White House messages on tax cuts unclear Plan to skirt Congress won't go through after all

September 04, 1992|By Chicago Tribune

WASHINGTON -- Over the last several weeks, the Bush administration has sent out confusing signals about what the president intends to do about taxes.

But the message has seldom been more scrambled than it was yesterday.

Responding to a newspaper report, White House spokesman Marlin Fitzwater said early in the day that President Bush might skirt Congress and issue an executive order that would effectively cut taxes on capital gains, an action that would score points for him with voters, especially among conservatives.

Just a few hours later, the Justice Department said it had issued a formal opinion on Tuesday that contradicted Mr. Fitzwater. Reaffirming the advice its lawyers had been giving Mr. Bush since last spring, the department said the president lacked the legal authority to lower capital-gains taxes on his own.

The matter may not be dead yet, however. Mr. Bush may use his advisers' opinion as a tool to bash Congress. Now that unilateral action has been ruled out, he could claim his proposed tax cuts -- and the jobs he says they'll create -- depend entirely on electing a more accommodating Congress.

The mix-up over capital-gains taxes follows great anticipation before last month's Republican convention that Mr. Bush would use the gathering to announce new tax reductions.

But in his acceptance speech, Mr. Bush said only that he would propose to lower taxes and federal spending in his second term and did not go into specifics. Since then, he has largely dropped any mention of taxes in his campaign speeches.

Mr. Bush made the tax cut the centerpiece of the economic-growth tax package he outlined in his State of the Union speech in January. And to the surprise of liberal Democrats, Congress agreed to reduce the capital-gains tax as part of its tax package.

Mr. Bush vetoed the legislation, however, because it also contained a provision raising the income taxes of the richest Americans.

Late yesterday, Mr. Fitzwater acknowledged he had erred in confirming a story in the Boston Globe that Mr. Bush would soon index taxes on capital gains. "We are disappointed," he said, adding that Mr. Bush now wants the Treasury Department to add indexing to the administration's moribund legislative program.

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