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Tax Cut Politics

February 27, 2001 at 12:00 AM EDT
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KWAME HOLMAN: Through the first few weeks of his new administration, it appeared President Bush’s 10-year, $1.6 trillion tax cut proposal was on a glide path to congressional approval.

PRESIDENT GEORGE W. BUSH: I urge the Congress to pass my tax relief plan with the swiftness these uncertain times demand.

KWAME HOLMAN: Even before the President signed and sent his plan to Congress, it already had momentum behind it. Federal Reserve Chairman Alan Greenspan softly endorsed the notion of a tax cut; the expert Congressional Budget Office forecast a big enough budget surplus to pay for it; and one of the new Democrats in the evenly split Senate, Zell Miller of Georgia, came out immediately to say he’d vote for it.

SEN. ZELL MILLER: Remember that old Elvis Presley song, “Return to Sender”? That’s what we’re wanting to do right here. That’s what we’re wanting to do with this overpayment of taxes.

KWAME HOLMAN: Treasury Secretary Paul O’Neill hand-carried the plan up to the Capitol, where Republican leaders were eager to accept it. And before the House Ways and Means Committee, where all federal tax legislation is born, O’Neill urged members to act on the tax cuts right away.

PAUL O’NEILL: And if we were to do it on a retroactive basis to January 1, money could begin to flow very quickly, if the Congress could act on these things quickly.

KWAME HOLMAN: The President held the early advantage in promoting his tax cuts in large part because no one in Congress stepped forward to offer a comprehensive alternative; certainly not one with a realistic chance of picking up enough votes to pass. Congressional Democratic leaders Tom Daschle and Dick Gephardt, opponents of Mr. Bush’s tax cut plan, didn’t propose a plan of their own until just before President’s Day. They endorsed a $750 billion tax cut, half the size of the President’s, aimed at low- and middle-income Americans. But they provided few details. And the Progressive Caucus, a group of left-leaning House Democrats, propose giving every American man, woman and child $300. They proclaimed it the fair way to distribute the expected budget surpluses.

REP. DENNIS KUCINICH: Unlike the administration’s proposal, which reserves over 40 percent of the tax cuts for the wealthiest 1 percent of the population, the American people’s dividend– this proposal– gives those at the top 1 percent, 1 percent. This makes the overwhelming proportion of tax relief available for the bulk of the population. Everyone benefits.

KWAME HOLMAN: Meanwhile, an equally passionate group of House conservatives argues the Bush tax cut plan isn’t big enough. They want to push the tax cuts beyond $2 trillion.

REP. TOM DeLAY: We don’t know how much is out… How much taxes… How many taxes that the government is taking in surplus from the American people. I mean, this is the beginning of a process. It’s an ongoing process, and no one should be drawing a line in the sand saying, “it’s going to be that number and no number.”

KWAME HOLMAN: But each time a new tax cut proposal is offered, President Bush’s response remains the same.

PRESIDENT GEORGE W. BUSH: I think it’s going to be very important for us and the members of Congress to work together, but I’m going to make my case that the size of the tax relief package I propose is right.

KWAME HOLMAN: Among the most important members of Congress with whom the Bush administration will have to work are the centrists. They’re Senators from both parties who meet regularly to promote common moderate goals. Two Republican centrists, Jeffords of Vermont and Chafee of Rhode Island, already are on record saying the Bush tax cuts are too big. Maine Republican Olympia Snowe said she would like to see a triggering mechanism that would suspend major tax cuts if the economy doesn’t perform as well as expected.

SEN. OLYMPIA SNOWE: You know, we anticipate that we will have sizable surpluses. But in the event that they don’t materialize to the extent that we expect or anticipate, then we should have a mechanism in place to ensure that each and every year we can keep track of our debt reduction first and foremost. Then we can, you know, phase in the next step of the tax cut. If we don’t, you know, meet… we can delay this phase of the tax cut if we don’t meet the debt reduction goal of that particular year or spending policy.

KWAME HOLMAN: Just before Congress recessed last week, the centrists invited Bush chief of staff Andrew Card and economic advisor Lawrence Lindsey to meet with them in a capitol conference room. Cameras were allowed to record the welcoming comments.

SEN. OLYMPIA SNOWE: So we appreciate the fact that you’re willing to be here today, and Larry as well, to talk about the President’s tax proposal and any other issues that you care to address.

KWAME HOLMAN: The centrists expect to hold several more discussions in an effort to reach consensus on tax cuts. They admit at this point, they’re far from it. Nor does it appear President Bush yet has the votes. Senate Budget Committee Chairman Pete Domenici gave the President the running tally during a White House budget session just before the recess.

SEN. PETE DOMENICI: We told him tonight at this meeting of the closeness of the debate in the Senate, and he indicated that he was well aware of that and he was going to do his share to help us. So everybody should understand we’re not finished working on this. Right now it would appear that there are a number of Senators who are undecided, and there are between 47 and 49 that are absolutely committed, and we’re still working.

KWAME HOLMAN: And President Bush continues to respond optimistically when questioned about his tax cut.

PRESIDENT GEORGE W. BUSH: I don’t agree with that assessment that there’s not enough votes in the Senate. I believe, when it’s all said and done, we’re going to get a tax bill out of the House and the Senate that will be at the level I think it ought to be. And I know there’s a lot of speculation about members, but it’s early. It’s early in the process.

KWAME HOLMAN: But the debate already has begun. Yesterday, the President was well positioned to hear opposing views from two of the nation’s governors: Democrat Parris Glendening of Maryland.

GOV. PARRIS GLENDENING: That some of us are very concerned that the tax cut that’s being proposed is too large and will not permit funding for some key issues, such as education and prescription drug coverage.

KWAME HOLMAN: And Republican John Engler of Michigan.

GOV. JOHN ENGLER: Many of us have the perspective on the tax cut: Big, fast, across-the-board, and right now, so… ( Laughter ) …I’ll say that, and… ( Applause )

KWAME HOLMAN: The President will make his own case for tax cuts during his nationally televised address to Congress tonight.