Bush Putting Off Tax-Cut Decision : Economy: White House officials are split over the issue. The President signals shift in strategy, saying he is unsure the action to aid middle class would spur growth.

White House officials, caught in a rift between top Bush Administration policy-makers over how to fuel a sputtering economy, have decided to delay any decision on a possible tax cut for middle-class Americans, Administration sources said Friday.

President Bush himself signaled the shift in Administration strategy, saying that he is still “trying to sort out” whether such a measure is needed at a time of mixed signals about the severity of the economic problems facing the nation.

“Let’s be sure what we do helps,” he said.

In a press conference, Bush also rejected the “feminist” perspective on the confirmation hearings of Supreme Court Justice Clarence Thomas and expressed regret that Republican David Duke had won a place in the runoff for Louisiana governor.

The stalemate within the Administration over tax cuts comes in the face of growing pressure from Democrats in Congress to enact a tax credit for children and to restore the tax benefits of individual retirement accounts as a means of stimulating economic growth.

Previously, White House officials had indicated that Bush was planning to respond to the Democrats by putting forward a growth package of his own, perhaps by the end of this week. Efforts to develop a tax package quickly would seem to acknowledge the importance that the nation’s economy is likely to play in the 1992 elections.

Senior White House officials said that the President’s work on an economic growth plan has been stymied primarily because the Administration itself is sharply divided over the issue. The effect of the dispute would be to delay any decision by at least a week--if not longer--and perhaps concede the early momentum for a new round of tax cuts to the Democrats.

On one side, Treasury Secretary Nicholas F. Brady is said to think the economy does not require any new stimulus. On the other, Vice President Dan Quayle and Housing and Urban Development Secretary Jack Kemp are among those known to believe that a tax cut is needed.

White House Chief of Staff John H. Sununu and Budget Director Richard G. Darman, adopting an intermediate position, are understood to be urging the President to support a tax cut only if it can be portrayed as “more responsible” than the Democratic proposals.

As for the President himself, sources said that he appears to be leaning toward Brady’s view that a middle-class tax cut would--in the words of one official--”screw up everything.”

While the Administration seeks to resolve its differences, sources said, chief presidential economic adviser Michael J. Boskin has been ordered to consult with leading forecasters about the likely course of the economy.

“There are just a lot of very big decisions and complex issues before we come up with a package,” a senior White House official said. “All of the political impetus is to do something . . . but it’s got to be backed up by economic need.”

On Friday, Bush acknowledged that the economy is sluggish but said he does not accept the view that it is heading into a deeper slump. He said he is resisting a tax cut because it would violate the 1990 budget accord between the White House and Congress that was intended to reduce the federal deficit.

“I will not revisit it (the agreement) because it’s the only cap we have on outrageous congressional spending,” he said. “It’s the only guarantee that the taxpayer has that his interests to some degree will be protected.”

Officials said that the dispute within the Administration centers on how a new package of middle-class tax cuts would be reconciled with the President’s existing proposals for cutting the tax on capital gains and expanding the use of IRAs.

In his press conference, Bush referred to a “six-point growth package.” Besides the capital gains and IRA proposals, he cited his plan to stimulate research and development, a bank reform proposal, a transportation bill and “enterprise zone” legislation.

“We need some stimulation to economic growth and I think everybody is now familiar with the fact that a capital gains cut would stimulate growth and create jobs and create opportunity,” he said.

Debate over a middle-class tax cut began when Sen. Lloyd Bentsen (D-Tex.), chairman of the Senate Finance Committee, announced a plan calling for expanded tax benefits for IRAs and the creation of a $300 child tax credit. His plan has won broad support from Democrats, and Republican Sen. Phil Gramm of Texas has expressed support for more middle-class tax relief.

One of the few Democratic holdouts has been Rep. Dan Rostenkowski of Illinois, chairman of the tax-writing House Ways and Means Committee and a frequent ally of the President. On Friday, Rostenkowski expressed continuing reluctance to support any of the proposals. “I don’t have a reputation of jumping in until I find out that there’s water in the pool,” he said.

At his press conference, Bush was asked repeatedly whether he had any qualms about the tactics used by Republican senators during the Thomas confirmation hearings designed to question the motives and reputation of his accuser, law professor Anita Faye Hill.

He acknowledged that he was concerned about the way Hill’s allegations were handled by the Senate Judiciary Committee but he did not view the matter strictly on a “feminist basis.” He said that he is just as concerned about the damage the hearings did to Thomas’ reputation as the impact they had on Hill’s life.

Bush, who campaigned for unsuccessful Republican Gov. Buddy Roemer in Louisiana, said that he could not explain why “plain, honest, decent voters” gave so much support to Duke, a former leader of the Ku Klux Klan.

He said that it might be a result of general discontent among voters, but added: “I could not possibly support David Duke because of the racism and because of the very recent statements that are very troubling in terms of bigotry and all of this.”

Laws That Do Not Apply to Congress

President Bush assailed Congress this week as ‘a privileged class’ that exempts itself from many laws. Legislators retorted that the executive branch is itself exempt from certain laws, such as the Freedom of Information Act and certain ethics statutes. Here are some of the laws from which Congress has exempted itself, including those affecting worker safety, wages and workplace discrimination.

Social Security Act of 1933, which imposes payroll taxes on most of the U.S. work force for retirement benefits.

National Labor Relations Act of 1935, which gives employees the right to organize in labor unions and engage in collective bargaining with employers.

Minimum Wage Act of 1938, which sets wage and overtime standards.

Equal Pay Act of 1963, which requires that men and women receive the same pay for the same jobs.

Civil Rights Act of 1964, which bars discrimination in the workplace and across American society.

Freedom of Information Act of 1966, which forces public disclosure of government documents.

Age Discrimination Act of 1967, which bars discrimination based on age in employment and promotion and protects workers from forced retirement.

Occupational Safety and Health Act of 1970, which sets health and safety standards for the workplace.

Rehabilitation Act of 1973, which expands the rights of the disabled. However, this law is superseded by last year’s Americans with Disabilities Act, under which complainants may take a grievance to the Senate Ethics Committee but may not sue, as they could against a private employer.

Privacy Act of 1974, which bars the government from disclosing personal information about an individual without his or her permission.

Ethics in Government Act of 1978, which sets up the independent counsel system of investigating allegations of executive branch misdeeds.

Conflict of interest laws that bar other government officials from dealings on matters in which they have a financial interest.

Sunshine Act, which requires government agencies to conduct their business in public.

Inspector General Act, which requires the President to appoint inspectors general to combat fraud and abuse within the executive branch.

Source: Associated Press