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Tax bill could push session into weekend

WASHINGTON -- The House voted overwhelmingly Friday to expand offshore oil drilling and preserve a variety of popular tax breaks for families and businesses, but the wide-ranging last-minute package faced serious opposition in the Senate from law...

WASHINGTON -- The House voted overwhelmingly Friday to expand offshore oil drilling and preserve a variety of popular tax breaks for families and businesses, but the wide-ranging last-minute package faced serious opposition in the Senate from lawmakers angry about trade provisions and its $50 billion cost.

Eight senators from textile-manufacturing states sent a letter to Senate leaders threatening to block the bill unless they removed a proposal to lift tariffs on clothing manufactured in Haiti. And Senate Budget Committee Chairman Judd Gregg, R-N.H, delivered a blistering condemnation of the decision by Republican leaders to try to push the unwieldy collection of tax, trade, health and energy measures through Congress as a single package, with few opportunities for debate or objection.

The package "is arguably the largest budget-buster ever brought forward by the Republican Congress, and that's ironic in and of itself, isn't it?" Gregg said in a speech on the Senate floor. "This is being done by the Republican leadership to the Republican membership, by the way, in a way that will make it extraordinarily difficult to attack the bill at any point."

It was unclear late Friday whether the problems could be resolved in time for the Senate to approve the package and end the 109th Congress. Senate aides began preparing for a weekend session that could last through Sunday.

With the trade measures under assault in the Senate, House leaders delayed a vote on that portion of the package and focused first on the more popular tax provisions. By 367 to 45, the House voted to extend for two years nearly two dozen tax breaks, most of which expired in December 2005. They include a credit for research and development critical to many businesses, a reward for employers that hire former welfare recipients and a deduction for state and local sales taxes paid by people in states without income taxes.

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If Congress leaves town without extending the breaks, taxpayers will be unable to claim them in April.

The package would also repeal a $5,450 limit on contributions to health savings accounts, which would allow taxpayers to shelter an unlimited amount of money as long as they choose certain insurance plans with high deductibles. And it would open 8.3 million acres in the Gulf of Mexico to oil and gas exploration.

The House approved the trade portion of the package by 212 to 184, voting to grant permanent normal trading status to Vietnam and extend trade relations with some African and Andean countries and some other developing nations. The measure would also allow some types of clothing made in Haiti to be imported duty-free. Supporters call the proposal a form of aid to one of the world's poorest countries, while opponents say it would destroy U.S. textile jobs by opening a tax-free door to Haitian goods manufactured with yarn and fabric from China.

Differences over the Haitian imports remained a major sticking point in the Senate. As night fell, leaders planned to accept the package from the House, open debate and see whether the objecting senators would agree to give up and go home.

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.

Lawmakers, facing a midnight deadline to send President Bush a bill to keep domestic federal agencies from shutting down, passed by a 320-70 vote a stopgap spending bill putting the government on autopilot until Feb. 15. The Senate planned a pre-midnight vote to avoid a government shutdown.

BUDGET MESS

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With work unfinished on nine of 11 spending bills, a stopgap funding bill would put 13 Cabinet departments on autopilot through Feb. 15 frozen at or slightly below current levels.

Democrats face difficult choices and weeks of work on the leftover budget mess, which totals $463 billion and must be passed at Bush's strict budget limits.

"They are leaving us with a tremendous mess," Senate Minority Leader Harry Reid, D-Nev., told reporters. "We have alternatives, none of which are very good."

The House approved by a voice vote a bill to keep open a special investigative office that has unearthed millions of dollars in waste and fraud in the rebuilding of Iraq. The office, which was set to end operations by October 2007, would stay open for an extra year under the bill, passed earlier by the Senate.

The Associated Press contributed to this report.

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