Democratic Senator John Kerry, who wants to run for President in 2004, accused the Republicans of "leaving 12m children behind".
And House Democratic leader Nancy Pelosi quickly organised a march of young families with children to the office of House Republican leader Tom DeLay.
Under pressure, the Republican-controlled Senate last week passed a bill to extend the child tax credit, at a cost of $10bn, which would be paid for by increased customs charges.
But now the House Republicans have decided to use the controversy to pass a new, $82bn tax cut that includes both help for low income families and more tax cuts for upper income groups.
That bill will have to go to a Senate-House conference commitee for a resolution of the disagreement.
At the root of the problem is that conservative Republicans are still angry that the moderates in the Senate reduced their original tax cut proposal by half from its original $762bn price tag.
They are hoping that pressure to help the poor will allow them to extend the child tax credits to families earning between $110,000 and $150,000, and also to extend the length of time the tax cuts stay in place (under the Senate compromise, they expire in five years).
EUROPEAN ECONOMY 'VERY WEAK'
The 12-nation eurozone is in even worse economic trouble than previously thought.
The warning, from European Central Bank President Wim Duisenberg, comes just a week after the ECB slashed interest rates by half a percentage point to 2% in the face of fears of deflation and renewed recession.
Now, in his quarterly appearance before the European Parliament, Mr Duisenberg has cut back the ECB's forecasts for eurozone growth to 0.4-1.0% in 2003 from the 2% he had previously predicted.
"Economic growth in the first half of 2003 is likely to have been weak, very weak, and expectations for annual average growth of this year and 2004 have had to be scaled down," Mr Duisenberg told a European Parliament committee.
The news increases the likelihood that Europe's interest rate will be cut again.
Inflation — the taming of which is at the core of the ECB's brief — is dropping significantly, he said, further fuelling some economists' worries about the risk that prices might start falling, damaging investment and risking even lower growth.
For 2003, price growth is likely to be close to earlier predictions, Mr Duisenberg said.
But 2004 may well show a sharp slowdown in inflation — a contingency which the ECB is keen to avert.
Traditionally, the bank has striven to keep inflation below 2%, unlike the targets at the UK's Bank of England, which shoots for an inflation rate within a single percentage point of 2.5%.
According to the BoE's proponents, that makes sure that keeping a lid on prices does not unduly damage growth and the jobs market — factors outside the ECB's official remit.
CRUCIAL TALKS ON EU FARM REFORMS
European Union farm ministers have begun crucial talks on reforming the controversial system of farm subsidies.
The European Commission is putting forward proposals to stop paying farmers according to how much food they produce.
But the plans are likely to meet resistance from France and Spain, the main beneficiaries of the current system.
EU farm commissioner Franz Fischler said it was "decision time" and warned against "lame compromises" which could lead to more red tape and overproduction at taxpayers' expense.
"The negotiations will be tough and we have a few days' and nights' hard work ahead of us. But an agreement can be reached," he said.
FALLING EXPORTS HIT ITALY'S ECONOMY
The Italian economy shrank in the first three months of this year, according to official figures.
It suffered because of a slump in investment, and a sharp fall in exports as the euro rose in value.
The national statistics office, Istat, said the economy contracted by 0.1% from the last three months of 2002 — the first quarterly fall since 2001.
Istat was confirming preliminary figures released in May.
It said investment fell 5% from the previous quarter, while exports were down 3.5%.
Imports also dropped, but their value was almost equivalent to exports.
In the previous quarter exports exceeded imports by 2bn euros (£1.4bn; $2.3bn) and Italy's economy grew by 0.4%.
EAST AFRICA'S BUDGET DAY OF RECKONING
Three East African countries unveiled budgets in an attempt to repair decrepit financial architectures, boost growth and reduce poverty.
In Kenya, the budget is the first under the new Rainbow Coalition (NARC) government, which took over after a landslide victory in December after 39 years under President Daniel arap Moi's Kanu party.
Commitments to spend more on roads and schools made by the party — in the hope of turning around what it said was four decades of misrule mean expenditure will swell to 334.1bn shillings in July 2003-June 2004, up 20% on the previous year, Finance Minister David Mwiraria told Parliament.
In Uganda, meanwhile, the government unveiled a string of tax waivers to boost export industry, while raising consumption taxes in the hope of increasing revenues overall.
Tanzania, meanwhile, looks set to introduce sweeping farming subsidies to fight the damage wrought by the drought afflicting all of southern Africa, despite opposition from the International Monetary Fund.
FINAL PUSH FOR EU CONSTITUTION
The body in charge of drafting a constitution for the European Union is entering its final session with strong backing for its proposals from Germany and France.
German Chancellor Gerhard Schroeder said after talks with French President Jacques Chirac in Berlin on Tuesday that the two countries were determined to support the proposals of the Convention on the Future of Europe "without reservation".
