Democrats Seek to Extend Child Tax Credit

WASHINGTON June 5, 2004 (AP) - Intensifying the pressure on Republican leaders to give poor families a more generous child tax credit, Democratic Sen. Blanche Lincoln lined up a majority Wednesday behind her effort to send poor workers the same $400 check that will start going to other families this summer.

A spokesman for Lincoln, D-Ark., said 51 of 100 senators, including six Republicans, support her effort to give the child tax credit to minimum wage workers who do not pay enough income tax to claim the entire $1,000 benefit.

Republican leaders, who said they remain open to the idea, searched for ways to make the mostly Democratic proposal more palatable to GOP colleagues.

"We'd really like to try to find a bipartisan approach,'' said Senate Finance Committee Chairman Charles Grassley, R-Iowa.

Grassley said he has scaled back his ambition to immediately make the $1,000 child tax credit -- scheduled to drop back to $700 in 2006 if left unchanged -- a permanent part of the tax law.

Instead, Republican aides said, he combined a more generous child tax credit for low-income workers with a full benefit for married couples that make up to $150,000 in 2008 through 2010. Under current law, the benefit decreases for couples who make $110,000 or more.

Grassley's new proposal also simplifies the five definitions of a "child'' used for various deductions and credits to a single definition.

The three parts together cost $10 billion over a decade, but half would be offset by extending customs fees.

The smaller bill faces amendments from both the left and right, making an easy solution more difficult, Grassley said. Democrats want to pay for any new tax cuts by offsetting the cost with tax or fee increases. Republicans want to use the bill to make expiring tax cuts permanent.

Lincoln's plan would cost $3.5 billion over 10 years. To cover the cost to the Treasury, she would drop corporate provisions in the tax law that were used by bankrupt energy giant Enron Corp. Democrats, who opposed the tax cut enacted last month as too costly, want to keep the child credit bill as small as possible.

"Regardless of how well intended the tax cut would be, it's just wrong,'' said Senate Minority Leader Tom Daschle, D-S.D., arguing that the resulting debt would create a "deficit tax'' on future generations.

The tax cut that President Bush signed in May sends rebates of up to $400 per child this summer to families that qualify for a just-increased $1,000 tax credit. The new law does not change eligibility rules for low-income families, who do not pay as much in income taxes as the law requires to claim the full credit.

Republicans joining Lincoln and other Democrats are Sens. Lincoln Chafee of Rhode Island, Susan Collins of Maine, Olympia Snowe of Maine, Arlen Specter of Pennsylvania, George Voinovich of Ohio and John Warner of Virginia.