Bush confident about tax cut

by Jeannine Aversa
Associated Press Writer

WASHINGTON - President Bush and his treasury secretary expressed confidence yesterday that Congress will approve the massive tax cut at the center of Bush's economic program.

Hoping to build momentum, Bush and Treasury Secretary Paul O'Neill held a strategy session at the White House with Republican leaders from the House and Senate and received encouragement for their efforts to pass a $1.6 trillion 10-year tax reduction.

Senate Republican leader Trent Lott said after the meeting, "We fully expect to have significant tax relief for Americans before the Fourth of July recess."

Declaring that he wanted to see the package approved "as soon as possible," Bush said he was open to suggestions on legislative strategy.

"We did discuss the timing of the tax package, how best to move it through the House," Bush said. "We are interested in success."

Though Bush has talked of his proposal mostly in terms of returning surplus federal revenue to taxpayers, he and his advisers also have suggested that a tax cut could be helpful to the weakening national economy.

Federal Reserve policy-makers were considering fresh interest-rate reductions yesterday to spur the economy, five days after Fed Chairman Alan Greenspan gave his blessing to a rate reduction.

While the administration has favored legislative passage as a single package, House leaders have been talking about taking a piecemeal approach. They wanted to focus first on parts of the plan that had passed Congress previously, such as getting rid of the marriage penalty and estate tax, only to be vetoed by President Clinton last year.

In a change of strategy, Republican leader Dick Armey told reporters the House would be willing to take up the across-the-board tax rate reduction first, thus holding the initial vote in Congress on the key portion of Bush's program.

"We must begin by just simply cutting taxes," Armey said. "There will be rate reduction."

White House spokesman Ari Fleischer said the president still will submit his tax program as a single package, but "the path it takes after we submit it to the Congress will be largely decided by congressional leaders." He called the administration's approach "procedural flexibility. ...The president's focus will be the bottom line."

A senior Bush aide, speaking on condition of anonymity, said the president told lawmakers he was open to seeing the tax package broken up. Bush plans to send his economic package to Congress next week and will spend a good part of the week promoting the measure.

Senate Republicans still are planning to push a single tax bill, believing that breaking it into many pieces could raise the risk of repeated Democratic filibusters.

Bush's top salesman for the tax package, O'Neill, said in an interview with reporters yesterday that he believes the administration has close to "uniform agreement" with Congress on the need for an across-the-board tax cut. The size is the major unresolved issue, he said.

O'Neill said the administration is trying to work out the mechanics of how to make Bush's tax package retroactive to the first of the year, although he said a final decision on that issue has not been made by the president.

One issue to resolve is how to change individual tax withholding rates to cover the full year, O'Neill said. That would make the withholding reductions larger since they would not take effect until several months had passed. However, that could result in what would appear to be a tax increase next year, when withholding rates would be readjusted to be spread over a full 12 months.

Associated Press writers Alan Fram, Curt Anderson and Martin Crutsinger contributed to this report.