulletin for law enforcement to be on the lookout for politicians in favor of health care for the needy and against tax cuts for the wealthy," said Madrid, a Democrat. Asked in an interview where his bosses are, Dean Rindy, a political advisor to the Democratic House Caucus, said: "I don't know. And I don't want to know." "They vanished into the night," he said. "Gone with the wind." Rindy dismissed rumors circulating that the Democrats ditched their cellular phones en masse in case any of them, in a moment of weakness, call home and give away their whereabouts. "To pry a cell phone from a politician's hand would be unprecedented," he said. "I doubt that." In a ploy audacious even by the standards of Texas politics, one of the GOP's new congressional districts would be composed of two Republican-leaning areas, one north of Austin and one in the Rio Grande Valley -- 300 miles away. The two areas would be connected by a mile-wide ribbon of land and have been dubbed a "community of interest." Democrats say U.S. House Majority Leader Tom DeLay, a Republican from Sugar Land, Texas, is behind the push for the new congressional districts. DeLay could not be reached for comment. "We did not choose our path. Tom DeLay did," the missing Democrats said in a prepared statement. "Our House rules, including those regarding a quorum, were adopted precisely to protect the people from what is before the House today -- the tyranny of a majority... The redistricting plan ... is the ultimate in political greed -- it is undemocratic, unjust and unprecedented. It's a power grab by Tom DeLay, pure and simple." It's not that simple, however, and the Democrats' walkout was about more than redistricting. Texas had long been a bastion of Democratic power, but the party began to falter in the 1980s, largely when white, suburban voters turned away from liberal social policies and toward the conservative wing. In 2002, Democrats assembled what they termed a "dream team" of candidates and declared it the "year of the comeback." It was a monumental flop. Largely because of President Bush's influence and fund-raising prowess, the Democrats did not capture a single statewide election. Politically, Republicans may be more powerful here than they are in any other state but they could not have picked a worse time to take control. Texas, though it spends less per capita than almost any other state, is in dire financial trouble, facing a $10-billion budget shortfall over the next two years. Many Texans, however, expect little more from their government than properly operating traffic lights, and raising taxes is tantamount to political suicide for Republicans. The alternative to raising taxes, though, is a series of dramatic cuts in social services that have shocked even many moderates here. The Republican leaders say they are trying to be good fiscal wards in difficult economic times. But they have proposed, among other things, reclassifying 56,000 elderly and disabled people so they are no longer "frail" -- making them ineligible for Medicaid. An estimated 250,000 children from low-income families would be removed from the rolls of the Children's Health Insurance Program. Money set aside to replace antiquated textbooks in public schools has been cut, and teachers' health insurance benefits are expected to drop considerably. The budget bill containing those provisions is among those that could die this week because of the Democrats' walkout. Democrats also disagree with a host of other Republican legislation that is expected to pass, including one bill that limits damages in medical malpractice cases, restricts class-action lawsuits and shields some corporations from defective product claims. "The Democrats in the Texas House of Representatives have taken a stand on principle," said Texas Democratic Party Chairwoman Molly Beth Malcolm. "They are not going to allow themselves to be run over by Tom DeLay, Tom Craddick and the rest of the far right-wing Republicans who care more about their party's agenda than what is best for Texas. The Republicans will attempt to call them obstructionists. They are heroes." According to Craddick, they are cowards. "It's not a disgrace to stand and fight, but it is a disgrace to run and hide," he said. The Texas Legislature meets just once every two years, for 140 days, during which, on average, more than 8,000 bills are proposed and more than 1,000 are debated and approved. That means every day counts, said Peggy Venable, the Austin-based state director of Citizens for a Sound Economy, which fights for lower taxes and less government regulations. "They are supposed to do the people's business. Instead they are taking a vacation at taxpayer expense," she said in an interview. "They are acting like truant schoolchildren. Democrats don't seem to know how to be in a minority. It is time they grow up." The Democrats' maneuver is not without precedent. Twenty-four years ago, 12 Texas state senators went on a similar strike, refusing to work at the Capitol. They hid in an Austin apartment for several days while Texas Rangers and other law enforcement authorities searched for them.

