- The Washington Times - Tuesday, March 13, 2001

Senate Republican leaders yesterday insisted they are not backing away from the size or components of President Bush's proposed $1.6 trillion tax-cut plan as Democrats and centrists seek to water it down.
"People are still underestimating the pressure that a lot of us feel for the tax-relief package to be higher, not lower," said Senate Majority Leader Trent Lott.
Both Mr. Lott and House Majority Leader Dick Armey yesterday said they also want to cut the capital-gains tax, relief not included in the president's plan.
In the wake of House approval on Thursday of Mr. Bush's proposed across-the-board rate cuts, Democrats and centrist senators of both parties have renewed their calls for smaller tax cuts and loopholes that could block tax relief.
A leadership aide said Senate Republicans still intend to wage an all-out push for Mr. Bush's package in the evenly divided chamber. He said while the overall size and features of the president's plan are intact, some adjustments are inevitable as the leadership tries to secure 51 votes by this summer.
"Obviously, there is more than one way to skin a cat," the aide said.
Mr. Lott, Mississippi Republican, yesterday rejected recent suggestions that the White House might agree to lower the top income-tax rate to 35 percent instead of 33 percent. That rate is now 39.6 percent.
"I think the president is absolutely right when he says that nobody should pay more than a third of income … for federal taxes," Mr. Lott said.
But one tax lobbyist said that backing off the reduction in the top rate may be what it takes to get an agreement with Democrats, and that Mr. Bush is not likely to veto such a deal.
Two Republican senators have said they oppose Mr. Bush's package; only one Democrat, Sen. Zell Miller of Georgia, has endorsed it publicly.
Democrats have criticized Mr. Bush's plan as benefiting primarily the wealthiest taxpayers, a charge sure to be intensified if congressional Republicans insert a cut in capital-gains taxes.
"There will be capital-gains rate cuts in the future," Mr. Lott said. "I don't know whether it'll be right away or later on, but at some point."
Mr. Lott did not specify how a capital-gains tax cut would fit into the president's overall package, although he said it would be difficult to get Senate support for relief totaling more than $1.6 trillion over 10 years.
Stephen Moore, president of the conservative Club for Growth, said Mr. Bush cannot afford politically to scale back his proposed cuts in tax rates.
"You'd see a revolt on the right," said Mr. Moore, whose nonprofit group is pressuring congressional Republicans to support the administration's tax cuts. "All of the economic juice from this plan comes from rate cuts."
Mr. Moore said a cut in capital gains from 20 percent to 15 percent "could actually be the key to getting a bigger tax cut."
"If you cut the capital-gains tax, it would increase the surplus [in the short term]," Mr. Moore said.
A Senate Republican aide said debate over modifications to the president's plan misses the larger tax-cut picture.
"If [Mr. Bush] had backed off the $1.6 trillion, that would be news, but we have always known the Senate Finance Committee was going to write the bill," the aide said. "The fact that Democrats are talking about $750 billion [in tax cuts] … means we have won."
Mr. Lott said discussions of a "trigger" to block tax cuts if the federal surplus dries up, and other proposals, are simply ideas being floated.
"Does that mean that we're undermining or rejecting what the president has proposed? No," he said. "We're just saying that these are some ideas that we want to consider. I don't think in the end that there will be major changes from what he has proposed."
Joining the opposition to Mr. Bush's plan yesterday were former Treasury Secretary Robert Rubin and former Federal Reserve Chairman Paul Volcker, who said it was too large and fiscally unsound. At an event in Washington on behalf of the bipartisan Concord Coalition budget watchdog group, they criticized as unreliable projections of $5.6 trillion in federal surpluses over the next 10 years.
Mr. Lott responded: "I think the projections are pessimistic. There will be more than enough revenue to provide what we need for the government and still give some tax relief to working Americans."
Both Mr. Lott and Sen. Phil Gramm, Texas Republican and member of the Senate Budget Committee, said on Sunday that they are open to some sort of "midcourse review" of the surplus estimates during the 10-year tax-cut plan. Yesterday they were joined by Sen. Pete V. Domenici, New Mexico Republican and chairman of the Budget Committee.
"That's a very good idea," Mr. Domenici told reporters. "If you're doing 10 years, a midcourse review would seem to me to not negate positive economic effects" of tax cuts.
Mr. Domenici also said yesterday that he expects to follow Mr. Bush's call for a 4 percent increase in overall spending, despite the senator's earlier claim that such spending limits would be difficult.
"My current thought is to produce the president's budget," he said.
Mr. Lott repeated yesterday that he does not support a trigger that would automatically prevent tax cuts from taking effect if projected surpluses do not materialize.
"Don't let me leave the wrong impression here that I'm entertaining all these other suggestions," Mr. Lott said. "I'm listening to them."
Senate Finance Committee Chairman Charles E. Grassley, Iowa Republican, has expressed strong support for both the size of Mr. Bush's tax-cut plan and the marginal rate cuts it includes.
But Mr. Grassley has also made it clear he would like to write a tax-cut plan that garners a substantial number of Democratic votes.
Such a plan will be based largely upon Mr. Bush's tax-cut plan, but it will also include legislation to address concerns about the alternative minimum tax.


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