
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, May 24, 1995                   TAG: 9505240103
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: From The Associated Press and Knight-Ridder/Tribune
DATELINE: WASHINGTON                                LENGTH: Medium

TAX CUT LOSES

The Senate shot down Sen. Phil Gramm's effort Tuesday to add tax cuts to the Republican balanced-budget plan, exposing deep rifts within GOP ranks over one of the party's priorities for the year.

Senators rejected the plan by the Texas Republican and presidential candidate by a vote of 69-31.

As expected, Gramm ran into solid opposition from Democrats and from Republicans who prefer an all-out effort to eliminate deficits. All 46 Democrats including Virginia's Sen. Charles Robb, joined by 23 of 54 Republicans including Sen. John Warner, voted ``no.''

Gramm proposed cutting taxes on families, businesses and investors by $160 billion over five years in a package similar to reductions already approved by the House. In that chamber, Speaker Newt Gingrich, R-Ga., has called the tax cuts the ``crown jewel'' of the ``Contract With America,'' the campaign pledges GOP candidates made last fall.

The overwhelming vote raised questions about how easily House-Senate bargainers will be able to resolve differences over taxes when they try crafting a compromise budget, probably next month.

``This is a big setback for the tax cut in the contract,'' Gramm said after the vote. ``A victory on this amendment would have solidified it.''

It was possible the Senate would address the issue again today.

The Senate also rejected, 60-40, a bid to increase defense spending beyond what President Clinton has recommended for the next seven years. The House bill would add about $68 billion to Clinton's defense budget over that period.

Another presidential contender - Senate Majority Leader Bob Dole - was considering offering a tax cut alternative. He has said repeatedly that the Senate will vote this year to cut taxes.

The Kansas Republican has worked on a smaller package that could provide tax credits for families and reduce the capital gains tax, said GOP Senate aides who spoke on condition of anonymity. After the lopsided vote against Gramm's plan, some GOP senators said they thought Dole had little to gain by offering a proposal that probably would lose, and Dole himself said, ``I don't know'' when asked what he would do.

The tax maneuvering occurred as the Senate debated a GOP outline for culling nearly $1 trillion in savings from Medicare, Medicaid and hundreds of other programs over the next seven years, eliminating federal deficits by 2002. The overall measure may be approved today.

by CNB