Congress’ GOP Leaders Drop Pursuit of Tax Cut

Formally abandoning a crown jewel of their once-glittering conservative agenda, Republican congressional leaders said Wednesday that they would not even try to pass a tax cut before this fall’s elections.

Prospects for even a modest tax cut--like the GOP’s cherished $500-per-child tax credit for families--have faded under the shadow of presidential politics and a higher political priority for members of Congress: their desire to adjourn early to campaign full time in this fall’s House and Senate elections.

“I would like to see a tax-cut proposal, but I’m a realist,” Senate Majority Leader Trent Lott (R-Miss.) told reporters as Congress returned from its monthlong August recess. “The reality is I don’t think we can get it done in September.”

The shelving of the tax cut also reflects the GOP leaders’ calculation that the tax issue will work better for their party as a campaign issue than as fodder for another round of legislative bickering with President Clinton.

“The reality is if [the voters want a tax cut], they need to make a decision on Nov. 5,” said House Speaker Newt Gingrich (R-Ga.) after a meeting of House-Senate GOP leaders. “If we passed a real tax cut, President Clinton would veto it.”

The shift on tax strategy is also a clear sign of just how vigorously GOP leaders are stripping their legislative agenda down to the bare essentials in hopes of adjourning by Sept. 27, a week earlier than previously planned.

In the remaining weeks, however, Congress may rack up one more major accomplishment: A bill cracking down on illegal immigration is heading to the House and Senate floors, perhaps as early as next week. However, the bill may face a presidential veto because it is expected to include restrictions on illegal immigrants’ access to public education.

Beyond that issue, the rest of this session is likely to be dominated by more mundane matters--principally appropriations bills to keep the government running after the new fiscal year begins Oct. 1 and political bomb-throwing by both Republicans and Democrats as they head into the stretch drive of the election battle for control of Congress.

The leadership decision to abandon the tax cut for the time being was not completely unexpected. For months, Republicans were divided about the political wisdom of pursuing a tax cut, in part because it was so hard to come up with offsetting spending cuts or tax increases. But Wednesday’s statements by Lott and Gingrich marked the first time that GOP leaders explicitly wrote off all hope for action this year.

Congress last year approved a $245-billion tax cut as part of the GOP’s landmark bill to balance the federal budget by 2002. The measure included credits for families with children, capital-gains rate reductions and other tax breaks for business and individuals. But Clinton vetoed the measure, arguing that it would cut too deeply into social programs and complicate efforts to reduce the budget deficit.

The decision by the GOP leadership also reflected a political calculation. Some Republicans argued that an effort to push a scaled-back tax cut could distract from or undercut the debate over tax policy that GOP presidential candidate Bob Dole is making central to his campaign. Dole has called for a 15% cut in income tax rates, and Republicans are casting the election as a referendum on whether or not to cut taxes and scale back government.

For their part, congressional Democrats are not interested in forcing a tax-cut debate either. “There is very little desire at this point to have a debate on tax cuts,” Senate Minority Leader Tom Daschle (D-S.D.) told reporters. “I think we’d be doing the people a real favor if we got these appropriations bills done.”