House Republicans Craft Tax-Cut Plan : Legislation: Proposal is seen as a ploy to embarrass Democrats. Foley says he will try to block measure because it is part of the S&L; bailout bill.

House Republicans, in an 11th-hour maneuver designed in part to embarrass the ruling Democrats, on Friday unveiled their own $23-billion tax-cut package and demanded a vote on the proposal before Congress adjourns for the year.

The package--which includes President Bush’s plan to reduce the tax on capital gains--was hastily drafted so GOP lawmakers could attempt to tack it onto a bill providing another $80 billion to be used by the Resolution Trust Corporation for the savings and loan bailout.

House Speaker Thomas S. Foley (D-Wash.), however, said that the troubled RTC bill could not carry any “extraneous material” and still stand a chance of passing the House in the short time remaining before a scheduled adjournment before Thanksgiving.

Foley signaled that he would move to prevent the Republican tax package from being considered on the House floor by exercising his control over the House Rules Committee, but House GOP leaders indicated they would force a test vote on the issue next week.

House Minority Whip Newt Gingrich (R-Ga.) said that it would be a “tragic circumstance” if Democrats refused to let the House consider the GOP tax plan, which he claimed would create 1.5 million new jobs and help spur the recovery.

The package contains several provisions with broad bipartisan appeal, such as an income tax exclusion for up to $12,000 in interest earnings on a couple’s savings, and a phased increase to $17,600 in the amount of outside earnings allowed before a Social Security recipient’s benefits are reduced.

But Gingrich acknowledged that the Bush Administration so far has refused to endorse the proposals--or the last-minute effort to attach the package to the controversial RTC bill that the White House regards as “must” legislation.

“It’s not a partisan action all the way down the line,” said Rep. Dean A. Gallo (R-N. J.), chief sponsor of the provision to allow exclusion of some interest earnings.

Even some GOP sources in the House, however, described it as a “seat-of-the-pants” proposal that had little chance of being approved at this stage in the congressional cycle.

But for Republicans who are returning to their home districts at a time when Bush is under heavy attack from Democrats who accuse him of not having a domestic agenda, the plan has obvious political appeal.

“It gives our people something to take home and talk about,” one Republican staff aide said.

The proposal was developed by a task force headed by Rep. Mickey Edwards (R-Okla.) and may foreshadow the kind of tax legislation that the President has promised to recommend in his State of the Union message next year.

While sponsors said the package would pay for itself, Democrats are sure to challenge the Treasury Department’s estimate that the capital gains tax cut would raise $9.5 billion over the next five years by stimulating more economic activity. The Congressional Joint Tax Committee has estimated that such a provision would instead lose large amounts of revenue.

Democratic leaders also have charged that nearly all of the benefits from lowering the income tax on capital gains--profits from the sale of stocks or other assets--would be channeled primarily to people with incomes above $200,000.

The proposal would allow businesses to write off capital investments up to $100,000 immediately, just as they do other business expenses, and provide a 50% exclusion for gains from venture capital investments held for more than five years.

In addition, the legislation would repeal the new excise tax on boats and aircraft and allow penalty-free withdrawals from individual retirement accounts for first-time home buyers. It would give a new tax break to anyone who suffers a loss on the sale of a principal home.

House Democratic aides brushed off the late-starting tax package as a partisan ploy that would be rejected on grounds that it was not approved by the House Ways and Means Committee and would not raise enough revenue to offset its tax benefits.