3 California Democrats Shift Stance on Tax Cut

Three California Democrats who voted last spring for President Bush’s 10-year, $1.35-trillion tax cut now say Congress should consider delaying some of the law’s provisions.

The shift by Sen. Dianne Feinstein and Reps. Ellen O. Tauscher of Alamo and Lois Capps of Santa Barbara shows the strains in the bipartisan coalition Bush assembled for one of his most significant legislative achievements.

It also portends a rancorous debate on taxes in the 2002 congressional campaign as the federal government for the first time in several years confronts budget deficits instead of surpluses.

Feinstein, Tauscher and Capps were among 40 Democrats--12 in the Senate and 28 in the House--who broke party ranks last May to vote for the largest federal tax cut in 20 years.

Senate Majority Leader Tom Daschle (D-S.D.), who opposed the measure, has stepped up his criticism of it in recent weeks as his party gears up for an election year in which control of the Senate and House are up for grabs.

But Daschle so far has stopped short of proposing a delay or repeal of any of the measure’s provisions. As a practical matter, the law’s critics acknowledge that no proposals to scale back or delay the tax cut are likely to succeed until after November’s elections--and could be doomed as long as Bush is in the White House.

The president has made clear he would view any push to revisit the tax cut as a bid to raise taxes. And he declared Saturday that “not over my dead body” would such efforts succeed.

But the second thoughts voiced by the three California Democrats show how the fiscal terrain has shifted since the tax cut was signed into law.

“I voted for the tax cut because I believe we should return surplus dollars to the American people,” Tauscher said Wednesday. “But I am not for huge deficits.”

The new tax law, enacted at a time when the federal treasury was flush with extra revenue, produced an immediate $300-per-taxpayer rebate. But its major provisions are scheduled to take effect gradually over the next decade, including across-the-board reductions in income tax rates, cuts for married couples and a phase-out of the federal estate tax.

Tauscher and the other two Californians say they stand by their votes and still support the general thrust of the new law. “My view is we ought to stay the course,” Feinstein said earlier in an interview on CNN.

But in various ways, the lawmakers say some of the law’s provisions should be reopened for debate in light of new economic conditions and the pressures on government spending since the Sept. 11 terrorist attacks.

Feinstein suggested in December that tax cuts for the wealthiest Americans should be frozen. Her spokesman, Howard Gantman, said Wednesday that the senator believes the top tax rate should be reduced no further than an initial cut to 38.6% from 39.6%. Under the law, the rate is scheduled for additional cuts, reaching 35% in 2006.

Capps said Wednesday that she would still support additional tax cuts if she believes they would help stimulate the economy. But she added that some provisions of last year’s law may need to be delayed to ensure adequate funding for the military, domestic security and Social Security.

Tauscher said Congress should consider delaying cuts due to take effect after 2005 in any year when the budget shows red ink. This idea, known as a “trigger,” was advanced and rejected last year.

Critics of proposed triggers, led by the Bush administration, said they would effectively force tax increases at the worst possible time, when revenues are dwindling and the economy is slowing. Tauscher insisted a trigger “would never raise taxes or reverse a tax cut but would instead implement the next phase of rate cuts only when it was fiscally sound to do it.”

Republicans on Wednesday said Democrats such as Feinstein, Capps and Tauscher would pay a political price for second-guessing the law.