US Senate approves $60 billion tax-cut bill

The US Senate on Friday approved a bill that would extend $60 billion in tax cuts for individuals and business but impose a $5 billion tax on big oil companies, drawing a veto threat from the White House.
The package passed, by a 64-33 vote, early Friday only after provisions were dropped that would have kept in place tax-rate reductions for capital gains and dividends beyond their 2008 expiration. Democrats and some moderate Republicans put up solid opposition to those investor provisions backed by the White House.
The tax legislation is part of a broader effort by congressional Republicans to maintain Bush's tax cuts while trimming domestic spending to reduce deficits.
The House of Representatives early on Friday passed a $50 billion package of spending cuts on social programs, student loans and farm subsidies that Democrats and some moderate Republicans said put too much of the deficit-reduction burden on the poor.
The overall cost of the Senate's tax-cut legislation was trimmed by a number of measures to raise revenues, including an accounting provision that would raise about $5 billion from big oil companies by temporarily changing the way they value oil inventories.
A White House statement said President George W. Bush's advisers would recommend a veto if the oil provision remains in place through negotiations with the House. "This provision would result in a retroactive tax increase by changing a long-accepted accounting practice," the statement said.
Senator Max Baucus of Montana, the top Democrat on the Senate Finance Committee, shrugged off the threat. "The veto threat doesn't mean anything to me," he said. "There's a lot in play."
The oil provisions could be a crucial bargaining chip in negotiations with the House, which is considering a dramatically different tax-cut bill. It was unclear when House Republican could bring up their bill for a vote, although they had hoped to do so on Friday before lawmakers left for a Thanksgiving holiday break.
The House bill would extend for two years a 15-percent tax rate for capital gains and dividends. A similar provision was dropped from the Senate bill to overcome opposition from moderate Republicans and Democrats.