WASHINGTON (AP) – The Senate voted yesterday to slash President Bush’s proposed $726 billion tax-cutting package in half, handing the president a defeat on the foundation of his plan to awaken the nation’s slumbering economy.

The vote to shrink the tax reduction to $350 billion through 2013 was a major coup for Democrats. Joined by a handful of moderate Republicans, they have been trying to shoot down the president’s proposed tax cuts or make them smaller, arguing they make no sense with an expensive war with Iraq under way and federal deficits expected to soar to new records.

Even as signs have emerged about public concern over the war, polls show Bush continues to have strong support from voters for his performance as president. Even so, yesterday’s vote underlined that his popularity has not cowed Democratic rivals from challenging his domestic policies.

The Senate’s 51-48 vote came the same day Bush formally asked Congress to rush him $74.7 billion to pay for the initial costs of the Iraqi war and other expenses of the U.S. war against terrorism.

Members of both parties said they expect the price tag of Bush’s war package to grow by billions before congressional approval. With the war spending likely to push this year’s federal deficit toward $400 billion or beyond, Democrats and moderate Republicans were emboldened to push their amendment to make the tax cut smaller.

“What you’re seeing is more concern than there was last week” about the war’s costs, said Sen. John Breaux (D-La.), a sponsor of the drive to reduce Bush’s tax cut.

Last Friday, the Senate rejected a similar effort to slice Bush’s tax plan to $350 billion. That measure had proposed using the difference to reduce the deficit, while yesterday’s proposal would use the money to buttress Social Security or for deficit reduction.

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