Cutting the tax-cut Pie
REES, MATTHEW
Cutting the Tax-cut Pie by Matthew Rees When a scheduler from Newt Gingrich's office called Ed Crane, president of the libertarian Cato Institute, to invite him to discuss the budget deal with...
...Ralph Reed, executive director of the Christian Coalition, says the agreement is not as bad as the ill-fated 1990 budget deal, but warns, "We want the $500-per-child tax credit fully funded and made permanent...
...The scramble is messy, though fun to watch—particularly if you're a Democrat...
...Still, the apparent differences on the education tax provisions underscore the continuing potential for conflict...
...Presented with this information late one night during the budget wrangling, Gingrich snapped that some new committee chairmen might be needed...
...Anything less and we could oppose the agreement...
...Or they could have insisted on a larger tax component in the budget deal...
...Republicans could have avoided all this infighting if, instead of allowing their constituency groups to dictate economic policy, they had sought Reagan-style across-the-board reductions in marginal tax rates...
...In a break with his leadership, he's already said that $135 billion in gross tax cuts is "an overly ambitious target...
...Paul Weyrich, president of the conservative Free Congress Foundation and National Empowerment Television, also is apoplectic over the budget...
...the Christian Coalition, mildly supportive of the deal, is "a creature of the Republicans...
...It's too early to tell whether the critics will succeed in getting what they want...
...It mirrors the disarray plaguing House Republicans (who suffered an embarrassing defeat last week over what should have been a simple procedural vote...
...He says Republicans must secure tax relief in the four areas they've agreed to—capital gains, estate taxes, individual retirement accounts, and the child tax credit—but "how we do this is less important than that we do it at all...
...As it is, everyone is scrambling for a piece of a pie that's too small to accommodate everyone's "minimum" demands...
...Neither Archer nor Roth strongly favors the credit, and business is lukewarm, too...
...This was vintage Archer, but he can be as prickly with Republican colleagues as he is with Democrats...
...Cutting the Tax-cut Pie by Matthew Rees When a scheduler from Newt Gingrich's office called Ed Crane, president of the libertarian Cato Institute, to invite him to discuss the budget deal with House Republican leaders recently, Crane's response was curt: "Tell the speaker to cut some spending...
...While congressional leaders have mostly managed to keep their troops from publicly opposing the balanced-budget agreement, outside groups influential in the GoP are divided...
...The challenge now for GOP leaders is to stem defections in Congress...
...The infighting is at its highest pitch since Republicans took control of Congress a little more than two years ago...
...Sounds good, except that no one knows what Gingrich means by "historically accurate," and regardless of how capital-gains is counted, there will still be a shortfall...
...According to Gingrich, maybe no one's: He recently told a group of conservatives he will minimize the shortfall by instructing Congress's Joint Committee on Taxation to provide "historically accurate" dynamic assumptions concerning the effects of capital-gains tax cuts...
...Reed acknowledges his credit could cost up to $125 billion over five years, consuming most of the $135 billion allocated for all the tax cuts...
...Whatever the future may hold, for now the Republican hierarchy must notice how many of its friends have jumped ship...
...Close behind was Citizens for a sound Economy, a free-market think tank led by Bush White House counsel Boyden Gray and Reagan budget director Jim Miller...
...Both are 26-year veterans of Capitol Hill and among the party's most fervent tax cutters...
...Similarly, while the White House and Republicans agreed to "roughly" $35 billion in education tax credits, this isn't set in stone...
...Neither Archer nor Roth had a major role in the budget negotiations, though Archer, determined to protect his turf, beat back administration efforts to dictate the tax package...
...Heritage published a paper entitled "The 1997 Budget Agreement: The Return of Big Government" charging that the policy outlines contained in the budget deal "may be worse than doing nothing...
...Pessimists see a ruptured coalition that could suffer losses in 1998...
...They assert that the agreement will bring "a significant expansion of the size and reach of the federal government...
...That's a jab at folks like Bauer and Weyrich, whose top priority—the $500-per-child tax credit—is vulnerable...
...Optimists say this is much ado about nothing and that the split will be patched up in time for next year's midterm elections...
...Norquist, a Gingrich adviser, is just about as vague...
...Ways and Means spokesman Ari Fleischer says only that Archer "will do the best he can" to meet the target...
...On the other side of this divide are the Christian Coalition, Grover Norquist's Americans for Tax Reform, and the National Federation of Independent Business, all tentatively supporting the deal in hopes of securing their preferred tax cuts...
...An aide later denied the comment was meant to be taken seriously, and Gingrich and Archer insist they are on good terms...
...Gary Bauer of the conservative Family Research Council calls the agreement "dopey," and former presidential candidate Steve Forbes said in a speech at the recent Microsoft CEO summit that Congress, in its haste to reach a balanced budget, had cooked the books in a way "that would land you in jail if you tried it...
...Whose ox will be gored...
...But there's a problem: Fully funding the proposed tax cuts would cost about $220 billion, $85 billion more than can be delivered...
...Cato was first out of the blocks in opposition, followed by the conservative Heritage Foundation...
...He says he and other opponents are "loyal to principles, not to the party...
...One top House Republican aide notes that "it's tough to have a seat at the table when you're kicking everyone in the shins underneath the table...
...The budget deal has crystallized a split among traditional Republican allies...
...Archer advocates abolishing the IRS and instituting a national sales tax, while Roth was the original cospon-sor in 1978 (with Jack Kemp) of the across-the-board tax cut that became Reagan's economic centerpiece...
...He admits, "I don't know how you get there...
...The men most on the spot are the chairmen of the tax-writing committees, Bill Archer of House Ways and Means and Bill Roth of Senate Finance...
...Weyrich sees the two sides in this fight as "pro-establishment" and "anti-establishment...
...Then he hung up...
...The $135 billion in gross tax cuts over five years is the one provision of the balanced-budget agreement that's prevented a full-scale mutiny on the right...
...Matthew Rees is a staff writer for The Weekly Standard...
Vol. 2 • May 1997 • No. 36
