Gephardt and Daschle assail Bush's plan and search for theirs
During the campaign, Bush's tax-cut plan seemed too grandiose to many voters. But layoffs, slipping economic indicators and a blessing from Fed chairman Alan Greenspan made the idea credible — and now Washington can smell a big tax cut the way hogs smell slop. Politicians are scrambling to the trough. Some of their schemes are well-intended — Senate majority leader Trent Lott wants to change the alternative minimum tax so it doesn't take such a big bite out of middle-class taxpayers — but all of them threaten to grow the beast. Lott's plan would bring Bush's plan to $1.8 trillion; House majority leader Dick Armey would inflate the cuts to $2.6 trillion. Corporate lobbyists "are baying at the door" of the Ways and Means Committee, says Florida representative Mark Foley, with pleas for up to $1 trillion in goodies — lower corporate tax rates, larger write-offs for computers, more tax credits. Kick in other tax subsidies that important constituencies like farmers want extended, and the tab runs up to nearly $4 trillion. "Time out!" pleads Max Baucus, senior Democrat on the Senate Finance Committee. "Let's slow down here."
Nobody else seems interested in hitting the brakes. At a Rose Garden ceremony last Thursday, Bush signed a letter delivering his tax-cut proposal to Congress. The same plan he campaigned on, it would lower tax rates across the board, doubling the child-care credit to $1,000 per child, reducing the marriage penalty and phasing out the estate tax. "This country has prospered mightily over the last 20 years," Bush said. "But a lot of folks feel as if they've been looking at somebody else's party."
As Bush knows, the best way to sell the cuts is to show "how they benefit children, families and workers," says a top Senate GOP aide. And so the wealthy — who would get the lion's share of tax relief under Bush's plan — were kept out of sight last week. Instead, Bush flew in middle-class "tax families," with little girls in velvet dresses and boys in penny loafers. Best prop for the cameras: a single-mom waitress with two kids making $32,000 a year. (She would get $1,500 back from the government, according to Bush.) Asked by reporters where the rich tax families were, the President said he represented them.
Democrats had props of their own. Senate Minority Leader Tom Daschle and House Minority Leader Richard Gephardt borrowed a new Lexus sedan from a local dealer and parked it outside the Capitol, near a dented muffler. Bush gives millionaires "a $46,000 tax cut, more than enough to pay for this Lexus," Daschle said. "But if you're a typical working person, you get $227. And that's enough to buy this muffler." The wealthiest 1 percent of Americans, by his calculations, would reap 43 perent of the Bush tax cut, while families making less than $39,300 would get just 12 percent.
That's a familiar argument from Al Gore's failed campaign, but Democrats still think they can draw blood with the fairness attack. In the latest TIME/CNN poll, a narrow majority of those surveyed, 51 percent, say Bush's plan favors the rich. Daschle's pollsters tell him the public also suspects that the projected $5.6 trillion budget surplus won't fully materialize to pay for the cuts. If it doesn't — and if Bush keeps his promises to hike spending for health care, education and missile defense — the tax cut will end up being paid for with "a raid" on Social Security and Medicare, Democrats warn.
"The last gasp of liberalism," replies White House spokesman Ari Fleischer. Republican polling indicates that as the economy cools, middle-class Americans are warming to Bush's plan — even if the rich get richer. "They want a tax cut," says GOP pollster David Winston, "to help the economy so it enhances their job security." Democrats sense this as well, so they're fortifying their attacks with a tax cut of their own. They'll dump the "targeted" tax cuts Gore pushed during the campaign, which "were a mistake," says California representative Ellen Tauscher, new vice chair of the centrist Democratic Leadership Council. "It looked like Big Government picking winners and losers." Instead, the Democrats will offer across-the-board cuts — but no more than $900 billion of them — with the cuts weighted toward lower-income taxpayers. To sweeten the deal, Daschle and Gephardt may also propose trimming payroll taxes, the money taken from paychecks to fund Social Security and Medicare, a bigger hit than income taxes for 80 percent of working Americans.
Bush's surprise at the feeding frenzy is, of course, an act. White House aides wanted a fever for the political cover it provides. When GOP conservatives howl for a $2.6 trillion cut and the Democrats come in at $900 billion, Bush's plan becomes the reasonable compromise at $1.6 trillion.
But hogs can be hard to control. Bush summoned CEOs to the White House last week and warned that he would fight any move toward business-tax breaks. "We should focus on people first, not corporations," he said. He delivered an even blunter message to congressmen at the White House Thursday night: "I'm not going to let the tax plan get pencil-whipped." Brave words, but few in Washington believe them. Corporations gave $134 million in soft money to the Republicans to get Bush elected. Their chiefs expect more than White House cuff links in return.
Nervous about rosy surplus projections, Senate moderates have floated the idea of a "trigger" that would postpone tax cuts in later years if there's no surplus to cover them. Bill Thomas, House Ways and Means Committee chairman, has ideas of his own, such as moving the tax-rate cuts through his committee before taking up other parts of the package. "You know, Bill," Bush joked with Thomas at a White House meeting, "you can pass anything you want as long as it's my bill." The two men laughed — but both knew that wasn't the case.
Even though the tax bill Congress passes won't be an exact copy of his plan, Bush believes he's already won. "The question is not whether there should be a tax cut but when and how much," says one of his aides. No matter how crowded the trough gets, Bush thinks he'll get credit for the feast.