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House Passes Tax-Cutting Bill

Work on the Senate side is expected to be done by Friday

WASHINGTON (AllPolitics, June 26) -- By a 253-179 margin, the Republican-controlled U.S. House of Representatives passed a measure late Thursday that cuts taxes by $135 billion. A similar measure is expected to be approved in the Senate by Friday.

The tax-cut bill serves as the companion piece to an already passed package of budget savings. Supporters say together the two measures will balance the budget by the year 2002.

The measure passed despite vigorous objections by Democrats who called it unfair. The vote broke down largely along party lines, with only 27 Democrats voting in favor.

The tax bills have been a top priority for many Republicans, who say they've been waiting 16 years for the chance to hand Americans their biggest tax cut since 1981.

House Speaker Newt Gingrich (R-Ga.) said at a news conference following the vote that today's victory was worth the past three years of groundwork.

"It takes time to turn around a system as big as the American government. It takes time to go from raising taxes four years ago to finally getting a bipartisan tax cut this year," Gingrich said.

The House bill contains $135 billion in tax cuts along with $50 billion in new revenues, for a net cut of $85 billion.

It includes a $500-per-child tax credit, education tax breaks, estate tax relief, a reduction in the alternative minimum tax and a capital-gains tax cut.

"This is a good tax bill. Its centerpiece is for families with children who are middle-income tax payers. And we're proud of that," said Rep. Bill Archer (R-Texas), the architect of the GOP tax-cutting plan.

But while the Republicans rallied, their counterparts railed that the plan primarily seeks to reward the rich.

Democrats wanted a plan that extended the $500-per-child tax credit to people who worked but didn't earn enough to pay income taxes.

"What do Republicans give a family of four making $24,000 a year? Nothing," argued Rep. John Lewis (D-Ga.). "What do Republicans give the mother who has left welfare and to work at a minimum wage job? Nothing."

The movement on the Senate side has been slower-going, as debate has been ongoing on a mountain of amendments since Wednesday. A vote was expected Friday.

An alternative package crafted by Senate Minority Leader Tom Daschle (D-S.D.), and pushed by Democrats, was defeated in a 61-38 vote Thursday afternoon. After his plan was rejected, Daschle signaled that he would vote for the GOP version saying, "There are some good things in it."

Daschle's plan would have expanded eligibility for the $500-per-child credit to lower-income families, allowing them to take the full credit if it is invested in an individual retirement account (IRA) for the child. Daschle also pushed to provide a capital gains tax break targeted at middle- and lower-income families and small business owners, in contrast to the across-the-board rate decrease from 28 percent to 20 percent contained in the GOP plan.

Today's vote was an easy first-round win for majority House Republicans, and a similar outcome is ultimately expected in the Senate. But things will inevitably get trickier and tougher as the tax bills move into conference committee, where Democrats and the White House hope to make inroads on some of their major complaints.

CNN's Candy Crowley contributed to this report.