WASHINGTON INSIGHT

TAXING IDEA: The Republican-led Congress may be preparing to consider a national sales tax to replace the federal income tax as the principal means of financing the government. Rep. Bill Archer (R-Texas), chairman of the House Ways and Means Committee, is quietly drafting a proposal to phase in such a “consumption tax” gradually as a substitute for the income tax. He hopes to unveil it by early spring. Archer will face an uphill fight, however. Not only are Clinton administration officials skeptical, but House Majority Leader Dick Armey (R-Texas) is plugging a rival proposal to enact a flat tax--one that would impose the same-sized levy on all taxpayers, no matter their income bracket.

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TOBACCO STRAINS: Notes from the tobacco front: The downtown Hilton in Greensboro, N.C., was packed with out-of-town lawyers and journalists for Monday’s court hearing in the industry’s suit against the Food and Drug Administration--a little too packed for FDA Commissioner David A. Kessler. The official who dared to declare that cigarettes should be regulated found he couldn’t get a no-smoking room. Next day, associate FDA Commissioner Mitch Zeller and anti-tobacco crusader Matthew Myers--not popular figures in the tobacco heartland--arrived at the hearing looking bleary-eyed. They had received strange middle-of-the-night telephone calls from a man who angrily insisted they had ordered pepperoni and sausage pizza. “I told him I come from a kosher household,” Myers said. When the hearing got underway, U.S. District Judge William Osteen surveyed the litigators--35 lawyers for the industry and 25 for the government. “It may be easier to introduce those who are not lawyers.”

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TAX BREAK: If House Speaker Newt Gingrich (R-Ga.) decides to pay his $300,000 ethics penalty out of his own pocket rather than tapping campaign funds, there may be a silver lining: The payment could be tax deductible. Kenneth Gross, former head of enforcement at the Federal Election Commission, said there is a good chance the Internal Revenue Service would rule that the payment is deductible as an “ordinary and necessary business expense.” It would not have been deductible if the House had called the penalty a “fine,” Gross said. But the House Ethics Committee, in recommending punishment for Gingrich for misleading the panel about his use of tax-exempt funds for political purposes, carefully described payment as “reimbursement” toward the cost of its investigation. If Gingrich could deduct his payment, Gross figures, the Georgia Republican may be able to earn much of his $171,500 tax-free for the next two years. Randolph Evans, Gingrich’s lawyer, would say only that “we’re looking at tax implications of all the alternatives.”

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O.J. CONNECTION: When President Clinton’s aides muttered last week about how the verdict in the O.J. Simpson civil trial muted media coverage of the president’s State of the Union address, it wasn’t the first time the former football star’s name had been invoked sarcastically in the White House. The diaries of the late H.R. Haldeman, President Nixon’s chief of staff, show as the Watergate scandal gained momentum, Nixon complained that the Washington Post was writing about connections between Watergate figures who had a common element in their backgrounds: They had attended USC. As Haldeman recorded, Nixon said on Oct. 16, 1972, that he thought his press secretary “ought to hit it with some sarcasm, saying he’s surprised you haven’t brought Pat Nixon in too. She’s also a graduate of Southern Cal, and so is O.J. Simpson.”