Budget negotiators are ready to boost gasoline taxes by at least a nickel a gallon and are narrowing differences over new taxes for the rich and cuts in Medicare benefits.
But after a weekend of dickering that featured a well-timed walkout by an unusually talkative White House chief of staff John Sununu, a final agreement on a $250-billion assortment of tax hikes and spending cuts remained elusive."It's a very difficult negotiation," Rep. Dan Rostenkowski, D-Ill., chairman of the tax-writing House Ways and Means Committee, said as talks among congressional leaders ended late Sunday. "Our problem is trying to put something together that passes both houses."
Lawmakers Monday resumed their search for a compromise package that would also satisfy President Bush and allow Congress to go home for the year by week's end.
Narrowing one important dispute, Democrats agreed to accept a nickel increase in the 9-cent-a-gallon gasoline tax, 2 cents less than Republicans wanted. The Senate last week approved a 9-cent boost, but the House insisted on no change.
Divisions remained over how much new taxes the rich should pay. But the two sides seemed to be nearing an understanding - amazing progress considering Bush's opposition to any tax increases just a few months ago.
Both sides were willing to boost the marginal rate on the wealthiest Americans - families with incomes above $180,000 a year - to 31 percent, up From the current 28 percent. And each party was willing to limit the deductions that people earning more than $100,000 can claim.
But a big gap existed over a Democratic demand to levy an additional 7.5 percent surtax on those with incomes above $1 million. Republicans said they would not accept the plan, and instead offered a proposal - rejected by Democrats - to reduce deductions on incomes above $1 million by 8 percent.
In addition, Republicans wanted to lower from 33 percent to 31 percent the tax rate on families with incomes between $80,000 to $180,000. Democrats opposed the idea.
Negotiators also moved closer to each other on Medicare. Democrats would restrain the growth of the program by about $44 billion over the next five years. Republicans want the cuts to be $3 billion deeper.
About one-fourth of the reductions would be borne directly by the 33 million handicapped and elderly people who use the program. Rostenkowski said the two sides were less than $2 billion apart on the precise cut to be aimed at beneficiaries.
Democrats also want to boost the $51,300 wage cap from which Medicare taxes are deducted to $125,000. Republicans would increase the cap to $98,000. The 1.45 percent Medicare tax is part of the Social Security deduction.
The final plan also is certain to include higher taxes on cigarettes, alcohol, luxury items such as furs, and airline tickets - elements that were in separate bills the House and Senate passed last week.
Also destined for the final bill were cuts in crop payments to farmers, new fees for federal environmental tests and Coast Guard services, and stingier benefits for retired civil servants and veterans.