WASHINGTON -- Don't count on President Bush's widely leaked
program of tax incentives to entice wary investors. It is in deep trouble
and may never even be formally proposed, not simply because the plan faces
impossible obstacles in the Democratic-controlled Senate. House Republicans,
until now steadfast in pushing the Bush agenda, are saying no to the
supply-side revival contemplated at the White House.
House Speaker J. Dennis Hastert has told the president's aides
that Rep. Bill Thomas, chairman of the House Ways and Means Committee, must
be in on the "ground floor" of any new Bush tax initiative. Thomas last week
made clear to the White House that he does not want to be on any floor of
new tax cuts. Pushing a bill against the imperious Ways and Means chairman,
a majority of the committee's Republicans, and without the help of the
speaker is seen by risk-averse administration officials as an embarrassing
exercise in futility.
For the House GOP to raise the white flag of surrender suggests
battle fatigue as the 107th Congress nears adjournment. What makes the
surrender so complete is that supposedly conservative Republicans are
adopting Democratic terminology and Democratic issues. While citing budget
deficits in rejecting supply-side tax cuts, they follow Democratic practice
in planning to build the deficit by raising spending over the president's
levels.
Such a development on Capitol Hill was not expected during the
congressional summer recess, when the president's economic advisers leaked
plans to boost investor confidence that has been shattered by corporate
corruption. In fact, Bush himself talked publicly about a highly ambitious
tax agenda: deductions for capital losses, relief of double taxation of
corporations through levies on corporate dividends, and maybe in the
future -- something the Bush team has resisted until now -- diminished
capital gains taxation.
Prominent supply-side economists, many of them unhappy with the
Bush administration, were invited to a White House luncheon the week of Aug.
19. They emerged euphoric. Bruce Bartlett, a former Treasury official of
Reagan vintage, revealed the details on the Wall Street Journal editorial
page Aug. 26.
Bartlett tipped the president's political strategy. While Bush's
plans would surely fail in the Democratic Senate, his willingness to fight
off class warriors would invigorate markets. It could also energize listless
Republican voters and produce congressional election gains ("making the
chances of passage in January almost certain," wrote Bartlett).
What nobody seemed to expect was Chairman Thomas, who has
faithfully carried Bush's water the past 20 months, saying he had had
enough. The White House found him uninterested in economic growth and
consumed by the goal of pre-empting a big Democratic issue: tax "inversion"
by American companies who take advantage of overseas tax shelters to avoid
high U.S. corporate rates.
Thomas warns of being labeled "pro-rich." He is not alone.
Republican lawmakers tell the White House that the president's proposed tax
plan is just too costly, adding to the budget deficit. They claim that it is
politically vulnerable as a "tax cut for the rich" that "raids the Social
Security fund." If these Republican concerns sound familiar, it is because
they echo the Democratic line for 2002.
Many Republicans, however, push a lenient spending line in this
campaign season on the contradictory grounds that voters really don't care
about budget deficits. It fits the hauteur of Appropriations Committee
Chairman Robert Byrd, the Senate's senior Democrat, that he won't deign to
meet with cost-cutting Budget Director Mitchell Daniels.
What's a little surprising is that Byrd's Republican
counterpart, Sen. Ted Stevens, makes snide remarks about Daniels's loss of
usefulness for the president. The best bet is that Stevens beats Daniels in
Republican cloakrooms, where worries about class warfare trump concerns
about pork-barrel spending.
In denigrating Bush's tax plans, Thomas tells colleagues that
the administration is not pushing its ideas with firmness. That is accurate.
Brainier, tougher and louder than most people in Washington, Bill Thomas is
one of the capital's truly intimidating figures. George W. Bush has to make
up his mind whether to stand up to him, do his best to bring him around, and
then go ahead even if the chairman says no.
Notebook