President Bush promised to veto a budget package like the one narrowly approved by the House that proposes, in part, to reduce the soaring federal deficit by raising income taxes on the rich.
The bill, crafted by Democrats and approved Tuesday along partisan lines, 227-203, meets the deficit reduction targets of $40 billion in fiscal 1991 and $500 billion through 1995 that were set in a budget resolution approved by Congress last week.The focus shifts to the Senate where another defict-reduction plan, which proposes no change in income tax rates and is preferred by Bush and top GOP congressional leaders, is scheduled for debate on Wednesday.
If the Senate plan is approved, conferees from both houses will try to negotiate a compromise bill.
Utah Democrat Wayne Owens voted for the measure, while Republicans Jim Hansen and Howard Nielson voted against.
Congress is under pressure to produce a budget agreement by midnight Friday when a temporary spending bill that is funding the federal government is due to expire. Bush has said that he will not sign a new funding measure if Congress fails to reach a budget agreement by the deadline.
Following a day of campaigning for GOP candidates in the Midwest Tuesday, Bush restated his veto threat if the measure reached his desk with the Democratic-sponsored tax package.
"Tonight the Democrats in Congress have turned back the clock. By a partisan vote in the House of Representatives, the Democrts pushed through a tax increase on working men and women," said Bush in a statement.
"I am determined that the budget deficit reduction package be fair. I am determined that the budget not be balanced on the backs of working Americans," said the president. "That's why I will veto the Democratic plan passed by the House should it reach my desk."
But Democrats said their plan is fair to the middle class.
"Approval of our alternative will be a proud moment for this House," said Ways and Means Chairman Dan Rostenkowski, D-Ill. "Our alternative is bold, but it is fair enough to win broad public acceptance."
The Democratic plan raises income tax rates on the wealthy from 28 percent to 33 percent.
It would freeze for one year the annual inflation adjustment of income tax rates and personal exemptions, which would raise taxes by about $313 on a family of four with a taxable income of $34,000 next year, according to Treasury Department figures.
The bill also proposes to:
- Impose a 10 percent luxury tax on expensive cars, jewlery, yachts and furs and add a 10 percent surtax on those with annual taxable incomes above $1 million.
- Reduce Medicare cuts by $17 billion over five years, from the $60 billion proposed in the ill-fated budget summit agreement negotiated by congressional leaders and the White House.
- Eliminate a provision that would have doubled to two weeks the waiting period for unemployment benefits.
- Exempt home heating oil from a new petroleum tax.
- Increase cigarette taxes by 4 cents in 1991 and 4 cents more in 1993.
- Increase taxes for a six-pack of beer by 32 cents. Increase wine and liquor taxes.
- Eliminate proposed increases in gasoline taxes and tax breaks for small business investments.
House Republican leader Robert Michel of Illinois said the Democratic plan sounds "the savage cry of class warfare" with increased taxes on the rich.
"This is a major tax increase that's going to put this country into a deep, bottomless recession," Rep. Dan Burton, R-Ind., said of the one-year freeze. "They (Democrats) are going to tax and tax and tax us all to death."