Leading the News: Four Senators Undercut Bush Dividend-Tax Plan
WASHINGTON -- Prospects dimmed significantly for President Bush's proposed dividend-tax repeal, after four pivotal senators put in writing that they wouldn't support a tax-cut package larger than $350 billion.</br></br>Unless the White House can change their minds or win over other allies, the elimination of dividend taxes for stockholders -- the centerpiece of the administration's 10-year, $725 billion economic plan -- is in jeopardy.</br></br>Republican Sens. Olympia Snowe of Maine and George Voinovich of Ohio, and Democratic Sens. Max Baucus of Montana and John Breaux of Louisiana, sent a letter yesterday to Senate leaders committing to the 10-year $350 billion cap. The four centrists were considered crucial swing votes for Mr. Bush.</br></br>The two Republican senators defected despite heavy lobbying by administration officials. Neither was inclined to abandon Mr. Bush on the eve of war, but concerns about the growing budget deficit proved to be stronger. The commitments by Sens. Breaux and Baucus are also significant because the two were the leading Democratic supporters of Mr. Bush's 2001 tax package. "It's a breakthrough for those of us who are concerned about the debt," Mr. Baucus said.</br></br>Senate Finance Committee Chairman Charles Grassley (R., Iowa) said that if he is limited to crafting a $350 billion package, Mr. Bush's dividends component -- which carries a 10-year price tag of nearly $400 billion -- likely would be dropped. "They basically have limited my committee's leeway," he said.