05/13/2003
Outgunned, Texas Democrats Vamoose With Rangers on Their Trail

AUSTIN, Texas -- In an act of political subterfuge, at least 53 Democratic legislators packed their bags, disappeared from the Capitol and apparently scattered across the Southwest on Monday as Texas Rangers searched for them, bringing a divisive legislative session to an abrupt halt. Under state law, Republicans -- who control the governor's mansion, the state Senate and the state House for the first time since the 19th century -- need 100 of 150 legislators on the floor of the House before they can conduct the people's business.

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Outgunned, Texas Democrats Vamoose With Rangers on Their Trail

AUSTIN, Texas -- In an act of political subterfuge, at least 53 Democratic legislators packed their bags, disappeared from the Capitol and apparently scattered across the Southwest on Monday as Texas Rangers searched for them, bringing a divisive legislative session to an abrupt halt. Under state law, Republicans -- who control the governor's mansion, the state Senate and the state House for the first time since the 19th century -- need 100 of 150 legislators on the floor of the House before they can conduct the people's business.

05/13/2003
Tax Down, but Not Out, in House's $550-Billion Plan

President Bush's prized effort to abolish taxes on dividend income was dealt a fresh setback in Congress on Thursday, as House Republicans unveiled a $550-billion tax cut bill that would fall short of that goal. The bill, backed by GOP leaders who are usually Bush's staunchest allies on Capitol Hill, would cut, but not eliminate, taxes on dividends. It would diverge from Bush's priorities by including a cut in capital gains taxes -- an aim long sought by congressional Republicans but omitted from the Bush tax program. Also, some of Bush's most popular tax breaks -- for small businesses, married couples and families with children -- would take effect for only three years under the bill; the president wants them on the books until 2013. The three-year limit is one way of keeping the bill's cost at $550 billion; the president's entire package would cost about $725 billion. Administration officials said the bill, expected to be approved by the House next week, is a step in the right direction. But they would not concede defeat in their efforts to entirely eliminate taxes on dividend income. "We are going to continue to fight for all the elements of the president's plan, which includes 100% abolition of the tax on dividends," said Commerce Secretary Don Evans. House Ways and Means Committee Chairman Bill Thomas (R-Bakersfield), principal author of the House bill, said the administration and its allies needed to accept the fact that the budget resolution approved by Congress last month was too tight to accommodate the $396-billion plan to eliminate dividend taxes. "They can't have their old plan," Thomas said. Under the budget resolution, the House is writing a bill to cut taxes by $550 billion through 2013, in deference to lawmakers' concerns about the growing federal budget deficit. In the Senate, where anti-deficit sentiment is even stronger, the tax cut is limited to $350 billion. The White House is hoping that at the least, final congressional negotiations will produce the $550-billion cut. The House tax bill includes all the major elements of Bush's plan -- albeit truncated in some instances -- as well as some additional business tax breaks favored by congressional Republicans. Major provisions of the bill would: * Speed up the scheduled reduction in income tax rates that were approved in 2001 but, under that law, are phased in over many years. Rates that were to take effect in 2006 would now kick in for 2003. * Increase from $600 to $1,000 the tax credit that families could take for each child. * Speed up to 2003 scheduled tax relief for married couples. Under the 2001 law, provisions to ease the so-called marriage penalty would not begin providing such relief until 2005, and would not be fully in effect until 2009. * Provide expanded tax relief for small businesses and new tax incentives to invest in computers and other equipment. To curb the cost of the tax cut, the bill resorts to a bookkeeping maneuver: The provisions on the child-credit, marriage-penalty and business tax relief all would apply only for 2003-2005, while other provisions -- including the dividend and capital gains cuts -- would apply to the full 11-year term of the bill. Critics denounced the maneuver as gimmickry. "The so-called increase in the child credit is a hoax," said Rep. Charles B. Rangel of New York, ranking Democrat on the Ways and Means Committee. "Like a magic trick, it's there and then it's gone again." Thomas acknowledged that the three-year limit on the politically popular family tax breaks was not intended to stand as policy. "No one believes there will be any difficulty in extending them," he said. Most of the controversy about Bush's proposal has centered on the dividend tax cut. He believes that plan would give a boost to the stock market and stimulate economic growth. He also promotes it as matter of principle on which it is hard to compromise: He wants to get rid of what he calls the "double taxation" of dividends -- the fact that taxes on profits are often paid twice, first by the corporation and then by shareholders when they receive dividends. But because the price tag of eliminating dividend taxes is so high, Republicans have been looking for ways to trim its cost to leave room for other priorities. The idea initially got a cool reception from Republicans in Congress in part because it was a relatively new idea without a strong constituency in Congress -- unlike, for example, tax relief for married couples, an issue long pushed by conservative family groups. The compromise endorsed by House Republican leaders would reduce and simplify taxes on investment income. Under current law, dividends are taxed as ordinary income, while taxes on capital gains are 20% for most taxpayers and 10% for lower-income people. Under the House bill, taxes on both dividends and capital gains would be 15% for most people and 5% for lower-income people. It is a compromise that pleased the many House Republicans who long have championed a reduction in capital gains taxes -- and had privately expressed disappointment that it was not part of the president's plan. The House bill also was good news for high-technology companies, which were lukewarm about the president's dividend tax cut because many of them do not offer dividends. But it was criticized by die-hard proponents of eliminating all dividend taxes. "The dividend tax repeal is the main engine of growth in the president's jobs and growth package," said Paul Beckner, president of Citizens for a Sound Economy. "I say to the administration and Congress: Don't stunt the growth in the growth package."

