Republican solidarity broken by tax-cut issue



WASHINGTON -- Ever since Newt Gingrich came up with his "Contract with America," one item has stuck out like a fat man in a nudist colony: the figure of $200,000 as the top family income level at which the Republican-proposed tax credit of $500 per child would be granted.

To members of Congress who make $133,600 a year, that ceiling may seem reasonable. But to Joe Sixpack, it is likely to sound like helping the rich get richer. The Contract, in defense of the $200,000 limit, proclaims that 90 percent of the estimated 50 million families that will be eligible earn less than $75,000 a year, which sort of begs the question.

This fact finally has dawned on 102 of the 230 Republicans who now are a majority in the House. They have written a letter to the House Rules Committee urging that the ceiling be dropped to $95,000, which also will seem high to the average lunch-bucket dTC toter. One reason for the distressed House Republicans' proposal is that the Democrats have also taken notice of the fat man in the nudist colony and are making a conspicuous target of him.

Speaker Gingrich says in response to the complaint within his own flock that lowering the limit isn't "out of the question." That's a prudent observation in light of the fact that the opposition is being echoed by leading Republicans in the Senate, including Senate Finance Committee Chairman Bob Packwood. The Oregon senator questions why there should be a tax cut at all when the first priority should be deficit reduction.

Conservative Republicans of the feet-in-cement school like presidential hopeful Sen. Phil Gramm and House Budget Committee Chairman John Kasich vow they will not budge. Gramm flatly guarantees that the "Republican Senate will not become a black hole for our 'Contract with America,' " though the Contract was a House document, not a Senate one. And Kasich digs in his heels by declaring, "I've had it with this rich-poor, class warfare business."

Maybe Kasich has had it, but obviously not the Democrats, to whom that "business" has always been the ultimate fallback in partisan wars. The Democrats are not reluctant to wage more "class warfare," with the Republicans providing them the juicy target of the $200,000 limit.

The mini-rebellion among the House Republicans gives President Clinton a stronger argument to continue his criticism of the Contract tax credit as a boondoggle for the rich at the expense of the poor and the middle class. It was the president's determination, after the 1994 midterm Republican sweep, to show voters on the bottom and middle rungs of the economy that he was still their champion that led him to propose his own $500 tax credit with a ceiling of $75,000.

That proposal was transparently a response to the political rock that fell on his head last Nov. 8. It was tantamount to a repudiation of his decision after his election in 1992 that even though he had promised a middle-class tax cut in the presidential campaign, reality dictated that it be shelved in favor of deficit reduction.

But by setting his own ceiling at $75,000 in contrast to the Republicans' $200,000, Clinton was able to argue that he would be rewarding only his favored voters "who work hard and play by the rules."

Clinton could seize the realistic high ground in the whole debate now by reverting to his original position as president, that the nation's economic condition requires that deficit reduction be the first priority, and tax cuts be delayed until the deficit is brought under control. Considering the mood in the Senate as indicated by Packwood, any significant tax cuts voted by the House this year may well be en route, anyway, to the black hole to which Gramm so defiantly refers.

But Clinton took a political beating the last time around in reneging on his promised middle-class tax cut, so he probably is stuck now with his decision after the midterm elections to try to compete with the Republicans as a tax-cutter. Besides, the dissenting House Republicans have made themselves his strange bedfellows on the issue, which may be the best thing that has happened to him politically since the "Contract with America" first raised its head.

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