The convention is hoping to complete the document ahead of a deadline so that it can be presented to EU leaders next week.
The convention's chairman, Valery Giscard d'Estaing, said earlier that a basis for consensus was emerging among the group leading the work.
PEOPLESOFT REJECTS ORACLE OFFER
US software firm Peoplesoft has turned down a $5.1bn (£3bn) takeover offer from rival Oracle.
Peoplesoft said competition watchdogs were highly likely to block any tie-up between the two firms.
SOUTH AFRICA CUTS RATES
South Africa's Reserve Bank has cut interest rates further than expected as it tries to rein in inflation.
The bank knocked 150 basis points off the rate, bringing it down to 12% — the first rate cut in 21 months.
EU INVESTIGATES OIL GIANTS
Two multinational oil companies are being questioned in the European Parliament about their payments to governments in the developing world.
At a special hearing, senior executives from Shell and BP face accusations they indirectly help corrupt governments to plunder oil revenues while their citizens live in poverty.
UK JOBLESS TOTAL JUMPS
The prospect of a further UK rate cut appeared to rise following an increase in the number of jobless and a drop in earnings growth.
Data from the Office for National Statistics (ONS) showed the number of people out of work in the three months to April rose by 36,000 on the previous quarter to 1,495,000.
SUMMIT LOOKS TO BOOST AFRICA GROWTH
An African Economist Summit starts in the South African port city of Durban with the aim of kick-starting the continent's stalled efforts to attract new resources for development and growth.
The summit is run by the World Economic Forum, the body best known for a jamboree of government, business and civic elites held every January in Davos, Switzerland.
But while as many as seven leaders were expected to attend, only South African President Thabo Mbeki — the host — Joaquim Chissano of Mozambique and Madagascar's President, Marc Ravalomanana, are now likely to turn up.
"I think there's something to be said for the idea of 'summit fatigue'," one delegate said.
High on the summit's agenda is the HIV/Aids crisis,
which is seen by many as the biggest threat to the continent's well-being.
South African mining giant Gold Fields has struck a deal to sell a 15% shareholding to a black-run group to comply with new laws to strengthen black influence over the white-dominated economy.
Gold Fields sold the 15% shareholding to Mvelaphanda Resources for 4.1bn rand ($514m; £311m) in what it said was a "broad based black economic empowerment deal".
SOROS SLASHES RUSSIAN AID
The billionaire philanthropist George Soros has said he plans to drastically scale back his programme of charitable donations in Russia.
Mr Soros, who made his billions through currency trading and famously contributed to the 1992 sterling crisis, set up his Open Society Institute (OSI) foundation in Russia in 1988 to help create a so-called 'civil society'.
The foundation has spent over $1bn in the last 15 years, focusing particularly on education, science and the development of the Internet.
SRI LANKA WINS $4.5BN AID PLEDGE
International donors have promised $4.5bn in aid towards rebuilding Sri Lanka after two decades of civil war.
A Japanese envoy at the donor conference in Tokyo, Yasushi Akashi, described the pledges of loans and grants — to be released over the next four years — as a vote of confidence in Sri Lanka.
The aid on offer was higher than expected, but most of the money is conditional on progress in reviving peace talks between the Sri Lankan government and Tamil Tiger rebels.
UK TRADE GAP NARROWS
The UK's goods trade deficit with the rest of the world has unexpectedly shrunk, official figures show.
The Office for National Statistics said the value of goods imported into the UK outstripped the value of UK exports by £3.1bn in April, down from £3.4bn in March.
Analysts had predicted that deficit would widen to £3.5bn.
The improvement was entirely down to a shift in the balance of trade with countries outside the European Union (EU).
The non-EU trade gap fell to £1.4bn from £2.3bn in March, the lowest deficit since September 1999.
The narrower gap partly reflected an 11.3% increase in exports. Most analysts had predicted the deficit would grow to £2.5bn.
SIGNS OF HOPE FOR UK FACTORIES
The UK's struggling manufacturing sector has shown tentative signs of moving out of recession, with output rising in April.
The Office for National Statistics said manufacturing output rose 0.3% in April from the previous month, a better than expected figure, although still 1.1% down on the same period last year.
The ONS also revised up its figure for the first quarter to show a rise of 0.1% from the fourth quarter, meaning the sector narrowly escaped recession based on the common definition of two quarters of contraction. The sector contracted by 1.1% in the fourth quarter.
OPEC PRICES 'UNFAIR TO ASIA'
India's oil and gas minister has called on the Opec cartel of major oil producing nations to cheapen the price of oil to developing countries.
Ram Naik's appeal came just ahead of Opec's meeting in Qatar in the Arabian Gulf.
India imports most of its oil from the Middle East but pays more than developed countries despite being geographically close to the source of its supplies, he said.