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Thursday, Sep 23, 1999 5:30 PM UTC

Murky future for tax cuts

Republicans regroup and plot strategy after President Clinton's veto of their $792 billion tax-cut package.

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Topics: Bill Clinton, Republican Party, Taxes,

It was only a matter of time before President Clinton officially axed the
“Taxpayer Refund and Relief Act of 1999,” the Republican-sponsored $792 billion
tax-cut plan. Even before Congress passed the plan, which was more than three times the White House’s tax-cut proposal, Clinton promised a veto. And today he followed through.

Fiscally conservative Republicans hoped that a popular groundswell would force the president’s hand on the tax-cut issue, the way it had with welfare reform in 1996. But outside the Beltway, the GOP tax cuts were met with indifference.

Polls consistently show Americans are more concerned with government programs
than government refunds. A recent ABC News/Washington Post poll shows only 44
percent feel cutting taxes is very important, whereas 79 percent think it is very
important to improve education.

The improved economy is one reason people shied away from the GOP’s
tax-cut plan — but in addition, many Americans read the Republican tax cut as a partisan jab at the White House rather than a realistic plan for economic stability. Another
recent poll from ABC News.com found that 49 percent of those polled think only
the rich would benefit from Republican tax cuts. Even some GOP lawmakers criticized the proposal.

“The people don’t need to be fooled about this … They want to be realistic and
have us start at the beginning with something that can go through, a smaller tax
cut, rather than this bloated bill that can never pass,” Rep. Connie Morella, one
of a handful of moderate Republicans to vote against the tax cut, told the
Washington Post.

Despite growing internal problems facing the GOP, fiscal conservatives are
still standing firm, insisting that a large tax cut be made before Clinton leaves the
White House.

“The threat of a veto should never scare the Republican majority from creating
tax relief legislation,” said GOP pollster Kellyanne Fitzpatrick.

“Taxes should always be a Republican issue,” she added. “Once that distinction is
removed between Democrats and Republicans there is just a glob, there is no real
contrast between the parties.”

The GOP’s question, “Where do we go from here?” is getting different answers
from philosophical tax-cutters and strategists looking for a viable issue for
campaign 2000. While Senate Majority Leader Trent Lott claims there will be “no
tax cut this year,” other Republicans plan to keep the option open for early next
year.

“The Republicans need to treat this like welfare reform — pass, veto, pass,
veto, pass, veto, until [the president] caves,” said Grover Norquist, president
of Americans for Tax Reform. “He needs to have a political interest to sign this
and we are still too far off from the election.”

Democrats, led by President Clinton, are still pushing for a more modest,
targeted tax-cut package. “I think some of the leadership in the Republican Party
have indicated that they want to throw in the towel and start the campaign
season … the president hasn’t given up on this Congress, and I don’t think the
Congress should give up on itself,” said White House spokesman Joe Lockhart at a
briefing last week. The White House “will continue to make the case that Social
Security and Medicare have to come first, but we can provide tax relief” as
well, he added.

For the moment, Republican hopes of implementing tax-cut legislation have been
scrapped. But there is still optimism that the most important “pieces of the
bill, like the marriage penalty, can be taken care of in smaller bits … and
passed between now and next spring,” said GOP strategist Rich Galen.

With the presidential election just over a year away, tax relief issues are sure
to play a big part in next year’s Republican campaign. And although the past two
years have left the GOP empty-handed on tax cuts, it isn’t for lack of trying.

“The future of the party does not hinge on this one piece of legislation.
[Republicans] deserve credit from their fiscal base for trying it and actually
getting the legislation through the House and the Senate,” Galen said. “Last year
Republicans could not take up a tax cut because the Democrats threatened to
filibuster.”

In the end, Galen said, the bill “makes the Republican Party look better to the
Republican Party.”

The cat-and-mouse game played from one end of Pennsylvania Avenue to the other
doesn’t seem to be nearing an end any time soon. Clinton won’t cut taxes to terms
that will please fiscal conservatives, and is all too happy to repaint the
Republican-controlled Congress as more concerned with revenge than with passing
meaningful legislation.

With the August recess and the tax-cut defeat behind them, Congress faces the
quickly approaching federal budget deadline. With their consistent record of
battles over the federal budget, the Republicans might retaliate against the
Clinton veto by forcing a government shutdown — despite the fact that the public has
consistently sided with Democrats in past budget battles.

“Yes, there is potential for [a shutdown],” said Galen. But, he explained,
Congress is not yet at that point and with compromise and debate they should be
able to work around the spending caps.

Even if there is no government shutdown, Congress will very likely miss its
Oct. 1 deadline for passing a budget. Of the 13 appropriations bills that
need to be finalized before the beginning of fiscal year 2000, only four have
been passed. Unless these budgets are finished in the next two weeks, this
could bring the government to a screeching halt — again.

“I think most Americans have come to see the Republican Party as captive to its
far-right wing while it pushes its extreme agenda,” said Democratic Congressional Campaign Committee spokesman John Del Cecato.

With all the problems facing the Republican Party over the last few years,
another shutdown could convince voters that the GOP is unfit to lead Congress,
and could potentially damage their chances of maintaining their House majority.

Sarah Keech is a freelance writer living in Portland, Oregon. More Sarah Keech.

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