Will rebel Republicans sink Bush tax plan?

GOP senators aren't happy with the imperious White House, and some might take it out on the budget-busting tax cut.

Published January 16, 2003 12:03AM (EST)

As the White House gears up to sell President Bush's $674 billion economic package to Congress and the American public, Republicans could turn out to be more trouble than Democrats in getting the plan enacted.

While the plan has been met with firm resistance from a majority of Democrats -- including moderates who supported Bush's 2001 tax cuts -- some of its loudest critics are moderate Republicans. Relations are unexpectedly frosty these days between Senate Republicans and the White House, with even conservatives complaining they've been left out of the loop on questions of Iraq, North Korea and the president's blockbuster tax-cut plan.

The president's economic proposal met bipartisan opposition in the Senate almost as soon as it was announced. The story landed above the fold in Saturday's Washington Post, where even champions of the president's plan said it would have to be changed to pass; and the plan was met with GOP skepticism on many weekend talk shows, where the list of senators with reservations about the tax cuts continued to grow. By the time Senate Republicans reconvened Tuesday, many were openly calling for big changes to the president's plan.

It's not just economics that has Republicans bristling. Conservative columnist Robert Novak reported Monday that Republican senators "complained bitterly of arrogance by the Bush administration ... in treatment of Congress along the road to war" with Iraq. Republicans vented their frustrations in a closed-door session with White House chief of staff Andy Card last week.

Discontent reached fever pitch this week, so when Vice President Dick Cheney was spotted going into a lunchtime meeting with Senate Republicans, speculation swirled that he was there in part to help allay concerns that the White House was not listening to Republicans in Congress. Sen. Lindsey Graham, R-S.C., said afterwards that Cheney was there mostly to listen, and did not speak directly about the president's economic package or the concerns mentioned in the Novak article.

But Cheney's visit did not silence frustrated moderates, like Sen. Olympia Snowe, R-Maine. Moderate Republicans like Snowe, who will be key to getting any new tax-cut package through the closely divided Senate, are particularly critical of Bush's $364 billion dividend tax cut. Snowe, a member of the Senate Finance and Budget committees, said the president's proposal is in need of some major changes.

"The dividend component is one that needs to be substantially overhauled and potentially eliminated from the plan," she said. "The president's plan may be a plan for long-term growth, but it's certainly not going to affect short-term behavior. I think it's important to look more on the short term."

Snowe said she and Sen. John Breaux, D-La., and other moderates in both parties would meet this week to try to agree on a proposal that Republicans and Democrats may be able to support. "Many of us will be getting together to see what we can agree on, just as a preliminary, just to get a sense of seeing where people are on this whole issue."

Snowe's criticisms echoed those of Ohio Republican Sen. George Voinovich, who said over the weekend that the president's tax package was short on economic stimulus. "I don't think [the White House plan] will give us the shot in the arm or rev us up like I think we need to be revved up," he said.

And indeed, that sounds a lot like what Democrats are saying. Though moderates in both parties differ with liberal Democrats about the form an immediate economic stimulus should take -- liberal Democrats are calling for a smaller tax cut that would benefit all American workers, not just stockholders, as well as help for states -- some kind of plan emphasizing a short-term jolt to the economy is likely to emerge from the bipartisan meeting of the moderates, according to Snowe.

The tax-cut proposal also seems to have reopened a dormant intra-party rift within the GOP between moderate deficit hawks and tax-slashing supply-side-economics advocates. Snowe sounded some populist notes in objecting to the president's proposal. "I'm concerned about the deficit, but I think we also have to look at the distribution, and who do we want to benefit at this point in time."

Other moderate senators like Lincoln Chafee, R-R.I., and John McCain, R-Ariz., have balked at the White House plan, and no Democrat has come out in favor of it. In 2001, Bush received support from 48 Republicans and 12 Democrats for his tax cut.

The administration has dispatched Commerce Secretary Donald Evans and Labor Secretary Elaine Chao to try to sell the plan. The White House insists that once the pressure to pass the plan begins, the president will get most if not all of what he is asking for.

