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Child Tax Credit All But Dead

Lead negotiators on a bill to extend the child tax credit are acknowledging that a plan to send $400 rebate checks to low-income families is probably dead for the year.

“If it ain’t dead, it’s doing a pretty good impression,” said one senior Senate GOP aide about the bill, which caught fire in June when media outlets reported that about 6.5 million lower-income families had been left out of President Bush’s $350 billion tax cut.

“I think it’s unfortunately fading away,” Sen. Max Baucus (D-Mont.), ranking member of the Finance Committee, said of the ability to conference the bill with the House.

The measure appears to be suffering from a lack of momentum from Senate champions and a deep reticence among House Republican leaders to send the measure on to the president’s desk.

Senate Finance Chairman Chuck Grassley (R-Iowa) said he was not willing to put much effort into the conference because of the difficulties of negotiating with House Ways and Means Chairman Bill Thomas (R-Calif.), with whom he has repeatedly sparred.

Grassley, who is officially the chairman of the conference, has the power to jump-start the negotiations by scheduling a meeting of conferees. But he complained that Thomas has been unresponsive to his entreaties to work out the differences between the House and Senate versions of the bill.

“I suppose … I could call a conference meeting, but I’m not going to do that unless it’s going to be productive. And right now, it doesn’t look like it would be,” said Grassley. “We haven’t gotten a response from them to our letter [about the conference] that we sent this summer.”

When asked about the status of the child tax credit, a spokeswoman for Thomas deflected questions about its fate to Grassley.

Grassley expressed hope that conditions would become favorable for a conference meeting later this fall, but he acknowledged that he may only be able to go through the motions of a meeting without getting a resolution.

Thomas, along with House Majority Leader Tom DeLay (R-Texas), has opposed the bill from the beginning. They argue that many beneficiaries of the lower-income child tax credit do not even pay federal income taxes.

Thomas and DeLay have also defended the larger tax-cut conference’s decision to cut the provision by saying that Senate GOP moderates — George Voinovich (Ohio) and Olympia Snowe (Maine) — refused to vote for any tax cut that cost more than $350 billion.

Thomas had included the tax credit for lower-income families in a $380 billion compromise bill that he touted during negotiations, but that ultimately did not prevail.

The Ways and Means chairman finally agreed to push a House version of the lower-income child tax credit after the White House intervened and urged its passage. But Thomas infuriated Senate backers of the bill by loading the measure with nearly $80 billion in additional tax cuts.

Those additional tax breaks are not likely to get Senate approval. Key votes like Snowe and Voinovich, as well as the majority of Democrats, refuse to back any other large tax cuts while federal deficits are rising to record levels.

Grassley suggested that Democrats might be the key to putting the pressure back on Thomas to negotiate once again.

“The Democrats won’t let it be dead, and I don’t blame them,” said Grassley, who has been supportive of the much smaller $3.5 billion Senate package. “If I was them and the majority party wasn’t doing something about it, I’d make an issue of it. And I expect they will.”

Senate Minority Leader Tom Daschle (D-S.D.) said he would continue to try to add the child tax credit bill to other measures in the hopes of it eventually becoming law.

“We’re certainly not giving up on that,” Daschle said.

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