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House panel derails Bush's fast-track budget as Democrats, GOP square off Democratic proposal is still under wraps


WASHINGTON -- The tax-writing House Ways and Means Committee rejected a fast-track version of President Bush's budget yesterday but kept the nation guessing on details of the Democratic plan for jump-starting the economy.

At a rancorous committee meeting, Democrats and Republicans accused one another of turning the economic debate into a political battleground and of threatening a budget-busting bidding war over tax cuts.

Both sides paid lip service to the widespread unemployment, insecurity and hardship in the nation, but neither showed any signs of compromising on how to respond.

Rep. Thomas J. Downey, D-N.Y., recalled President Bush's threat to join battle if Congress did not pass his economic recovery program byMarch 20 and said:

"We have moved up the date. The issue is joined."

Rep. Jim Bunning, R-Ky, warned: "If we are going to argue over semantics . . . we are going to have stalemate, and the American people ought to throw every one of us out of this place, and I would not be surprised if that's what they do."

In the end, the Democratic majority had its way.

It rejected by a party-line vote, 23-13, the slimmed-down, fast-track stimulant package -- minus the middle-class tax break and unpopular program spending cuts -- now backed by the White House and congressional Republicans. Instead, it sent the administration's "entire" budget proposal without recommendation for floor debate by the full House.

The Democrats' ploy was meant to embarrass Mr. Bush, to show that his overall blueprint for recovery did not have the full backing of his own party on Capitol Hill and to open it to critical comparison with both the Democrats' yet-to-be-announced proposals and the fast-track version of the Bush bill.

Both will be under scrutiny during floor debate.

The Republicans argued that Mr. Bush had always wanted two bills -- a short-term stimulative package to boost business investment and real estate activity and a long-term program to ease the middle-class tax burden and stabilize economic growth.

The fast-track bill includes a capital gains tax cut, a $5,000 tax credit and penalty-free IRA withdrawal for first-time homebuyers, investment tax allowance for new equipment and enhanced alternative minimum tax depreciation, and tax breaks and incentives for real estate developers and investors.

The Democrats are to hold a series of closed-door meetings this week to thrash out their own package.

It is likely to include a middle-income tax cut to be paid for by increased taxes on the wealthy and a public-spending program financed from defense savings.

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