The Senate Finance Committee approved a bipartisan budget package early Saturday that would double gasoline taxes and do nothing about tax rates on high incomes or capital gains.
The plan was approved on a 15-5 vote shortly after it was endorsed by leaders of both parties. It is one of the more middle-of-the-road budget packages of the several circulating on Capitol Hill."I believe it is a fair compromise," said Senate Majority Leader George Mitchell, D-Maine.
The plan would raise the federal gasoline tax from 9 cents per gallon to 18.5 cents in three steps by 1992, raising $43 billion over five years.
Nine Democrats and six Republicans voted for the plan, while two Democrats and three Republicans opposed it. The vote occurred shortly after midnight.
Meanwhile, House Democrats on Friday lined up behind a soak-the-rich deficit-reduction plan that also would cut capital-gains taxes for middle-income families.
The plan put them at odds with President Bush, who has said he would accept such a trade only if taxes on the wealthiest Americans were raised less and capital-gains rates cut more than the Democrats are proposing.
The new plan by the House Democrats also would raise money by delaying taxpayers' protection against "bracket creep" for a year. However, unlike other plans under consideration, it would include no increase in the tax on gasoline.
Meanwhile, Republican House members squabbled among themselves as they tried to come up with their own plan to find - before next Friday's deadline - $500 billion in spending cuts and tax increases to reduce the federal deficit over the next five years.
Bush, seemingly unruffled as frustration grew on Capitol Hill, said he was confident a "sound budget agreement" could be found.
"Just stay calm - it will all work out," he said.
The Senate Finance Committee sought to put together a proposal that could win support from a majority of Democrats and Republicans. But there appeared to be little backing in that committee for any kind of capital-gains reduction or for tax-rate increases on the wealthy to pay for it.
Bush said Thursday he would accept an increase from 28 percent to 31 percent in the tax rate of the highest-income Americans in return for a deep cut in the rate on capital gains from sales of stock, real estate and other investments. But he also said he didn't think Congress would pass such a bill, and he declared he would not accept the 33 percent top rate the House Democrats propose.
Republican members of the House were divided over whether to fight any kind of tax increase or support Bush's call for a deficit-cutting plan that includes some sort of higher taxes. There was no conclusion, but the anti-tax group seemed to carry the day.
"We're developing a House Republican position," said Rep. Mickey Edwards, R-Okla. "We're not stating the position of the president, nor are we stating what we think Democrats would vote for."
But there was even division over whether to produce a GOP budget plan at all.
Party leaders were trying to piece a measure together, arguing that Republicans need to unite around a proposal. But many conservatives were insisting that unless the plan reflected bedrock Republican principles - such as no tax increases of any kind - it would be better to present nothing.
"If the alternative is going down in flames anyway, we ought to put out a Republican, pro-growth, anti-tax agenda, not something like Rostenkowski with a few less taxes," said Rep. Tom DeLay, R-Texas.
Democratic Rep. Dan Rostenkowski, House Ways and Means chairman said, "I just hope we'll have the pleasure of seeing what the minority will present. . . . The Democratic Party stands for asking the wealthy in this country to participate in deficit reduction (while Republicans say) `Let's have the wealthy pay taxes, but not too many.' "
The heart of a GOP plan under consideration would cut capital-gains taxes and raise tax rates on the wealthy but still produce a tax cut for the typical person with income above $200,000 a year.
The heated debate among House Republicans contrasted with what was generally described as a harmonious session of House Democrats.
"We're just happy to have a bill we can stand behind," Rep. Vic Fazio, D-Calif., told reporters.
"There's a sense of unity," added House Speaker Thomas S. Foley, D-Wash., referring to the liberal alternative to the deficit-reduction plan written earlier in the week by the Democratic-controlled Ways and Means Committee.
A surprise entry in the liberal proposal is a provision to forgo next year's inflation adjustment to tax brackets. This would affect taxpayers at all income levels, costing them $17.5 billion over the next five years.
The adjustment is designed to offset bracket creep, under which inflation gradually pushes people into higher tax brackets when they get cost-of-living pay raises. Only the bracket adjustment would be delayed; the standard deduction and personal exemption would be increased as usual.
Delaying bracket-creep protection allowed backers of the liberal plan to eliminate a proposed 12-cent-a-gallon increase in gasoline taxes.