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House sends tax, trade measures to Senate

Rejected by voters and limping off stage, the Republican-led House on Friday passed a sweeping bill reviving expired tax breaks and preventing doctors from taking a big cut in Medicare payments.

But they dumped an unfinished budget on the Democrats about to take power.

Working into the night, the chamber also passed a package of trade bills and debated a measure to keep the government running into February. Under a complicated procedural pirouette, the tax and trade legislation was to be bundled together and sent to the Senate, where a handful of Republicans threatened delay.

A weekend Senate session loomed as Republican budget hawks bridled at the measure's cost and textile state senators objected to trade provisions benefiting Vietnam, Haiti and Andean nations, among others. The House passed the trade bill by a 212-184 vote.

The 367-45 vote on the tax bill reflected widespread bipartisan support for extending expired tax breaks, including the research and development tax credit for businesses, sales tax deductions for people in states without income taxes, the tax deduction on college tuition, a tax credit for hiring welfare recipients and others facing difficulties finding jobs and tax credits for alternative energy producers and purchases of solar energy equipment by homeowners and businesses.

All told, the tax cuts would cost $38-billion over five years.

Also driving the massive bill forward was an effort to prevent a 5 percent cut in Medicare payments to doctors scheduled to take effect Jan. 1 under a complicated government funding formula. But the GOP-crafted solution to the problem was criticized as an accounting gimmick since it would double the cost of fixing the problem again next year.

The $4.5-billion cost was lower than earlier estimates of more than $10 billion a year but would result in a 10 percent cut in doctors' fees in 2008 - which would be even more costly to fix.

Fast facts

Last-minute action

Some highlights of last-minute bills that Congress acted on Friday.


- Lets taxpayers with incomes of $65,000 or less ($130,000 for couples filing a joint return) deduct $4,000 for higher education costs. The deduction is $2,000 for those earning up to $80,000 (or $160,000 with joint returns). The cost is $3.3-billion over two years.

- Extends through 2007 a deduction of up to $250 for teachers who personally buy class supplies. The two-year cost is $379-million.

- Extends through 2007 the option of taxpayers from states without income taxes to deduct state and local sales taxes. The seven affected states are Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming. The cost is $5.5-billion over two years.

- Blocks plans to reduce by about 5 percent what Medicare pays to doctors, at a cost of about $4.5-billion.

- Provides a one-year extension of an exception process under which Medicare will pay for stroke or hip replacement therapy when costs exceed $1,740.


- Congress sent to President Bush a bill approving $289-million over five years to make it easier for the estimated 50-million families caring at home for adults and children with special needs to find respite care.

- House approved $3.2-billion bill to improve veterans' benefits and health care.

- Senate approved first reauthorization since 1996 of the Magnuson-Stevens act, the nation's prime ocean fisheries law. The measure is expected to win House approval.