WASHINGTON Negotiations on legislation sought by the banking industry were expected to continue into last weekend.
The Senate planned to vote Tuesday on a $240 billion tax-cut package that would create a tax-deferred savings account for farmers and ranchers, let banks pay interest on business checking accounts, raise limits on contributions to retirement savings plans, and create tax breaks for banks and other companies that invest in poor communities.
Absent from the version that the House passed Thursday are savings proposals targeted specifically at the poor and some of the incentives bankers had been expecting for investments in low-income areas. In particular, the package does not include $5 billion of federal guarantees for loans to special private entities that in turn would invest in poor communities.
President Clinton has already promised to veto the legislation, and Democratic legislators continued to pound away at it Friday.
Senate Minority Leader Thomas A. Daschle said the tax bill, if enacted, would raise credit costs. What it will do is eat up the surplus, threaten the economy, and drive up interest rates which will mean higher mortgage costs, higher payments on car and student loans, and higher credit card payments for all Americans, the South Dakota Democrat told reporters.
Former Treasury Department General Counsel Peter J. Wallison, now a resident fellow at the American Enterprise Institute, strongly disagreed. The question of whether interest rates would rise or fall is based on the markets concern whether there will be inflation in the future. As long as the Federal Reserve maintains a consistent policy with respect to inflation, then federal deficits do not cause interest rates to rise.
Separately, Senate Majority Leader Trent Lott has said that bankruptcy reform legislation, which the President also has vowed to veto, will be among the Senates final votes this year. Adjournment had been expected last week but was delayed.