THE GOP'S TAX-CUT WAR
BARNES, FRED
THE GOP’S TAX-CUT WAR by Fred Barnes TAX CUTS ONCE PRODUCED UNITY among Republicans, but no longer. When GOP congressional leaders met in House speaker Newt Gingrich’s office on the evening of...
...The impetus for renewed tax cutting was the Congressional Budget Office’s revised estimate, issued July 15, of the surplus over the next 10 years...
...The tax cut proposed by House Republicans is even bigger—nearly $700 billion over ten years—and Senate Republicans are wary in the extreme...
...When GOP congressional leaders met in House speaker Newt Gingrich’s office on the evening of July 22, talk of a large tax cut generated anger, frustration, and ill will...
...Gramm said Republicans shouldn’t over-promise on taxes...
...O’Neill hasn’t exactly embraced Gingrich’s idea, but, according to the speaker, “she’s getting closer...
...Days later, senators were still infuriated with DeLay and others...
...And “in the end, Clinton will switch...
...DeLay believes the House should approve the tax cut—to be financed out of the projected budget surplus of $1.6 trillion— before the congressional recess in August...
...Bill Archer, the normally mild-mannered chairman of the House Ways and Means Committee, took on Sen...
...If you leave the money in Washington, the liberals will spend it,” Gingrich told the Fox News Channel...
...Rather, this year’s deficit would have exceeded $135 billion...
...In the early months of GOP control of Congress in 1995, several private meetings turned hostile...
...Still, they believe they can make Social Security the chief issue, and win...
...In fact, the CBO estimate was increased by $1 trillion over the figure in March...
...Gingrich and other House Republican leaders were equally united in favor of it...
...In fact, they were united against such a move...
...Of course, not once during the 40 years they controlled Congress did Democrats do what they’re proposing now, which makes their motives suspect...
...Gingrich didn’t hesitate...
...Gingrich may be wrong about this, but he figures that merely proposing tax cuts will aid Republicans in this fall’s election...
...He never promised his wife three houses and a car, only that he’d try to make her happy...
...He’d expected a jump, but nothing like that...
...Voters don’t care about tobacco or campaign-finance reform, and Republicans have already neutralized the HMO-reform issue...
...Absent these loans, the budget would never have reached balance in the first place...
...At the same time, slightly more than half the surplus, or roughly $720 billion, would be earmarked for protecting Social Security...
...Instead, House Republicans will be assigned to chat up the tax cut while at home during the recess...
...I’ll fight for tax cuts until I die...
...That would drop it quickly in the Senate’s lap and force action when Congress convenes again after Labor Day, whether Republican senators like it or not...
...When you don’t work and don’t try, that’s when people lose respect,” he said...
...The tax cut] may be smaller by the time he signs it, but that’s why you begin big...
...Lott chastised DeLay and House majority leader Dick Armey for getting on a “high horse...
...The truth is,” Gingrich says, “you move the Senate by moving the country...
...This floored even Gingrich...
...They felt the senators were knuckling under to Clinton out of fear he’d blame them for robbing the Social Security fund...
...Fred Barnes is executive editor of THE WEEKLY STANDARD...
...Bill Roth, chairman of the Senate Finance Committee, answered, “We can’t just cut taxes on a whim...
...There’s an issue vacuum in the campaign debate...
...This didn’t sit well with the Senate contingent...
...It’s been three years since House and Senate Republican leaders fought so bitterly...
...Though sympathetic to this approach, Gingrich has decided against confrontation...
...Come November, we’ll know who’s right...
...Gingrich had lobbied CBO director June O’Neill aggressively in May and June to adopt “dynamic scoring...
...Gingrich concedes a $700 billion tax cut won’t be enacted...
...Gingrich thinks this sound bite is powerfully persuasive, and he may be right...
...Phil Gramm, DeLay’s fellow Texan and conservative pal...
...Senators claim a cut so big has no chance of passing the Senate and can only land Republicans in political trouble...
...By late on July 20, Gingrich had the rough outlines of a tax cut that would end the marriage penalty and inheritance tax, trim the capital-gains rate from 20 percent to 15 percent, eliminate the earnings limit on Social Security recipients, and repeal Clinton’s tax hike on Social Security benefits...
...Then, too, the issue was a mammoth tax reduction that House Republicans passionately advocated and senators viewed with fear and skepticism...
...Thus, when Senate honchos gathered in Gingrich’s office on July 22, they weren’t prepared to change course suddenly and seek bigger tax cuts...
...Since last winter, Clinton has insisted any surplus be used to “save Social Security first”—by, in effect, beginning to pay back the borrowed funds...
...Nasty quarreling ensued...
...That means counting the positive effect that economic- policy changes, like tax cuts, have on growth...
...I don’t believe what I’m hearing,” Archer said...
...Eventually they compromised on a $240 billion cut that President Clinton later vetoed...
...The excitement continued to build,” says a Gingrich aide...
...And Gingrich suggested House Republicans might retaliate if Senate Republicans don’t go along with a tax cut...
...DeLay shot back that Republicans could at least work hard in pursuit of their goals...
...That leaves tax cuts and Social Security...
...This would be done by paying off “loans” taken from the Social Security system...
...I’ll continue to fight for a tax cut whether you’re with us or against...
...But he tells us that we can’t cut taxes because we don’t really have a balanced budget...
...He summoned House Republican leaders to a meeting on July 16 at which John Kasich, the chairman of the House Budget Committee, gave a briefing on the new estimate...
...Both Gingrich and Lott agreed, and they sharply limited tax cuts in the 1999 budget...
...As for House Republicans, they were, as one aide said, “disgusted...
...Actually, moving the country may be easier...
...Their chief talking point...
...Then Gingrich huddled with Archer on July 19 and Kasich the next day...
...Gingrich has a strategy for pressuring them to do so: generate a public clamor for paring taxes...
...Pete Domenici, who chairs the Senate Budget Committee...
...Democrats want to keep all $1.6 trillion in Washington, supposedly to prop up Social Security...
...Well, do we or don’t we...
...Archer demanded...
...Republicans—at least those in the House—want the surplus devoted partly to Social Security, partly to tax cuts...
...Republicans believe they can make tax cuts the chief issue—and win...
...Domenici assures the press and public there’s a balanced budget, Archer noted...
...Meanwhile, House Republican whip Tom DeLay sparred with Senate majority leader Trent Lott and Sen...
...But Senate Republicans will come around by mid-September and back a scaled-down version...
...This time, common ground will be harder to find...
...Says Gingrich, “As a fellow Ph.D., I felt good that our conversations have led to a more accurate score...
...House GOP leaders want them to try for a major tax cut anyway...
Vol. 3 • August 1998 • No. 45
