Hey, Guys! Our Tax Cut is Just as Big as Yours

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The GOP is almost ready for their showdown. By a 57-43 vote that got Ė- but didnít need Ė- support from four Democrats, Senate Republicans passed their ten-year, $792 billion plan to give Americans an annual April dividend on their surplus. They donít have a bill that'll go anywhere -Ė President Clinton, says TIME White House correspondent Jay Branegan, "will veto anything this big" -Ė but Senate Majority Leader Trent Lott and his House counterpart, Speaker Denny Hastert, have their defining issue. "We want to cut taxes and the President wants to spend it," Lott said after the vote. "That's what the fighting is all about." Well, thatís what the fighting will be about. Before the Republicans can turn Clintonís promised veto (or, more improbably, concessions) into a 2000 rallying cry, theyíve got to give him something to reject, and thatís why even before the final vote, Lott and Hastert were huddling with their deputies over when the bicameral negotiations would get underway. Theyíve got their work cut out Ė- about the only thing the House and Senate versions share is their staggering $792 billion price tags.

Compromise or confrontation? William Rothís Senate plan takes small, negotiable bites: Reduce the 15 percent tax bracket to 14 percent and expand that bracket; ease the "marriage penalty," reduce estate taxes and increase contribution limits for IRAs. The House proposal is uncompromising swordplay -- cut the capital-gains tax and slash income taxes, across the board, by 10 percent. "Itís up to the Republican caucus what they want to do now about a final bill," says Branegan. "If they decide to try to attract some Democratic support, itíll look more like the Roth plan. If they want to make an ideologically pure statement, itíll be more like the House version." Clinton insists he doesnít care what it looks like -- $792 million is too much. And so, for that matter, is the $500 billion proposed by some moderate Republicans. "The White House thinks itís keeping the bidding low by publicly saying it wonít compromise," says Branegan. Republicans, by railroading their disgruntled moderates, figure theyíre keeping the bidding high. Get ready to rumble.