- The Washington Times - Thursday, May 17, 2001

The White House and Senate Republican leaders are using a very old but effective strategy to circumvent an attempt by liberal Democrats to emasculate President Bushs tax-cut plan. They are getting the bill into the conference committee with the House, where the GOP can control the outcome.
As they did in the bitter battle over the budget, Republican leaders are going to let the Senate Finance Committees watered-down tax-cut bill sail into the Senate. They will refrain from offering major changes on the floor, then theyll fix the bill in the conference to come.
Mr. Bushs economic recovery plan was substantially weakened in a fit of bipartisanship between finance committee chairman Charles Grassley of Iowa and the committees ranking Democrat, Max Baucus of Montana. Mr. Grassley argued that he had to move a lot closer to what Mr. Baucus wanted to get the bill out of his committee, which is split right down the middle. The result, however, was not a pretty sight.
The top personal income-tax rate (now at 40 percent), which is paid by many small businesses, was lowered to 36 percent instead of the 33 percent called for in Mr. Bushs plan. Most of the tax cuts wont fully take effect for five years, making the bill so back-loaded that tax-cutters fear it would provide little or no economic stimulus over the next two years.
The top rate itself, which is pivotal to unlocking risk-taking, job-creating investment capital, would inch down by only 1 percent next year. The death tax and the marriage penalty repeal would take a decade to achieve. Thats why Republicans threw up their hands this week and decided to shift to a rear-guard strategy.
They would confront the same heavily Democratic opposition that threatened to undermine the budget resolution by larding it up with more spending and carving $400 billion from Mr. Bushs tax cuts. But when the budget went to a House-Senate conference to iron out differences between the two chambers, the political terrain was dramatically different. The GOP had a majority in the conference and controlled the outcome. The budget emerged with nearly $1.4 trillion in tax cuts, and spending was cut to Mr. Bushs proposed 4 percent a year.
Republican leaders expect to have the same success in the tax-cut conference, no matter what the Senate does to the bill next week.
"I dont know if its worth improving the bill on the Senate floor," a disgusted Sen. Phil Gramm said, as the finance panel, on which he sits, began to mark up the bill for Senate action.
"I think we should quickly pass it and then rewrite the bill in the conference. At that point we can make it more to our liking by lowering the marginal income-tax rates and by implementing the rate reductions quicker," Mr. Gramm said.
"Theres nothing broken in this bill that cant be fixed. The bill can be dramatically improved, and will be dramatically improved, in conference," he said. Republican leadership officials confirmed that their strategy will be to offer relatively few amendments on the floor and recast the bill in conference closer to what Mr. Bush proposed and what the House passed.
In a sharply worded broadside against his finance-committee colleagues, an angry Mr. Gramm had this to say about its Democratic members and, by implication, Mr. Grassley himself: "This bill has changed the Finance Committee from a committee that redistributed the tax burden to a committee that redistributes wealth. The Democrats first fought to make the tax cuts smaller, and then they sought to give the tax cuts to nontaxpayers."
He was referring to the committee bills further tilt toward lower-income taxpayers, even though the Bush plan is heavily weighted toward those in the 15-percent bottom bracket because it would create a new, lower 10-percent tax rate.
When Mr. Grassley and Mr. Baucus unveiled their compromise, conservative tax-cutters were aghast. "This would be a great tax-cut bill if it were effective in 2001, but this is an extremely back-loaded bill. Almost all of the rate reduction occurs after 2005," said Steve Moore, president of the Club for Growth.
Notably, Mr. Moore is "much more concerned about its back-loaded nature than the fact that the rates are not as low as we hoped for."
Even with the puny $100 billion or so in tax cuts that would be made retroactive this year, mostly for those in lower income brackets, Mr. Moore says "this isnt going to provide any immediate stimulus" in a giant $10 trillion-a-year economy. "Im worried that were about to pass a tax cut that will have zero impact on the economy before the next congressional and even the next presidential election," Mr. Moore said.
The Democrats hope thats the case. They are pursuing a minimalist tax strategy, hoping to keep Mr. Bushs plan as small as possible and to delay its impact for as long as possible. If that happens, the result could be a higher-unemployment economy that remains weak and unresponsive for a lot longer than anyone now foresees.
Thats why the quicker this bill gets fixed in conference, the better off the American economy will be.

Donald Lambro, chief political correspondent of The Washington Times, is a nationally syndicated columnist.


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