The Republicans' Phantom Tax Cut

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Going once, going twice... House and Senate Republicans late Tuesday came up with the refund they’ve always wanted – a 10-year, $792 billion smattering of tax cuts that combines the House’s across-the-board dreams (in this version, a one-percentage-point cut in every bracket) with the Senate’s targeted goodies (relief of the marriage penalty, increase IRA contribution limits) that make the measure sound more like one of Bill Clinton’s than Newt Gingrich’s. And that’s exactly why maybe – just maybe – some of this begging-to-be-vetoed bill might survive the summer. "The fact that it has so many of the earmarks of William Roth’s (R-Del) Senate version means there is some possibility of splitting the difference with Clinton," says TIME White House correspondent Jay Branegan. "But first they’re going to go home and see if they can sell it, and get some leverage from the voters."

After its passage this week, the bill should land on President Clinton’s desk sometime in September, at which point either it’s going to get a lot smaller – Clinton’s stated upper limit is $300 billion, but he’ll go higher in a pinch -- or it’s going to disappear completely. And by way of pre-negotiation negotiation, both sides will be insisting all month that that’s OK with them. "Sometimes inaction is better than wrong action," said Trent Lott on Tuesday, sounding just like White House wonk Gene Sperling did on Sunday. If no deal gets done, this year’s surplus goes straight into debt repayment – something nobody is against these days. And although Roth has a way with bipartisanship, a standoff seems the likeliest possibility. "Clinton has successfully sold his spending programs as more important than tax cuts," says Branegan. "The White House doesn’t feel it will have to give too much up, and if the GOP stands firm, Clinton will veto it." But take heart, overtaxed Americans: if he does, you'll get another crack at it next year.