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Tax Down, but Not Out, in House's $550-Billion Plan

BY Janet Hook

President Bush's prized effort to abolish taxes on dividend income was dealt a fresh setback in Congress on Thursday, as House Republicans unveiled a $550-billion tax cut bill that would fall short of that goal. The bill, backed by GOP leaders who are usually Bush's staunchest allies on Capitol Hill, would cut, but not eliminate, taxes on dividends. It would diverge from Bush's priorities by including a cut in capital gains taxes -- an aim long sought by congressional Republicans but omitted from the Bush tax program. Also, some of Bush's most popular tax breaks -- for small businesses, married couples and families with children -- would take effect for only three years under the bill; the president wants them on the books until 2013. The three-year limit is one way of keeping the bill's cost at $550 billion; the president's entire package would cost about $725 billion. Administration officials said the bill, expected to be approved by the House next week, is a step in the right direction. But they would not concede defeat in their efforts to entirely eliminate taxes on dividend income. "We are going to continue to fight for all the elements of the president's plan, which includes 100% abolition of the tax on dividends," said Commerce Secretary Don Evans. House Ways and Means Committee Chairman Bill Thomas (R-Bakersfield), principal author of the House bill, said the administration and its allies needed to accept the fact that the budget resolution approved by Congress last month was too tight to accommodate the $396-billion plan to eliminate dividend taxes. "They can't have their old plan," Thomas said. Under the budget resolution, the House is writing a bill to cut taxes by $550 billion through 2013, in deference to lawmakers' concerns about the growing federal budget deficit. In the Senate, where anti-deficit sentiment is even stronger, the tax cut is limited to $350 billion. The White House is hoping that at the least, final congressional negotiations will produce the $550-billion cut. The House tax bill includes all the major elements of Bush's plan -- albeit truncated in some instances -- as well as some additional business tax breaks favored by congressional Republicans. Major provisions of the bill would: * Speed up the scheduled reduction in income tax rates that were approved in 2001 but, under that law, are phased in over many years. Rates that were to take effect in 2006 would now kick in for 2003. * Increase from $600 to $1,000 the tax credit that families could take for each child. * Speed up to 2003 scheduled tax relief for married couples. Under the 2001 law, provisions to ease the so-called marriage penalty would not begin providing such relief until 2005, and would not be fully in effect until 2009. * Provide expanded tax relief for small businesses and new tax incentives to invest in computers and other equipment. To curb the cost of the tax cut, the bill resorts to a bookkeeping maneuver: The provisions on the child-credit, marriage-penalty and business tax relief all would apply only for 2003-2005, while other provisions -- including the dividend and capital gains cuts -- would apply to the full 11-year term of the bill. Critics denounced the maneuver as gimmickry. "The so-called increase in the child credit is a hoax," said Rep. Charles B. Rangel of New York, ranking Democrat on the Ways and Means Committee. "Like a magic trick, it's there and