Tax Tussle Threatens to Split the GOP

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The Republicans are betting the next Congress on a showdown with Bill Clinton over tax cuts. The challenge will be getting to the big game in one piece. As the GOP leadership gets ready to stampede a massive cut through the Senate this week, they’ll be stepping on the toes of not only the White House and the majority of economists, but some moderate members of their own party — just like the House leadership did last week. Rhode Island Republican John Chafee is leading a handful of fellow moderates and Democrats who want to split the tax-cut difference between the White House ($250 billion and not a penny more) and the Senate GOP leadership ($792 billion and not a penny less). It’s a futile effort — for now. "The $792 billion cut is just like last week’s House proposal in that it’s little more than an opening offer," he says. "The compromise, if Clinton feels enough pressure to compromise at all, might well be in Chafee’s range. But that won’t happen for months."

In the meantime, it looks more and more like the GOP leaders against the world. From the White House (Al Gore stopped by late Tuesday to trash the bill for neglecting Medicare) to the polls, the appetite for a cut that big just isn’t there right now. Even fellow Republican and economic icon Alan Greenspan is in on the finger-wagging. In testimony before the Senate Banking Committee Tuesday, the Fed chairman more or less repeated what he told the House last week: In this time of economic plenty, tax cuts aren’t bad, but debt repayment –- and preparing for boomers’ retirements — is a whole lot better. And while the Senate leadership shouldn’t have much trouble ramming their bill through by Thursday, Republicans will eventually have to face down the critics in their own party. "The two bills are very different packages," says Branegan, "similar only in size. Before they can stare down Clinton, they’ve got to combine the measures into a single bill. At that point, the moderates will have their say." Which could make the face-off with the White House –- in which a veto, as political ammunition, would be almost as good as a compromise — look like the easy part.