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Senate rejects GOP-backed estate tax and wage hike bill

OK's legislation on pensions as session ends

WASHINGTON -- A Republican election-year effort to fuse a cut in inheritance taxes on multimillion-dollar estates with the first minimum wage increase in nearly a decade was rejected by the Senate late last night.

Republicans needed 60 votes to advance their bill, which links a $2.10 increase in the $5.15 federal minimum wage over three years to reductions in estate taxes next decade. The bill got a 56-42 vote, four votes short of succeeding. The House had passed it Saturday.

For Republicans, the combination could have neutralized a Democratic campaign issue while also advancing an estate tax cut, a priority that might have an uncertain future if the GOP loses seats in Congress in November's election.

The GOP strategy put Democrats in an uncomfortable position. They could vote against the bill -- thus rejecting a minimum wage increase -- or they could vote for it -- thus agreeing to cut taxes on multimillion-dollar estates. Most rejected the bill, blocking a GOP victory months before the election.

The vote would have been 57-41, but Senate majority leader Bill Frist, a Republican from Tennessee and a key backer, switched his vote in a maneuver to preserve his right to debate the bill again this fall. He urged senators who voted against it to ``rethink long and hard" before lawmakers reconvene in September.

Four Democrats joined Republicans and voted for the bill: Robert Byrd of West Virginia, Ben Nelson of Nebraska, Bill Nelson of Florida, and Blanche Lincoln of Arkansas. Two Republicans voted against the bill: Lincoln Chafee of Rhode Island and George Voinovich of Ohio.

In a second significant vote last night, the Senate approved and sent to the White House pension legislation to give millions of Americans a better chance of getting the retirement benefits they've earned while sparing taxpayers from possibly paying for failed pension plans. The legislation, passed 93-5, also provides incentives for young workers to enroll in 401(k) plans, reflecting the trend away from traditional employer-based pensions.

The pension vote was the last before the Senate leaves for a four-week summer break and gives lawmakers a major accomplishment to speak of when they meet their constituents back home.

Republicans had similar hopes with the estate tax bill, despite its daunting prospects. Charles Grassley, Senate Finance Committee chairman and a Republican from Iowa, likened the minimum wage and estate tax bill to ``a long shot" bet on racing horses. ``Once they're out of the barn and running around, it's kind of hard to turn them around," he said.

Most senators lauded the passage of the pensions bill.

``This bill says to millions of Americans who fear their pensions will disappear that help is on the way," said Senator Edward Kennedy, Democrat of Massachusetts.

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