Clinton steels Democrats' resolve over GOP tax bill

Veto pledge may shift the debate toward more modest proposal

July 27, 1999|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- President Clinton's pledge last weekend to veto a compromise package of tax cuts appears to have steeled the resolve of wavering Democrats to oppose the sweeping tax bill that will reach the Senate floor tomorrow, and it may have shifted the debate toward far more modest tax proposals.

The White House surprised Democrats and Republicans alike Sunday when it dispatched senior advisers to issue veto threats not only for the House-passed $792 billion tax bill but also for a $500 billion proposal that has been backed by a group of Senate Democrats. In the past, Clinton has been loath to issue early veto threats, preferring to keep all negotiating positions open.

But this time, a Democratic split forced him to show his hand early. Five Democratic senators sent a letter last week to two other Democratic senators, Bob Kerrey of Nebraska and John B. Breaux of Louisiana, all but endorsing their proposal to cut taxes by $500 billion over 10 years. This plan falls short of the Republicans' $792 billion but is far higher than the $250 billion to $300 billion that Clinton has said he would accept.

Top Democratic leaders had hoped to stand firmly against sweeping tax cuts, believing they could portray themselves in next year's elections as the guardians of Medicare and as the party of fiscal responsibility.

But fearing a revolt in the works, Democratic leaders summoned Clinton's chief of staff, John Podesta, on Thursday to meet with the Senate Democratic caucus. When Podesta proclaimed that Clinton would veto a $500 billion bill, some senators appeared skeptical, a senior Democratic leadership aide said yesterday.

Some feared a situation in which they would fight against such a bill, only to watch the president turn around and make a tax-cut deal with Republicans this fall. As a result, Democratic leaders told the White House that they could hold the line against a $500 billion tax-cut bill only if Clinton vowed not to sign it.

With that in mind, the veto threats Sunday from two top administration officials -- Treasury Secretary Lawrence H. Summers and Gene Sperling, the White House economic adviser -- were aimed as much at skittish Democrats as at Republicans.

"It was not necessarily to stem the tide, but there was a concern that some [Democrats] thought you could just split the difference between $800 billion and $300 billion, and everyone would end up winners," a senior White House official said yesterday.

Clinton will continue to hammer his message home -- in a speech today, in which he will say a large tax cut could imperil Medicare, and in another tomorrow, in which he will make the case that large tax cuts would channel money from education.

Republicans have reacted angrily to the idea that Clinton would veto a broad tax cut, arguing that they had compromised with the White House already.

They had agreed, for example, to set aside an estimated $2 trillion in revenue from Social Security taxes over the next decade to pay down the debt and extend the life of Social Security. And they have agreed, in principle, to grant some kind of prescription drug benefit for Medicare.

"In that light," Rep. Bill Archer, chairman of the House Ways and Means Committee, said in a letter to Clinton, "I am surprised and saddened to see your hostile and partisan reaction to our plan to help overtaxed American workers and their families."

But to Democrats, the strategy seems to be working, said Ann Lewis, a White House policy adviser. Democrats -- and some Republicans -- are looking with renewed interest at bipartisan proposals that would cut taxes by $345 billion over 10 years, a total that Democrats would be hard pressed to reject.

"We're getting back down to a reasonable range," Lewis said.

The proposals are sponsored by Rep. Lindsey Graham, a South Carolina Republican, and Sen. Paul Coverdell, a Georgia Republican. They would expand the 15 percent tax bracket by $10,000 for a couple or $5,000 for a single filer, shield $5,000 in capital gains and $500 in interest and dividends from all taxes, and raise the contribution limit on individual retirement accounts to $3,000.

"We're trying to find something that will have to be signed by the president or will go through over his objections," said Kevin Bishop, a spokesman for Graham. "This is the perfect alternative to a big tax cut, which is not going to be signed, and no tax cut at all."

The House bill has attracted an odd cast of co-sponsors, including Rep. Robert Wexler, a Florida Democrat who fought Graham fiercely over the president's impeachment, conservative Republicans such as Rep. Matt Salmon of Arizona, and liberal Democrats such as Reps. Albert R. Wynn of Prince George's County and James E. Clyburn of South Carolina.

Wynn said yesterday that he believed there would be a compromise tax cut this year and that it would fall somewhere between $300 billion and $500 billion.

"That's within the range of reasonable discussion," he said. "I'm very confident we will come up with a number that both sides can live with."

White House aides insist they are not negotiating any bottom-line figures. They say they simply want to ensure that their plans to extend the solvency of Social Security and Medicare, to reduce the national debt and to boost funding for some government programs are achieved.

But on Capitol Hill, Democratic leaders expressed hope yesterday that private negotiations were under way to quickly scale down the overall size of the tax cut.

A package that cost $350 billion instead of $800 billion "would be a huge victory for us," a Senate leadership aide said.

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