House-Senate conferees begin work on tax plans Legislators have tough time agreeing

July 21, 1993|By Karen Hosler | Karen Hosler,Washington Bureau

WASHINGTON -- After an unexpectedly fractious start yesterday to the House-Senate conference on President Clinton's tax proposals, an exasperated Sen. Daniel P. Moynihan pulled aside his chief tormentor with a pointed question.

"What do I tell the president?" Mr. Moynihan, chairman of the tax conferees, asked Sen. Max Baucus, after the Montana Democrat launched an insurrection that threatens to undo the fundamental features of Mr. Clinton's $500 billion deficit reduction package. "We're having lunch today, and he'll want to know what's going on."

The conferees from the Senate Finance and House Ways and Means committees could not even agree unanimously yesterday on an agenda of 14 items already approved by both houses in nearly identical form, the smallest and perhaps easiest part of their task.

Mr. Baucus and Sen. David Pryor, an Arkansas Democrat, resisted a leadership drive to raise the corporate tax rate from 34 percent to 35 percent because they want the option to raise it later to eliminate a gas tax increase or for other purposes.

"The president originally proposed a 36 percent rate, but both houses voted for 35 percent in part to offset the Btu tax [on energy]," Mr. Baucus argued. "We all know that's gone, now."

But the White House and the Democratic leadership struck a deal long ago with business leaders to support the 35 percent rate. And while a majority of the conferees endorsed the 35 percent rate yesterday, it may be revisited later.

The committee also agreed yesterday to:

* Prohibit corporate deduction of executive salaries over $1 million a year, though the salaries of other million-dollar earners such as actors and ballplayers would not be affected.

* Deny a business deduction for club dues.

* Allow higher-income people subject to the alternative minimum tax to take a deduction for the full value of appreciated art and other assets donated to charity.

* Make permanent a credit for investment in rental housing for low-income people.

But Mr. Moynihan of New York was clearly frustrated at his failure to take the corporate tax rate issue off the table permanently.

The atmosphere was all the more strained by the media attention focused on House Ways and Means Committee Chairman Dan Rostenkowski, who faces possible indictment in the federal probe of the House post office.

A highly skilled legislator and Chicago Democratic pol thought by many to be the key to winning congressional approval for Mr. Clinton's economic overhaul, Mr. Rostenkowski snarled at the rebellious conferees yesterday.

"I don't know by what stretch of the imagination the gentleman suggests the Btu tax is dead," Mr. Rostenkowski, chief of the House negotiators, said in retort to Mr. Baucus.

Even though top officials, such as Treasury Secretary Lloyd Bentsen, have acknowledged as recently as yesterday that the broad-based energy tax passed by the House cannot be enacted, Mr. Rostenkowski insisted that it must be considered. He said it will not be surrendered without some trade-off.

But the powerful chairman's fire was gone a few minutes later when he pushed his way through a bank of television cameras and reporters with an ashen face and a gruff "No comment."

Mr. Clinton came to get an eyeful of the action for himself yesterday, giving an afternoon pep talk to the budget conferees, even as Mr. Baucus and others were sampling the sentiment for dropping the 4.3 cent-per-gallon gasoline tax substituted by the Senate for the Btu tax.

Meanwhile, Deputy Treasury Secretary Roger Altman, chief of the White House "boiler room" on managing the message on the tax bill, was holding strategy sessions with Democratic lawmakers in the Capitol on how to get the focus off the deficit reduction package's $260 billion in tax increases and onto its $240 billion in spending cuts.

And Mr. Bentsen told reporters that staff negotiators were close to resolving the procedural problems that kept "empowerment zones," a $6 billion program of tax incentives for investing in poor urban and rural areas, out of the Senate version of the budget.

But the huge problem remained of how the "empowerment zones" and other Clinton spending programs would be financed if the conferees are to reach Mr. Clinton's target of $500 billion in total deficit reduction.

"We can always round it off," one senior administration official quipped. "If the bill is $451 [billion], we can round it up to $500." Some Democrats have urged the president to consider lowering his deficit reduction target, but the White House has resisted.

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