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House, Senate leaders aim for Tuesday budget agreement

WASHINGTON (CNN) -- House and Senate leaders are aiming for a Tuesday agreement on a budget resolution that would set parameters for government spending and the size of the tax cut.

But they have a tricky road in front of them as they seek to reconcile the two chambers' versions.

The House passed a budget true to President Bush's plan for $1.6 trillion in tax cuts over 10 years while limiting growth in government spending in the coming year to 4 percent.

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But the evenly divided Senate scaled back the tax cut to $1.25 trillion and doubled government spending growth to 8 percent.

Senate Majority Leader Trent Lott, R-Mississippi, said an 8 percent increase in government spending is "just totally irresponsible."

"There needs to be some restraint," he said. "There may be a need to add some more money for defense, or you name it, so the number may work up some above the 4 percent, but the question is, how much?"

On the tax cut, Lott, along with White House aides, is negotiating with Sen. John Breaux, D-Louisiana, who heads a key group of moderate swing votes, to come up with an overall tax cut figure that can pass the 50-50 Senate.

Breaux and 14 other Democrats voted for the $1.25 trillion tax cut, with an $85 billion stimulus for this year. Most in that group are saying they are unwilling to go higher.

"We're still working to get the highest possible number for tax relief for working Americans," Lott said.

He said if the tax bill is capped around $1.3 trillion it will be hard to achieve "the things that the Congress and the American people support overwhelmingly."

Senior GOP aides say Bush's four main tax proposals -- across-the-board income tax cuts, marriage penalty relief, an estate tax cut and doubling the $500 child credit -- will be hard to wedge into a cap that low. That's why some White House and Senate aides are floating a strategy to split up those proposals.

The idea is to use the major Senate tax bill for Bush's centerpiece across-the-board cuts.

To make room for greater rate cuts, Republicans could remove some tax cut proposals that have bipartisan support, like the marriage penalty or estate tax cut, and bring them up separately at a later date.

But the chairman of the tax-writing Senate Finance Committee, Charles Grassley, R-Iowa, told CNN on Monday he is more likely to include scaled-back versions of all four tax cut proposals. He said the rate cut for the wealthiest Americans would have to be more modest than what Bush requested.

Grassley said Monday he hopes to produce a bipartisan tax bill by next week so that it can be completed and sent to the president by Memorial Day.

"This is an ambitious schedule," Grassley said at a speech to the U.S. Chamber of Commerce, "But we're very serious about providing tax relief to the American people."

A spokesman for Sen. Max Baucus, D-Montana, the ranking Democrat on the tax-writing Finance Committee, says a bipartisan tax bill is possible as long as it is fair.

"While people are focusing on the size," said Baucus' spokesman, Michael Siegel, "he wants a bill that's going to be fair in terms of its scope, one that works well for rural America as it does for the rest of the country,"

Meanwhile, conservative Republicans in the House expressed frustration Monday at the president's willingness to allow government spending to inch past the 4 percent ceiling he had set and the House had endorsed.

"Everyone is so focused in the Senate right now that they forget they have to get this through the House as well," said Brenna Hapes, spokesman for House Budget Chairman Jim Nussle, R-Iowa.

Passage in the House, which is narrowly controlled by Republicans, is not assured, particularly if the bill is dramatically altered by Senate negotiators, House aides said. That message was reinforced Monday in a letter a group of conservative GOP members sent to Nussle, the lead House negotiator in budget talks with the Senate.

"Strict adherence to the president's proposed spending levels is critical to our support for the budget resolution," the letter warned.

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The White House
 • U.S. President George W. Bush
U.S. Office of Management and Budget
U.S. Congressional Budget Office

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