Jewish World Review Feb. 5, 2001 / 12 Shevat 5761
Dems move toward bush on
taxes, but ...
WITH Congressional Democrats shifting toward larger,
across-the-board tax cuts, it ought to be easy for President
Bush to strike a deal. But of course it won't be.
The Democrats haven't officially settled on their tax stance, but
leaders are talking about cuts as large as $900 billion over 10
years and have virtually decided to jettison the word "targeted,"
convinced it's a political loser.
The Democrats' shift is closing the differences between their
plan and Bush's $1.6 trillion across-the-board proposal, and
Federal Reserve Chairman Alan Greenspan has given his blessing
to a tax cut.
There's plenty left for Democrats and Republicans to fight
about, though - and both sides seem to be itching for a battle
before they settle down to serious negotiations.
For example, they differ not just on the size of cuts but
especially on how they should be distributed. Democrats are
leaning toward a proposal that would give all families a
yearly $600 tax cut, while Bush also wants to give tens of
thousands of dollars back to upper-income taxpayers.
Besides being far apart on substance, both sides want a test of
strength to show who's boss. If Bush wants to change
Washington's partisan atmosphere, this is the place to start.
So far, Bush has won one argument. Democratic leaders are
abandoning former Vice President Al Gore's campaign position -
and theirs - that tax cuts ought to be "targeted" to the middle
class and achieve specific policy goals.
"People hear the word 'targeted' and think everyone will get a
cut but them," observed one Democratic leadership aide. "They
think that, as a party, we oppose tax cuts."
The point was driven home in a poll unveiled last Monday at a
House Democratic leadership retreat which showed that by
margins of 12 to 22 points, voters prefer across-the-board cuts
to targeted ones.
The poll of 1,200 voters was conducted jointly by two
Democratic firms, Garin-Hart-Yang and the Mellman Group,
represented at the retreat by pollsters Geoff Garin, Fred Yang
and Mark Mellman.
Asked whether Democrats should "stand up to" or "go along
with" a Bush tax cut of $1.9 trillion (Democrats add interest
payments to Bush's cuts), voters were split, 36 to 36 percent.
By 57 to 17 percent, they said Democrats should "stand up to"
cuts that go 60 percent to the rich.
Respondents said they trust Democrats on taxes slightly more
than Republicans, 41 to 39 percent, and favor Democratic
priorities, such as education, Social Security and prescription
drugs, over tax cuts by 10 to 20 percent.
However, when asked to choose between "reducing everyone's
taxes" and "targeted cuts for college and health care," they
voted for across-the-board cuts by 52 to 40 percent. And when
asked to choose between "reduced rates for all" and rate
reductions for the first $35,000 of income, across-the-board
cuts were favored by 57 to 35 percent.
Democrats haven't entirely dropped the idea of targeted cuts,
however. Senate Minority Leader Thomas Daschle (D-S.D.)
introduced a package of targeted cuts as the new Congress
They also are likely to reintroduce marriage penalty and estate
tax relief legislation that's smaller than Republican proposals, as
they did in the last Congress.
But, subject to agreement when House and Senate caucuses
approve the strategy, Democrats are likely to make their lead
proposal acceleration of Bush's plan to lower the current bottom
rate of 15 percent to 10 percent for the first $12,000 of
During the election campaign, Bush favored phasing in the cut
over six years, which would give all families just a $120 cut this
year. Democrats are inclined to make it fully effective this year,
giving all families $600 at a cost of $40 billion a year.
There also is discussion among Democrats about giving
taxpayers an income-tax credit for the Social Security taxes
they pay and helping taxpayers whose incomes rise above the
level that makes them eligible for the earned income tax credit.
Besides moving to across-the-board cuts, Democrats have
nearly doubled the price tag on the cuts they will consider -from
$500 billion during the campaign to close to $900 billion, if the
Congressional Budget Office comes in next week with a
non-Social Security, non-Medicare budget surplus of $2.7
Democrats want a third of the surplus to go to tax cuts, a third
to new spending programs, and a third to pay down the federal
Democrats charge that Bush wants to spend 85 percent of the
surplus on tax cuts and, after spending increases, would return
the nation to the deficit era. Bush aides say that's nonsense.
Both sides claim they've been vindicated by Greenspan
-Republicans, from his endorsement of marginal rate cuts; and
Democrats, from his cautions to protect the surplus. And so the
fight goes on.
My guess is there'll be an agreement somewhere near Senate
Finance Chairman Chuck Grassley's (R-Iowa) estimate of $1
trillion in cuts and a top rate lower than its present 39.6
percent but higher than Bush's proposed 33 percent. However,
it will be awhile
JWR contributor Morton Kondracke is executive editor of Roll Call, the newspaper of Capitol Hill. Send your comments by clicking here.
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