Washington – President Bush and congressional Republicans agreed Tuesday on a $70 billion package of tax-cut extensions that they hope will help halt the deterioration of their political fortunes.
The package would extend 2003 cuts to the tax rates on dividends and capital gains, continue tax breaks for small-business investment and the overseas operations of financial-service companies, and slow the expansion of the alternative minimum tax, a parallel income-tax system enacted to target the rich but that is increasingly snaring the middle class.
But the agreement cannot come to a vote until House and Senate negotiators agree on a second piece of legislation containing many of the proposed tax breaks left out of the compromise, according to legislative aides. And the compromise is sure to spark a new round of recriminations from Democrats, who say the Republican Party continues to favor wealthy investors over lower- and middle-income workers, without regard to a budget deficit that is expected to reach $370 billion this year.
Bush summoned Republican leaders and tax writers to the Oval Office Tuesday to force an agreement on a tax bill that has languished since late 2005.
The president is to speak today on the economy and taxes, and he implored lawmakers to deliver an agreement he could tout.
“The tax relief that the president advocated and passed is working to do exactly what it was intended to do, get the economy growing and help create jobs. To keep our economy strong and growing, the tax relief needs to be made permanent,” White House spokesman Scott McClellan said Tuesday.
The compromise measure falls well short of making Bush’s first-term tax cuts permanent. Instead, all the major tax cuts passed in 2001 and 2003 would expire at the end of 2010.
