Senate Rejects Medicare Drug Coverage

In a slap at President Clinton’s top health policy goal, the Senate on Thursday swatted down a Democratic bid to convert part of the Republican tax cut proposal to provide prescription drug coverage for Medicare beneficiaries.

That was one of several unsuccessful efforts to reshape the GOP bill that calls for cutting taxes by $792 billion over 10 years, a measure that steamed toward expected Senate approval today after surviving attacks from the left, right and center.

The bill, which Clinton has pledged to veto, reduces tax rates for the lowest tax bracket from 15% to 14%, cuts estate taxes and eases taxes on married couples.

Before turning back the Democrats’ Medicare initiative on a largely party-line vote of 55 to 45, the Senate rejected an amendment pushed by GOP conservatives, including Senate Majority Leader Trent Lott of Mississippi, to rewrite the tax bill to make it more like one passed last week by the House. The conservative alternative would have cut all tax rates by 10% duringthe next 10 years and cut capital gains taxes, two key elements of the House bill.

In a sign of just how partisan the tax debate is at this stage, proponents of a centrist alternative calling for $500 billion in tax cuts decided to withdraw their amendment. They had once touted their plan as a pragmatic effort to bridge divisions between the parties.

“You have to know when to hold them, and you have to know when to fold them,” said Sen. John B. Breaux (D-La.) as he withdrew the centrist proposal in the face of certain defeat.

The fear, said an aide to one sponsor, was that a solid on-the-record defeat of the plan would undercut its credibility as the basis for a future compromise.

Indeed, the alternative may offer a glimpse of what legislation may emerge by the end of the year after Clinton goes through the expected exercise of vetoing the larger GOP tax cut and negotiating a budget agreement with Congress.

“I really believe there’s going to come a time--not tomorrow, not the day after, but before long--that this proposal . . . is going to be accepted,” said Sen. John H. Chafee (R-R.I.), a co-sponsor of the centrist plan.

For now, Clinton is saying that he would veto even a $500-billion tax cut. But the key question is whether he ultimately will accept a deal to twin his domestic policy initiatives with a tax cut beyond the $250 billion he has proposed.

While most of the Senate’s debate this week has focused on how much to cut taxes and which taxes to cut, the Democrats’ Medicare proposal was an effort to broaden the debate--and reframe it in terms that have proved politically favorable to their party in the past.

“This debate is about priorities,” said Sen. Edward M. Kennedy (D-Mass.). “New tax breaks are a priority for the Republicans. Prescription drugs for senior citizens are not.”

That is reminiscent of arguments Democrats used earlier in the 1990s, when Newt Gingrich was House speaker. Even though Gingrich’s successor, Speaker J. Dennis Hastert (R-Ill.), is far less incendiary and has tried to put a more moderate face on the party, Democrats are determined to keep portraying Republicans as unwilling to improve Medicare coverage.

“Today, Newt Gingrich is gone,” said Senate Minority Leader Tom Daschle (D-S.D.). “But make no mistake: His spirit lives on in the reckless [bill] Republicans are trying to pass this week in the Senate.”

At the White House, Clinton reiterated his threat to veto the final form of the GOP tax cut bill after Senate and House Republicans reconcile their differing versions. He said that the push for $792 billion in tax reductions either would force unacceptable cuts in domestic programs or “cause us to revert to the dark old days of huge deficits, high interest rates, low economic growth and stagnation.”

Senate Democrats argued that, instead of using almost all of the projected $1-trillion budget surplus during the next 10 years for a tax cut, some money should be set aside for Medicare and used to pay for the prescription drug coverage Clinton has sought.

Now, roughly one-third of all Medicare beneficiaries do not have any coverage for prescription drugs. Democrats warned that such costs increasingly impose a huge financial burden on the elderly and that the GOP tax cut plan would leave Congress with little chance to help.

Republicans argued that the tax cut debate is not the proper forum for addressing the Medicare issue. They said that any new benefit should be considered as part of a broader effort to prepare Medicare for the retirement of the baby boom generation.

Conservatives, meanwhile, objected that the bill authored by Sen. William V. Roth Jr. (R-Del.), head of the Senate Finance Committee, diverges too much from the House bill in an effort to win some support from Democrats.

Proponents of an amendment by Sen. Phil Gramm (R-Texas) said it would do a better job of distributing tax relief more broadly than Roth’s bill, which has many narrowly focused provisions, such as tax breaks for people who renovate historic homes.

Gramm’s amendment would have provided more generous tax breaks than Roth’s version in areas that are priorities of key GOP constituencies. For example, it would abolish, not just reduce, the estate tax--a key issue for small businesses and farmers.

But despite support from GOP leaders other than Roth, the conservative amendment was rejected, 54 to 46. Nine Republicans, mostly moderates, joined all 45 Senate Democrats to vote against it.

*

Times staff writer Edwin Chen contributed to this story.