"Vis-à-vis the Hill, it remains very, very early," said White House spokesman Ari Fleischer Tuesday. "Typically, it's a process that takes many months." Fleischer said the president would take his tax-cutting message on the road later this year, sometime after the Jan. 28 State of the Union address.

Where Republicans tend to attack the deficit-inflating element of the president's tax proposal, Democrats tend to emphasize the populist critique of the tax package. Senate Minority Leader Tom Daschle, D-S.D., seemingly invigorated by his decision to forego a run for president, blasts Bush's proposal as a "Leave no millionaire behind" plan -- playing off the president's "Leave no child behind" education-reform slogan.

"It's a cockamamie scheme," said Sen. Tom Harkin, D-Iowa, one of the Senate's most liberal members. "It makes no sense. As I read more and more of the analysis of the doing-away of the tax on dividends, this just makes no sense in any way -- economically, financially, tax-wise. It just makes no sense."

Incoming Senate Finance Committee chairman Charles Grassley, R-Iowa, admitted the Bush tax-cut package would be "a tough sell," and suggested that an alternative to the dividend cut may be introduced in the Senate -- perhaps a cut in the capital gains tax. But Grassley angrily criticized Democrats for simply attacking the White House plan without putting an alternative proposal forward.

"Where's the Democrats' plan?" he asked. "I still haven't seen anything come from my colleagues on the other side."

In reality, there are many Democratic proposals. All the declared presidential candidates in the Senate have their own economic plans, which will soon be making their way into bill form. Daschle said he has discussed plans for an alternative proposal with Sen. Max Baucus, D-Mont., the ranking Democrat on the Senate Finance Committee.

"It ought to have four components," Daschle said. "It ought to be immediate. It ought to be targeted to the middle class. It ought to be fiscally responsible, and we ought to provide money and help for the states."

In a plan introduced late last year, Baucus called for a $160 billion stimulus package that includes turning over $75 billion to states to spend as they wish.

"States across the nation are facing large budget deficits this year," Baucus said. "My bill would provide immediate stimulus that would help states balance their budgets, rehire laid-off workers and provide assistance to critical state programs."

But discussion of this year's budget must wait until last year's appropriations bills are passed. And reaching a deal on those bills may take a while, as Democrats seem to have returned to the new Congress friskier and feistier than before. Currently, all Senate business is on hold as Democrats fight for resources in their new minority status. Until a deal over staffing levels and internal budgets is reached, Democrats have refused to hand over control of Senate committees, which has forced a number of key hearings -- including the nomination of Tom Ridge as homeland security director -- to be put on hold.

Incoming Senate Majority Leader Bill Frist, R-Tenn., accused Democrats of creating a hostile, partisan environment in the Senate, saying, "The Democrats are doing something that is unprecedented in the history of the United States of America." Sen. Rick Santorum, R-Pa., went further, saying Democrats' refusal to hand over the reins amounted to "a coup" in the Senate.

Partisan bluster aside, resolution on those matters is expected this week. But even then, last year's policy fights will take precedence over this year's battles. At issue are 11 bills that make up the majority of the more than $750 billion in federal spending for the 2002-03 fiscal year, which is already more than three months old.

Now that control of the Senate has changed, Republicans want to trim about $10 billion in spending from the Democrats' proposals. Daschle says those cuts include eliminating $1 billion in homeland security spending and $1.7 billion in education spending. Daschle promised to introduce amendments on the Senate floor trying to reinstate the homeland security and education money.

But a spokeswoman for the White House Office of Management and Budget says that even under the GOP plan, federal spending will increase 33 percent over last year's levels.

"We want to spend less than what Senate Democrats want to spend, but it's certainly not a cut," said OMB spokeswoman Amy Call. "Even by Washington standards, that's preposterous."

By Anthony York

Anthony York is Salon's Washington correspondent.

MORE FROM Anthony York

Related Topics ------------------------------------------

John Mccain R-ariz. Olympia J. Snowe