Tax & Politics--The Post: "Tax Cuts Gaining, In Pieces"
washingtonpost.com
>>>By Glenn Kessler and Eric Pianin
Washington Post Staff Writers
Sunday , July 9, 2000 ; A01
Senate Republicans are preparing this week to push through two major tax-cut bills, building on a successful campaign by House Republicans to attract Democratic support by splitting up a giant tax bill into smaller parts.
Last summer, the GOP pushed through Congress an $800 billion package of tax cuts ranging from repealing estate taxes to reducing taxes for married couples. Just six Democrats voted for the bill, and it died after a presidential veto. But after House Republicans began rolling out pieces of the old bill one by one, many Democrats no longer called the GOP tax cuts irresponsible--but instead backed them.
Senate Majority Leader Trent Lott (R-Miss.) said he hoped to pass "marriage penalty" relief and estate tax elimination by the end of this week. The marriage penalty bill will be taken up under rules that prohibit delaying tactics and amendments from the Democrats.
The strategy of passing a series of bills, largely engineered by House Speaker J. Dennis Hastert (R-Ill.), has energized the Republican base and left the Democratic leadership and the Clinton administration scrambling to hold on to wavering Democrats by crafting expensive tax cut alternatives. The approach has also defused, at least for now, complaints that the tax cuts are unaffordable and has helped House Republicans make the case that they are accomplishing things this election year.
"The Republicans in the past had these big tax cuts that nobody could relate to," said Glen Bolger, a GOP consultant with close ties to the House leadership. "Now it's easier for people to relate to and perceive it would help them. They see the basic unfairness or injustice to the [tax] code."
But in many ways, the biggest tests have yet to come as the action moves to the Senate, where the complex parliamentary rules could make it more difficult for the GOP to advance its agenda. The political task may be eased somewhat by new estimates in recent weeks that the budget surplus will be much higher than previously projected over the next decade. Still, in the end, the GOP may have to decide whether it would prefer a veto or some kind of compromise with President Clinton.
So far, the vote tallies have been sweet for a House leadership with only a narrow majority. Republicans attracted 48 Democrats to a bill to relieve the marriage penalty, which would cost $182 billion over 10 years, and 65 Democrats (enough to override a veto) for a $104 billion proposal to phase out estate taxes--"death taxes" in Republican parlance.
By a vote of 420 to 2, the House also passed a repeal of a 3 percent telephone excise tax that will cost $51 billion over 10 years. Lawmakers approved $18 billion in tax cuts related to employer-sponsored pensions, and later this year they will consider legislation to boost the amount that can be contributed annually to Roth retirement accounts from $2,000 to $5,000.
Grover Norquist, president of Americans for Tax Reform and a close adviser to House Republicans, said the popularity of the estate tax repeal underscores the Democratic predicament on taxes. "Give me a tax Democrats can defend without hurting themselves, and that's the death tax," he said. "It's a tax on the rich. It's a tax on dead people. If you can't tax them, who can you tax?"
Administration officials profess to be unimpressed. "Having discovered that their large tax bill was seen by the public as fiscally irresponsible, they are hoping that if they take the staples out and send it page by page, it will somehow fool people," said Gene Sperling, Clinton's chief economic aide. "I don't think it will."
Rep. Martin Frost (D-Tex.), the leader of the House Democratic Caucus, acknowledged that Republicans have been getting some political mileage out of their strategy but noted that ultimately they will have to own up to the totality of their tax measures.
"At the end of the year you add it all up," Frost said. "There will be over a trillion dollars' worth of tax cuts--way over that. You just have to look at the numbers at the end of the day."
Nevertheless, Democrats have been forced to respond to the GOP's initiatives. In the House, Democrats crafted a rival estate tax bill that would have cut rates and eliminated the tax for about half of decedents--and would have taken effect faster than the GOP bill. Senate Democrats also are working hard to come up with a version of estate tax relief that can hold together the Democratic caucus.
Hoping to take advantage of the momentum caused by the overwhelming vote in the House to repeal estate taxes, Senate leaders plan to take the unusual step of bringing the House bill up for a vote without crafting a Senate version in committee.
Sen. Jon Kyl (R-Ariz.), one of the leaders in the push to repeal estate taxes, said the House's gambit "is an effective strategy" because a bigger bill "represents a big, fat target." But he added, "There is one flaw in it: The Senate doesn't run that way."
"They were smart to develop that strategy, and they were able to score some political votes. But hopefully we'll also be able to repeal some taxes," Kyl said.
Kyl has nine Democratic co-sponsors for his bill to repeal the estate tax, but even so he said it would be tough for the 55 Republicans to come up with the 60 votes to beat back a filibuster. Kyl said Senate Minority Leader Thomas A. Daschle (D-S.D.) "has made a big effort to craft a Democratic alternative" that would win the support of all Democrats and thus thwart bipartisan passage of the GOP bill. Lott said he is trying to work out an agreement with Daschle on amendments to an estate tax bill.
In the House, however, Democrats were unable to woo wavering members with their alternative exempting many farms and small businesses or with statistics showing that the wealthy pay most of the estate taxes.
Rep. Neil Abercrombie (D-Hawaii) has one of the most liberal voting records in the House but voted for the GOP estate tax repeal (an issue for small businesses in his district) after having voted against the big tax bill in 1999. Although Abercrombie voted against the GOP version of marriage penalty relief, he also said he might support a bigger tax bill that came out of the Senate combining estate tax repeal with marriage penalty relief.
"With the new estimates of the surplus, it is more difficult to make the argument" that the tax cuts are irresponsible, he said. Vice President Gore recently doubled his tax cut to $500 billion, Abercrombie noted. "When you start dealing with hundreds of billions of dollars, the electorate will start to say, 'What's the difference between $500 billion and $800 billion?' "
Democratic leaders say they are convinced Republicans are not serious about actually passing many of these tax bills into law. Rep. Charles B. Rangel (N.Y.), the senior Democrat on the House Ways and Means Committee, said he would describe the GOP's approach this way: "Make certain that you keep sending out attractive messages that Democrats would like but load it up so that it will be vetoed. Don't talk to Democrats about compromise and getting something signed into law."
There is certainly a debate within Republican circles about whether to seek a compromise with Clinton or attract a veto with the hope that a better deal can be struck next year with a Republican president. A compromise might dilute the message, but a veto might make Congress appear unproductive.
Mark Bloomfield, president of the American Council for Capital Formation, which is pushing for estate tax repeal, said, "I would argue both the Republicans and the Democrats are better off having something signed into law. Both parties would be able to go to the people and say we produced something."
Abercrombie agreed that if Congress and the administration strike a deal, "each party will lay claim to that bill." But he insisted that no matter what happens, control of Congress won't depend on the tax bills. Instead, he said, the election will turn on Social Security, Medicare, prescription drugs and education. "There's no way the marriage penalty will add up to the same thing" as those issues.
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