Bush, however, was having no part of it, contending the economy needs help now. Nor did he want a long bargaining session Monday night. A State dinner (for visiting Philippine President Gloria Arroyo) was to begin at the White House at 7:30. Three of the lawmakers at the meeting -- Frist, DeLay and Senate Majority Whip Mitch McConnell -- had to change into black tie for the dinner. Short of time, the president did not negotiate. He dictated.
There would be neither ping nor pong; there would be old-fashioned Senate-House negotiations. The $350 billion price tag would stand, but front-loading of the tax cuts in the early years made the cost estimate meaningless. The Senate "pay-for" requiring American businessmen abroad to pay U.S. income taxes would be eliminated, but the Senate's state and local aid package would remain. Extended unemployment benefits would be enacted in a separate bill.
But how to choose between House reduction of capital gains taxes and Senate exclusion of taxes on dividend income? The six Republican leaders left the White House Monday believing Bush wanted both plans in the bill. But Bush on Tuesday, after consulting Treasury Secretary John Snow, became convinced that Thomas was correct Monday in depicting parliamentary impediments to dividend tax repeal. The president telephoned Frist, supporting Thomas's reduced tax rates on both capital gains and dividends.
That disappointed supply-sider Stephen Moore of the Club for Growth, but he still is enthusiastic about a front-loaded bill that reduces taxes on investment. High-taxers who hate this bill know they have a lost a big battle. "I think this an enormous political victory for President Bush," Gene Sperling, an architect of the Clinton tax increase, said on CNN Sunday. "He's gotten virtually everything he wants." And that was the day before the president laid down the law to the Congressional Republicans."