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Who Wants A Middle Class Tax Cut? Politicians, That's Who


Washington Outlook

WHO WANTS A MIDDLE-CLASS TAX CUT? POLITICIANS, THAT'S WHO

The voters of New Hampshire made one thing pretty clear on Feb. 18: People are fed up with politics-as-usual. But judging by the squabbling over an election-year tax cut, politicians in Washington still haven't gotten the message that they must deal with the nation's serious economic problems.

As President Bush and lawmakers fight over details of a bill that's supposed to help end the recession and foster growth, political posturing--not economics--is the driving force. The result, once the name-calling and finger-pointing is over, will be a modest tax bill that offers little help to the economy.

The ball is now in the Democrats' court. On Feb. 19, the House majority caucus considered but took no action on a draft bill that would offer working people a small tax cut, raise taxes for couples earning more than $150,000, and index capital gains for inflation. The bill also contains some highly technical provisions that provide special-interest breaks to the real estate industry and to takeover artists. And it penalizes corporations that pay officers more than $1 million a year. But the caucus deadlocked after members objected to some provisions, including a one-percentage-point cut in the corporate tax rate.

NO QUARTER GIVEN. Whatever the caucus does, the measure is veto bait. Budget Director Richard G. Darman attacked it as "politically motivated," sneering that the plan would give middle-class families "25 a day for two years." He didn't mention that Bush only offered 41 a day for a family with two children. And that was before Bush disowned his own bill, demanding that Congress not even consider it until later.

Bush has spawned much of the tax cynicism by treating his own proposals as throwaway campaign lines. The President promised middle-class relief in his State of the Union speech and proposed paying for it and other tax breaks with a laundry list of tax hikes. But under pressure from challenger Patrick J. Buchanan, Bush ditched the revenue-raisers. That left him unable to pay for his proposed hike in the personal exemption, so Bush walked away from that promise, too, only to be blasted again by Buchanan for tax "betrayal."

While Bush flounders in search of a tax policy, congressional Democrats are pursuing the "fairness" issue. House Ways & Means Committee Chairman Dan Rostenkowski (D-Ill.) dusted off a 1991 proposal that would give workers a temporary $200 income tax credit against their Social Security payroll tax while raising tax rates for the wealthy. Senate Majority Leader George J. Mitchell (D-Me.) is one-upping the House. He wants any middle-class tax cut to be permanent. The Senate Finance panel, which will begin drafting a tax bill in a couple of weeks, will go further to help what Democratic candidates call "the forgotten middle class" by including sweeter provisions for Individual Retirement Accounts.

NO PANDERING, PLEASE. For all the energy going into this jockeying, voters seem too concerned with such issues as health care and job security to pay much attention. Polls show that middle-class voters don't expect a tax cut and don't think it would do much good. New Hampshire Democratic winner Paul Tsongas says if he were President, he would veto middle-class tax relief. Says Democratic analyst William Galston: "There isn't any overwhelming public pressure for a middle-class tax cut. The country is divided between those who wouldn't kick the money out of bed and those who want Congress to use the money for something else." Instead, says Galston, "the undercurrent is that people don't want to be pandered to."

Election-year pandering, however, is a deeply ingrained habit. The success of New Hampshire's insurgents suggests that it may be the wrong thing to do in 1992. But back in the swamps of Washington, old habits die hard.Howard Gleckman in Washington EDITED BY STEPHEN H. WILDSTROM


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