POLITICAL WRAP

July 23, 1999
		Wall Street Journal columnist Paul Gigot and syndciated colunmnist Mark Shields reflect on the House of Representatives passage of a $792 billion tax cut.

Online Forum: What issues do you think should shape election 2000? A NewsHour special emphasis on the Election 2000 issues. July 21, 1999: Congress discuss charges that PBS improperly traded donor list. July 21, 1999: Debating the $792million GOP tax cut plan July 15, 1999: The Senate votes down provision to sue HMO's July 15, 1999: Presidential candidates reveal their fundrasing totals July 6, 1999: A look at the First Lady's possible campaign for the Senate. July 2, 1999: Shields & Gigot discuss discuss Campaign 2000 and the congressional battles of the budget surplus. Browse the NewsHour's Shields & Gigot index.   The House of Representatives The U.S. Senate	JIM LEHRER: Now it's time for some political analysis by Syndicated Columnist Mark Shields and Wall Street Journal columnist Paul Gigot.
	The House votes to cut tax
	Paul, the tax cut bill finally passed the House and that was a big win for the Speaker, was it not? PAUL GIGOT: A big win for the speaker. A big win for the Republicans in the House, Jim. No question about it. It gets them on offense for a change. You know, they've been playing defense on an awful lot of bills, on the Patient's Bill of Rights, gun control, a variety of things. This gets them back fighting on an issue where they can dictate the terms of discussion. They can get the president to have to meet them halfway, and a very big victory for Speaker Hastert, I think, because he put his speakership on the line here. He said, "This was one for me, fellas." And he corralled an awful lot of moderates who - Dick Armey and Tom DeLay and some other leaders couldn't speak to; he couldn't get them, but, Denny Hastert, the speaker, said, "Look, some of you needed my votes in the past. I gave them to you. You want me to succeed as speaker, you have got to do it." And he got them. JIM LEHRER: Why was it so difficult for him, Mark? Why did this thing come down to this? MARK SHIELDS: I think there's couple of factors, Jim. I mean, there are obvious fault lines. I agree with Paul that the alternative would have been unacceptable to the speaker. The speaker had to win. JIM LEHRER: I mean, he would have been out of there? MARK SHIELDS: Well, I mean, -- JIM LEHRER: I don't mean literally - but - MARK SHIELDS: -- the tax cuts are the signature idea of the Republican Party. I mean, if you can't get Republicans to vote for tax cuts, and that's a little bit like inviting a college freshman to a free kegs night on Thursday. They do show up. That's the bonding, galvanizing idea that holds the party together. There's a lot of our different sub colonies in the Republican galaxy, but that's the key. And I think he had problems with moderates who were concerned about the size of the tax cut. He did modify them and modified the cut and mollify them personally. Personally, I think Paul is right. The personal relationship there was key and indispensable.
	A win for Coach Hastert
	JIM LEHRER: By Hastert, you mean? MARK SHIELDS: By Hastert, by the speaker. I think the conservatives or the social conservatives are particularly upset that there was no full elimination of what is called the marriage penalty, the tax that falls on some married couples more heavily than it does upon people living together without benefit of clergy or marriage. So, he had to walk that -- and made it an issue that this is my speakership that's hanging, and he's a popular man within the Republican Party. After he won, Chris Shays, who's a moderate and a maverick and an iconoclast within for the Republican Party, started leading cheers, "coach, coach, coach." I mean, there was a real feeling of victory and satisfaction for him. JIM LEHRER: So, but does this create a situation where the very conservative House, Republican House is suddenly being controlled by a few moderates? PAUL GIGOT: Well, I think that they are the dominating force in the Congress now, Jim, and particularly in the House. It was only a five-vote majority first of all. So, any six people can blackmail. But you've got those twenty to thirty members who say, "Look, they can control anything." There are a lot of ideas that Dick Gephardt has and Bill Clinton has-- patients protection, campaign finance reform, the minimum wage -- where these members are going to go over to the other side and create a lot of problems for the Republican leadership because they're going to vote with the Democrats. So every vote is going to be a struggle. I mean, you haven't seen, other than this tax bill, you haven't seen an awful lot of new conservative agenda items moving through the House, have you? And I think that's because a lot of moderates say "no." JIM LEHRER: So when they say "no," that means no to a vote, which is what -- this thing almost didn't come to a vote for that reason. It goes to the Senate next week. What is going to happen there, Mark? MARK SHIELDS: Well, I think the Senate, Bill Roth, the chairman of the Senate Finance Committee has a different idea; the same dollar sign. JIM LEHRER: About $800 billion. MARK SHIELDS: That's right. But with - he reached out -- the Republicans passed it in the House with Republican votes. They would have done it without any Democratic votes, if no Democrats had voted for it. No Democrat voted for the Republican bill in the House until they had a majority of those voting. PAUL GIGOT: Right. That was the deal. JIM LEHRER: Was that the deal? So nobody could say the Democrats - PAUL GIGOT: Democrats said we might vote for it, half a dozen of them said, but you better have the votes first. Show us the money. MARK SHIELDS: Well, I mean, and then knowing full well -- I mean the shrewdness of it was that the Republicans would not bring up the bill unless they did have the votes. JIM LEHRER: Unless they had the votes. MARK SHIELDS: And that was the escape clause. The Senate takes a little different approach. Bill Roth crafted a bill consulting people -- Democrats on the committee - like John Breaux of Louisiana, Bob Kerrey of Nebraska - he got them aboard. But it's more middle class seemingly. And it lowers the lowest tax rate for the least wealthy Americans from 15 percent down to 14 percent. And it extends or expands that group. That's the principle difference. JIM LEHRER: No across the board -- the House thing has a 10 percent across the board - MARK SHIELDS: Across the board - JIM LEHRER: -- cut in the tax rate, and that is not in the Senate's version. MARK SHIELDS: That's right, that's right.
