The Next Congress
Third of five parts
Repealing President Bush’s tax cuts and boosting social-welfare spending have been the meat and potatoes of the Democrats’ campaigns since the 2002 election, and they would be in a position to attempt both if they win control of Congress next week.
Mr. Bush has been warning in campaign speeches across the country that the Democrats “will raise your taxes” if voters put them in power, and Republican leaders have been making similar charges as Election Day draws closer.
Democrats have an outside chance of taking complete control of Congress, but a better chance of winning one chamber, and in this series, The Washington Times will look at how such a transfer of power will affect U.S. policy and politics.
House Minority Leader “Nancy Pelosi and congressional Democrats want the president’s tax-relief measures to expire, raising taxes on millions of Americans,” House Republican Whip Roy Blunt said last week.
Fearing Mr. Bush’s warnings about higher taxes could drive more people to vote Republican next week, Rep. Charles B. Rangel, New York Democrat, released a statement Friday saying: “Nothing could be further from the truth. Democrats have a long history of supporting targeted relief for middle-income families.”
Mr. Rangel would be in line to run the tax-writing Ways and Means Committee if Democrats win a majority in the House.
Recent polls show that most Americans expect Democrats to raise their taxes and increase spending for new big-ticket programs such as health care for the uninsured.
A USA Today/Gallup Poll reported last week that 63 percent of Americans surveyed think Democrats are likely to “increase federal income taxes” if they win control of Congress — though 74 percent said they disapprove of it.
Past the rhetoric
Mr. Rangel, a fierce critic of the Bush tax cuts, said one of his priorities will be “to close tax shelters and eliminate benefits for companies that move jobs overseas,” moves that businesses fear would raise their taxes and reduce profits.
He also said that 2010, when the bulk of the tax cuts expire, is “light-years away from the debate before us, and we have no way of knowing what the economy or even our country’s leadership will look like at that time.”
Despite Mr. Rangel’s promise that Democrats would reach out to Republicans and the White House “to find common ground,” Republican tax-cutters point out that he told Bloomberg News several weeks ago that he could not think of one of Mr. Bush’s tax cuts that deserved to be extended
But Democratic policy advisers say that despite their campaign rhetoric, many of the Bush tax cuts are supported by Democrats, including the $1,000 child tax credit, marriage penalty relief and lower tax rates for middle-income families.
One of the changes in the tax rates that Mr. Bush enacted was a lower 10 percent tax rate for workers at the bottom of the income scale, a tax-cut provision that the Democrats “would not want to eliminate,” a House Democratic staffer said.
“I can’t see Democrats opposing the rates that are being paid at the bottom two-thirds of the tax code. Democrats are for taxing the super-rich, though it is yet to be defined where super-richdom begins,” said Robert Reischauer, president of the Urban Institute, a nonpartisan economic and social policy research group.
Still, Republicans who have worked with Mr. Rangel in the House say they are a little suspicious of his ultimate goals.
“He’s a master politician, but when he talks about everything on the table and tax cuts for the middle class, my eyes begin to widen. When you start targeting tax cuts to a class of people, you are entering the arena of redistribution of wealth,” said former Rep. Jack Kemp, a tax-cut crusader who was the architect of the Reagan tax cuts in the 1980s.
Checks and balances
Senior Democratic advisers say that whatever Mr. Rangel might be planning, major tax and spending changes are unlikely to happen because of a number of institutional obstacles that would be extremely hard for the Democrats to overcome, especially in what is likely to remain a narrowly divided Congress.
“I don’t see any dramatic changes in taxes or dramatic increases in spending if you want to know the truth. A lot of this fear talk is part of the campaign,” said Leon Panetta, former House Budget Committee chairman and Clinton chief of staff.
“Everybody is saying that all of these things will happen, but there will be checks in the system. The fact is that Bush is still going to be president, with his veto, and the Senate, which could be split 50-50, will act as a barrier as well,” Mr. Panetta said.
With his veto power, Mr. Bush would be the biggest obstacle to rolling back any part of the tax cuts, and it would be very difficult for Democrats to win the two-thirds vote needed to override a veto in a narrowly divided House or Senate, former congressional officials said. The Senate filibuster, which requires 60 votes to break, is another big political hurdle that conservative Republicans say would be used to block Democratic tax-and-spend proposals.
Nevertheless, the power structure on Capitol Hill would shift dramatically from right to far left under Democratic rule if veteran liberal lawmakers take over the chairmanships of committees that would write the tax and spending bills the House and Senate would consider.
How the coming tax-and-spend battle plays out will depend upon “how the White House intends to play its cards” and how much Democrats are prepared to fight for their agenda, said Mr. Reischauer, a former director of the Congressional Budget Office (CBO).
“If push comes to shove, we are going to end up with some significant part of the tax cuts extended. We are not going to revert to the 2000 tax code before Bush. Neither is it likely that we will extend all of the tax cuts that have been enacted since 2000,” he said.
But Republicans such as former House Majority Leader Dick Armey of Texas said that if the Democrats take over, “they will try to find some way to raise taxes to finance their spending programs.”
Democrats gave voters a peek into the kind of spending proposals they want to enact in their election agenda titled “A New Direction For America.” The campaign agenda does not say how much their proposals would cost, but an analysis by the National Taxpayers Union based in part on CBO estimates puts the price tag at more than $79 billion a year.
These legislative proposals include $16.2 billion a year for lower-interest college loans, nearly $1 billion more per year for scientific research, $4 billion in additional Pell Grants for college students and $28.8 billion more for health care, including increased subsidies for the Medicare prescription-drug program for the elderly.
Perhaps one of the biggest spending initiatives in the Democrats’ agenda is a program called “AmeriSave,” under which the government will match the first $1,000 contributed to an IRA, 401(k) or other investment retirement account. The program would cost taxpayers $37.5 billion in the first five years.
Another measurement of spending increases a Democratic Congress would seek can be found in amendments they have offered in the Senate in the past two years. According to an analysis by the Senate Republican Policy Committee, Senate Democrats proposed $95.2 billion in increased spending for fiscal 2006 and $74 billion for fiscal 2007.
Mr. Panetta blames both Republicans and Democrats for the sizable budget deficits of the past six years and does not see that changing dramatically anytime soon, despite this year’s sharp decline in the deficits as a result of unexpectedly stronger federal tax revenues.
“This Congress has been the worst on borrowing and spending that I’ve seen in my lifetime, with record deficits. Responsibility for that rests with both parties. My theory is that they will continue to borrow and spend in the future,” he said.
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