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109th Congress Winds Down - No budget, $45 billion in tax cuts
WSJ
By DAVID ROGERS
December 9, 2006

WASHINGTON -- Congress began heading home after approving major tax and trade bills and turning out the lights on 12 years of Republican dominance in the Capitol.

Working past midnight, lawmakers also sent President Bush a stop-gap spending bill required to keep the government operating through Feb. 15, by which time Democrats will have assumed control.

The action came as a complex deal brokered between senators and the outgoing House Energy and Commerce Committee Chairman Joe Barton (R., Tex.) promised to release new funds for child healthcare as well as a backlog of health legislation on bioterrorism, AIDS treatment and the National Institutes of Health.

And spurred by the Hewlett Packard Co. scandal, the Senate approved a House-passed bill that would make it a federal crime to obtain someone's telephone records without his or her approval. "Stealing someone's private phone records is a criminal act that can now be prosecuted," said Sen. Charles Schumer (D., N.Y.) one of the leading proponents.

The $45.1 billion tax cut measure, which includes provisions benefiting oil, coal and health-care interests, first passed the House 367-45 late Friday after Democrats narrowly failed 207-205 in a last attempt to disrupt passage with an amendment to the oil provisions.

The trade package, which mostly has an impact on Vietnam, Haiti and developing nations in Africa and South America, followed hours later 212-184. And on a lopsided 79-9 roll call near 2 a,m. Eastern, the Senate adopted both measures as a single omnibus package that Mr. Bush is prepared to sign into law.

"God should be so good to the people of Haiti that their exports could be a threat to the United States of America. That's not going to happen," said Rep. Charles Rangel (D., N.Y.), the incoming chairman of the House Ways and Means Committee. And Southern Republicans allied with the textile industry never showed the strength to mount an effective filibuster given the late hour and desire to go home.

Driving the train was the tax package, which renews scores of popular but expired tax breaks, most notably a deduction for college tuition, a deduction for state and local sales taxes in states without income taxes, and the corporate-tax credit for research. And on two procedural challenges, the bill's proponents easily mustered the 60-plus votes needed to waive the budget restrictions and limit debate.

Nonetheless, fiscal conservatives complained bitterly of costly add-ons and the backroom horse-trading in which some departing leaders won concessions for their home-state interests. And the stop-gap spending bill -- covering more than $463 billion in annual appropriation -- dramatizes a larger collapse in the budget process for the current fiscal year.

"It is a blatant admission of abject failure by the most useless Congress in modern times," said Rep. David Obey (D., Wis.), the incoming chairman of the House Appropriations Committee. And the current chairman, Rep. Jerry Lewis (R., Cal.) was equally scathing in his personal criticism of Senate Majority Leader Bill Frist (R., Tenn.) for contributing to the failure.

Sen. Judd Gregg (R., N.H.), the departing chairman of the Senate Budget Committee, said he was "embarrassed" by his party's performance and warned Republican colleagues they were ignoring the lesson of losses in the midterm elections last month. "The American people took the reins of government away from the Republican Congress," Mr. Gregg said, in large part because "they were tired of our hypocrisy as a party on the issue of fiscal responsibility."

"It would appear that their concerns are justified. … You just have to ask yourself how we as a party got to this point, where we have a leadership that is going to ram down the throats of our party the biggest budget buster in the history of Congress under Republican leadership. … The American people figured it out and I'm sorry we haven't figured it out yet."

Together with the tax-cut extensions, the $45.1 billion package opens millions of acres in the Gulf of Mexico to offshore oil and gas exploration, and includes a provision to prevent a 5% cut in payment rates to physicians under Medicare, the federal health-care program for the elderly and disabled.

Over Mr. Gregg's objections, coal-state senators won a $4.9 billion provision to lift federal spending for retired miners' health benefits and abandoned mine reclamation. At the same time, New York was a big loser when tax credits to help financing for a proposed rail connection between lower Manhattan and John F. Kennedy International Airport were killed, together with a $477 million tax break for the timber industry, important to companies like Weyerhaeuser Co.

New tax language was added to promote the use of health-savings accounts, a priority for the departing Republican leadership seeking to give individuals more control over their health care. (See related article.)

And both Mr. Frist, who is retiring at the end of this Congress, and Speaker Dennis Hastert (R., Ill.), who will be giving up his role, used their positions to win concessions for home-state interests in federal health programs.

Tennessee, for example, will benefit from an estimated $30 million payment under Medicaid to help support hospitals in the state that handle a large number of low-income patients. And Mr. Hastert added language expanding the enrollment period for private health plans, providing coverage within Medicare.

Chicago-based Aon Corp., which provides private fee-for-service coverage through its subsidiary Sterling Life Insurance Co., pushed for the change that would allow qualified plans to enroll beneficiaries all year if they aren't participating in the prescription drug benefit.

Mr. Hastert's office said the language mirrors past enrollment provisions that expired last summer. Aon declined to comment. But critics argued that the landscape has changed with the advent of the prescription drug benefit, and that creating different enrollment rules for plans, based on whether they participate or not, introduces inequities.

Before adopting the stop-gap spending bill, Republicans made two modifications in a concession to critics. Lawmakers agreed to dock their own pay by delaying a planned cost-of-living increase -- due to take effect with the new year -- until Feb. 16, after the stop-gap bill expires. And they gave the Veterans Administration expanded authority to move almost $684 million from other accounts in its budget to avoid a threatened shortfall in medical-care funds.

Opposition to the trade provisions had focused chiefly on those benefiting Haiti by allowing companies on the island to use fabric from third countries, such as China, in duty-free apparel destined for the American market.

A key force is Sen. Elizabeth Dole, the North Carolina Republican. Antitrade sentiments ran especially strong in her state in the 2006 congressional election, contributing to the defeat of one House Republican, Rep. Charles Taylor, and nearly knocking off another, Rep. Robin Hayes.

But when it came to invoking cloture and heading off any filibuster, the leadership easily prevailed 78-10.

--Greg Hitt contributed to this article.

Write to David Rogers at david.rogers@wsj.com

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