	Tax cuts: a sure fire election issue
	JIM LEHRER: Okay. Now, Mark, the Democrats and the president, how are they playing this? And how well do you think they're playing it from their side? MARK SHIELDS: Well, I think that the president has said and assured the Democratic leadership that he would not go above 295 -- $295 billion. We're talking about 792 - Paul's talked about splitting the difference. I don't think they have that kind of move, that kind of wiggle room to go that high, quite frankly. The $295 -- the Democrats offered an alternative plan in the House which was defeated which would have cut taxes by $250 billion over the next 10 years. So I think the Democrats are immediately starting with the charge that this is a tax bill, the distribution of which goes disproportionately to the wealthiest Americans, that some 78 percent of the benefits, when it's fully implemented according to the Secretary of Treasury, Larry Summers, go to Americans earning over $100,000 a year. JIM LEHRER: And the politics of this, Paul, some people have said-- in fact it's been said on this program a couple times this week-- that this is a core division issue between Republicans and Democrats. You cut taxes or you don't cut taxes. And no matter how this thing turns out it's going to be a major debate subject in the 2000 election. Do you see it that way? PAUL GIGOT: I do see it that way. I don't think there's any question about it. I think every Republican presidential candidate-- George Bush hasn't proposed one yet but I think he will-is going to propose a substantial tax cut. There aren't that many issues left where there are real divisions within the party. And a lot of Republicans - JIM LEHRER: Between the parties. PAUL GIGOT: Between the parties - I'm sorry. And this is one issue that I think for Republicans they need it because, as Mark suggested, they need something that can unify economic and social conservatives and reach out to independents, and they think on some of these issues like - that giving families more disposable income, you can get some of the soccer moms who say, you know, you're taking two of our two incomes to make it go. We want to have a little bit easier time. JIM LEHRER: But do the polls and history support that idea? PAUL GIGOT: Well, tax cuts -- the polls suggest that the tax cuts aren't as popular now as they were ten or fifteen years ago. I think part of that is the good times. People don't feel -- I mean incomes are rising, so they don't feel as urgent a need. But I think the polls still show that people will take a tax cut if it is delivered. They don't trust politicians to deliver it. JIM LEHRER: How do you read politics of taxes? MARK SHIELDS: I think there is nothing more enduring in American politics than an idea, or a slogan, that once captured the White House. And that's what Republicans go back to. I mean, Democrats play Social Security. I mean, that worked for them once. JIM LEHRER: They keep playing, keep playing, keep playing. MARK SHIELDS: It worked for him at a time of economic chaos. I mean the great thing about supply siders -- I love them - is if things are good, cut taxes. If things are bad, cut taxes. I mean, it's the all-time reliable formula. JIM LEHRER: Ronald Reagan - you're talking about when Ronald Reagan ran, that's what he ran on, and won.
	Chairman Greenspan's opposition
	MARK SHIELDS: That's right. Ronald Reagan in 1980 when the country was at 25.9 percent inflation two years and facing unemployment and uncertainty, that really -- it really captured the imagination. Four years later people felt a hell of a lot better about their own lives and about their country. That Jim -- add to that this: I don't think it can be ignored in this case. The reality with the Republicans right now is that they are now a tax-cutting party and they're no longer a deficit party. I mean that's history. PAUL GIGOT: Because there is no deficit. JIM LEHRER: There is no deficit. Well -- MARK SHIELDS: There is a deficit. I mean, we are spending $243 billion this year in interest on the national debt. That's more than we're spending on education, the environment, national parks, FBI, police, education. All right? The only thing we spend on is defense. Now, that's every penny of income tax paid by every American living West of the Mississippi, every waitress, investment banker, small businessperson, anything, now that's what I think people are aware of. They understand that if interest rates go up, that is going to affect them a lot more than a little bitty tax break. JIM LEHRER: And the federal - MARK SHIELDS: And that's Alan Greenspan. JIM LEHRER: Alan Greenspan, the Federal Reserve Chairman, went right before on the day of the vote and said, "hey, wait a minute, be careful! Cutting taxes, reduce the national debt first." He kind of went against the Republican grain, did he not? PAUL GIGOT: Historic moment: Mark Shields invoking Alan Greenspan -- like me invoking Fred Wertheimer of Common Cause. He did do that. But I did look up what he said. And what Alan Greenspan said was, my first choice would be to reduce the debt. But if it's going to be spent, if that money, that surplus is going to be spent then it's much better to cut taxes because spending it would be worse. And I think one of the reasons Republicans want to cut taxes is because if they don't cut it, that money is going to be spent one way or another by the politicians here. MARK SHIELDS: Great, great tap dance. Let's get one thing straight. Bill Clinton did a tough thing in 1993; he raised taxes; he didn't cut them. I mean, Denny Hastert is a hero because he cut taxes. Bill Clinton raised taxes on the richest 1.2 percent of Americans, raised gasoline taxes, and the country prospered ever since. Democrats said it's because Clinton did it; Republicans said, no, it isn't because Clinton did it, it's because Alan Greenspan was chairman of the Federal Reserve. He's the wise man. OK? Now, as Alan Greenspan says, no, no, don't cut taxes, not now, wait. This is not the time. We should not do it. What do we say? Alan Greenspan is not really saying that? PAUL GIGOT: No. Alan Greenspan also said ideally he would like to see a zero capital gains tax rate, and cuts in marginal tax rates. MARK SHIELDS: He'd like to see the debt cut. PAUL GIGOT: But timing - well - but if it's spent, then cut taxes first -- it's going to be spent if they're not returned in taxes. JIM LEHRER: I've had a really good time talking to you tonight. Thank you both very much.