10/11/2001 12:00:00 AM - Robert Novak
WASHINGTON -- Beginning this week, the 41-member House Ways and Means Committee will start shaping a tax bill that is intended to revive the economy but fills key Republicans with fear and frustration. The fear is that they are drafting a stimulus bill that will not stimulate. The frustration is that they are getting little or no help from the Bush White House.
The two most potent ways to stimulate the economy would be to reduce the capital gains tax rate and speed up effective dates of income tax cuts passed in the administration's bill earlier this year. President Bush and his economic team remain cold toward capital gains tax cuts and are passive about ensuring that accelerated tax cuts are included for upper-bracket taxpayers, where they would do the most good.
Lack of support for supply-side doctrine by this Republican White House is no surprise. What's new since the terrorist attacks of Sept. 11 is Bush's determination to set aside partisan concerns and achieve bipartisan unity during national crisis. Unfortunately, that impulse is largely unrequited. While Bush seemed ready to abandon ideological concerns, the Democratic leadership of Congress was not.
The war on terrorism led Bush and his inner circle to believe he was back in Austin dealing with the tame Democrats of the Texas Legislature. The president was acquiescing in liberal standbys unrelated to economic stimulation: tax "rebates" to low-income people who do not pay income taxes, extended unemployment compensation that does not encourage aggressive job-seeking, and federalization of airport security employees (adding 30,000 people to Democratic-inclined government workers unions). There seemed to be agreement on a 50-50 split between spending increases and tax cuts for stimulation.
So many concessions worried Republicans last week, with old hands recalling the senior George Bush's capitulation to Democratic tax-increase demands a decade ago. Rank-and-file Republican members were on the telephone last Thursday, protesting to White House aides. GOP congressional leaders talked to the president himself.
George W. Bush's advisers long have pledged he would not repeat his father's mistake by alienating his conservative base, and last Friday he adjusted to that base. "In order to stimulate the economy," said the president, "Congress doesn't need to spend any more. What they need to do is cut taxes."
That put Bush on the right side of the partisan divide, but not clearly the ideological divide. House Majority Leader Dick Armey telephoned reassurances to conservative journalists that the GOP had not given up on capital gains taxes. There was no echo from the White House, however, backing the tax reduction best suited to revive equity markets and the greater economy. The only kindred soul in the White House perceived by congressional supply-siders is down the pecking order: 40-year-old Cesar Conda, who heads Vice President Dick Cheney's six-person domestic policy staff.
The highest-powered stimulation that could emerge from the Ways and Means Committee is acceleration of all tax cuts passed earlier this year. Democrats are insisting that only the 28 percent and lower tax brackets get the cut, and the White House appeared to acquiesce in this limitation inspired by the economics of class warfare. The best hope for Republican-style stimulation is Chairman Bill Thomas, who takes a dim view of bipartisan pretensions.
This is a democracy where the two great political parties should disagree on ideology, even during what the White House calls "time of war." Democrats, while claiming Republicans are unloading all their tax-cutting paraphernalia to take advantage of a national crisis, respond with their usual rhetoric of class warfare. House Democratic Whip David Bonior, running for governor of Michigan, pledged: "We're going to fight like hell to make sure working people get their fair share."
President Bush should recall recent history to note that Americans did not forego politics even when unified in World War II. In February 1944, President Franklin D. Roosevelt vetoed a tax bill because he called it too easy on the rich. In language that Bonior would approve, Roosevelt said the bill provided "relief not for the needy, but for the greedy" (and then saw his veto overridden). A great war president need not be bipartisan.