then it's gone again." Thomas acknowledged that the three-year limit on the politically popular family tax breaks was not intended to stand as policy. "No one believes there will be any difficulty in extending them," he said. Most of the controversy about Bush's proposal has centered on the dividend tax cut. He believes that plan would give a boost to the stock market and stimulate economic growth. He also promotes it as matter of principle on which it is hard to compromise: He wants to get rid of what he calls the "double taxation" of dividends -- the fact that taxes on profits are often paid twice, first by the corporation and then by shareholders when they receive dividends. But because the price tag of eliminating dividend taxes is so high, Republicans have been looking for ways to trim its cost to leave room for other priorities. The idea initially got a cool reception from Republicans in Congress in part because it was a relatively new idea without a strong constituency in Congress -- unlike, for example, tax relief for married couples, an issue long pushed by conservative family groups. The compromise endorsed by House Republican leaders would reduce and simplify taxes on investment income. Under current law, dividends are taxed as ordinary income, while taxes on capital gains are 20% for most taxpayers and 10% for lower-income people. Under the House bill, taxes on both dividends and capital gains would be 15% for most people and 5% for lower-income people. It is a compromise that pleased the many House Republicans who long have championed a reduction in capital gains taxes -- and had privately expressed disappointment that it was not part of the president's plan. The House bill also was good news for high-technology companies, which were lukewarm about the president's dividend tax cut because many of them do not offer dividends. But it was criticized by die-hard proponents of eliminating all dividend taxes. "The dividend tax repeal is the main engine of growth in the president's jobs and growth package," said Paul Beckner, president of Citizens for a Sound Economy. "I say to the administration and Congress: Don't stunt the growth in the growth package."

05/02/2003
Dividend Tax Down, but Not Out

WASHINGTON -- President Bush's prized effort to abolish taxes on dividend income was dealt a fresh setback in Congress on Thursday, as House Republicans unveiled a $550-billion tax cut bill that would fall short of that goal. The bill, backed by GOP leaders who are usually Bush's staunchest allies on Capitol Hill, would cut, but not eliminate, taxes on dividends. It would diverge from Bush's priorities by including a cut in capital gains taxes -- an aim long sought by congressional Republicans but omitted from the Bush tax program.

http://d7.freedomworks.org.s3.amazonaws.com/styles/thumbnail/s3/te_social_media_share/fw_default_0.jpg?itok=mX_C44GW

Dividend Tax Down, but Not Out

BY Janet Hook

WASHINGTON -- President Bush's prized effort to abolish taxes on dividend income was dealt a fresh setback in Congress on Thursday, as House Republicans unveiled a $550-billion tax cut bill that would fall short of that goal. The bill, backed by GOP leaders who are usually Bush's staunchest allies on Capitol Hill, would cut, but not eliminate, taxes on dividends. It would diverge from Bush's priorities by including a cut in capital gains taxes -- an aim long sought by congressional Republicans but omitted from the Bush tax program.

05/02/2003

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