WASHINGTON -- Sen. Robert Torricelli of New Jersey is one fiercely loyal Democrat who does not share the aversion of his party's leaders to tax cuts. He always was considered likely to end up voting for George W. Bush's proposal, but in addition, now has come up with a simple but ingenious means of rescuing the Republican president from a blind alley.
A bipartisan coalition of moderates, mischievously supported by Federal Reserve Chairman Alan Greenspan, is calling for a "trigger" that would suspend tax reductions if the national debt rises above expectations. That would impose higher taxes in the face of a declining economy -- the wrong remedy at the wrong time.
Torricelli to the rescue. He is proposing a waiver that would enable the president to override the trigger provision if he makes a finding of fact that the condition of the economy requires tax reduction. In effect, this attaches a safety lock on a dangerous trigger. "The waiver is the best way for the trigger to be enacted," Torricelli told me. "It puts on a restraint."
Torricelli floated his idea last week when Treasury Secretary Paul O'Neill testified before the Senate Finance Committee. It brought no immediate response from O'Neill, and no reaction from the news media. But when I checked with Bush administration strategists, they were intrigued by the idea as a means of escaping from a legislative cul de sac.
The heart of President Bush's problem is the evenly divided Senate, where moderates of both parties provide the balance of power and join in dreaming up supposed middle-way approaches. Republican Olympia Snowe of Maine and Democrat Evan Bayh of Indiana are the leading moderates advocating the trigger, tied to maintaining budget surpluses. On its face a harebrained scheme, the trigger was lent credibility by Chairman Greenspan's enormous prestige.
These are not the best of days for Greenspan. Fed-watchers see him off balance, confused by the economy and uncertain what to do. The financial adviser to a major corporation who a month ago was optimistic about the impact of the Federal Reserve's interest rate cuts, told me that he now considers Greenspan's policies to be ineffective.
Greenspan's support for tax reduction in the face of zero economic growth evoked fierce rebukes from erstwhile Democratic admirers. In response, he asserted he does not necessarily support the Bush plan but endorsed the trigger. Secretary O'Neill, Greenspan's longtime friend and colleague from Ford administration days, said on NBC's "Meet the Press" Sunday: "I can't imagine how we can have a trigger that does what Alan is proposing without contemplating the prospect of raising people's taxes if we go into an economic downturn, say in the year 2005 and 2006."
Indeed, it is hard to imagine how a sophisticated economist like Greenspan could endorse returning to the Great Depression folly of raising taxes as the economy weakens. In House testimony Feb. 28, he offered a Greenspanian explanation: "All previous changes are effectively grandfathered," he said. "So triggers never induce either an increase in taxes or a cut in expenditures."
But that was not good enough for Rep. Peter King of New York, a maverick Republican never previously known as a supply-sider. "As you are entering recession or the economy is slowing down ... " King suggested, "it's precisely at that moment that you need a tax cut, perhaps for another year or two or whatever to get the economy going and keep the economy from sinking further."
"Sure," responded Greenspan, rising to heights of disingenuousness, "but there's nothing to prevent the Congress at that point from doing that." Unintentionally, he demolished any rationale for a trigger.
I asked Karl Rove, Bush's chief political strategist, on CNN last Saturday whether the president would veto his own tax bill if it contained the Snowe-Bayh trigger. He didn't say no. Rove responded that Bush has "made very clear his opposition to it."
Torricelli's safety lock would make Bush's opposition unnecessary. It also would relieve the president from begging Congress for tax reduction during an economic downturn. But Bush has to accept Torricelli's idea and sell it to the moderates.