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The real deal on Bush's tax cut plan

By Thomas Oliphant, 4/20/2003,
This story ran on page D11 of the Boston Globe on 4/20/2003.

WASHINGTON :

THE COVER story: President Bush has begun a national campaign to use the political bump he got from a successful conflict with Iraq to boost the sagging fortunes of his tax cut proposal. The real story: Republicans are at each others' throats because of the sagging fortunes of the proposal.

The inside story: True-believing House Republicans and a handful of Senate coreligionists are furious at an even smaller handful of Senate Republicans who have for now blocked the Bush proposal, but they exhibit more fury over what they regard as the duplicitous behavior of their stumbling new majority leader, Bill Frist of Tennessee.

The outside story: One of the conservative movement's death squads has announced a six-figure TV ad campaign targeting the home states of the two GOP senators who are most responsible for the sagging fortunes of Bush's latest tax cut proposal. The White House has not intervened to stop the attacks.

As ever, I'll take the outside story first because it involves actions and money instead of political babble.

The commercials are being paid for by the conservative Club for Growth, an economics-fixated political group that is already helping fuel a primary campaign next year against one GOP moderate (Arlen Specter of Pennsylvania) and is fairly close to fueling another against a more famous maverick (John McCain of Arizona). Ironically, neither has done anything to contribute to the aforementioned sagging fortunes of Bush's latest tax cut proposal.

The current campaign targets Olympia Snowe of Maine and George Voinovich of Ohio, who are guilty as charged. The ads take the crude route of accusing the two of disloyalty to a wartime president, making the most odious current analogy of them all for true believers -- to the French.

Their sin against orthodoxy was their refusal to back a tax cut worth more than $350 billion (less than half the Bush request) in goodies the country can't afford in the just-concluded budget resolution fiasco on Capitol Hill. There is still time and there are still numerous parliamentary tricks to reverse what they did, but for now Snowe and Voinovich have thrown a large monkey wrench into the Bush proposal's gears. The real reason for the conservative fury is that if their positions hold, the heart of the president's program -- the repeal of income taxes on nearly all corporate stock dividends -- is a goner.

Making dividends tax-free to individuals is not a kitchen table issue; it is a stock market player's issue. In context -- hemorrhaging government finances, still-weak job market, sluggish economy, anemic business investment in capital equipment -- it is at best inconsequential and at worst a serious threat to responsible fiscal and social policy.

In fact, in his recent, modest activity in relation to the poor economy, Bush has not even referred to it. Instead, his rhetoric uses cover like ''jobs package'' or ''growth package,'' ignoring the absence of evidence that his program would affect either. Above all, he shouts to the rafters that size matters, claiming that Congress must give him a ''package'' of at least $550 billion.

Behind this jabber the GOP feud rages. The House leadership, which gave rubber stamp approval for what Bush wanted in its version of the budget resolution, is furious at Frist for caving in to Charles Grassley, chairman of the Senate Finance Committee, and furious at Grassley for caving in to Voinovich and Snowe.

Speaker Dennis Hastert and the majority leader, Tom DeLay, have a point. Faced with an inability to pass a resolution backing a tax cut larger than $350 billion, Grassley agreed to commit to holding that position when the real thing comes down the legislative pike later this year, and Frist went along.

The problem is that Frist failed to inform Hastert and DeLay of the deal and cut his own elected deputy, the outspoken conservative Rick Santorum of Pennsylvania, out of the discussions. Naughty, naughty.

Frist claims regrets and pledges to work for a tax cut more to Bush's liking, but the fact remains that if Voinovich and Snowe stick to their point that the country can't afford more, the Bush plan can't pass. Worse, if others like Specter and McCain realize that the Club of Growth's machinations are impotent in their states, they could easily return to their own fiscally responsible roots and dig Bush's hole even deeper.

In these circumstances, the idea of selling a repeal of dividend taxation to the country is a joke. The country has higher priorities that have little to do with taxes and more to do with security and budgetary common sense. There is no broad constituency in favor of it that extends an inch beyond the hardest core of the conservative movement.

The real problem for now is selling the Bush plan to Republicans. The rest of us should enjoy the internecine fighting. The only mistake would be to take it seriously.

----------------------------------------------- MUST SEE: Reasons Not to Invade Iraq by George Bush Sr.