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Washington's Brawl Over Taxes Is Mostly Show Biz


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WASHINGTON'S BRAWL OVER TAXES IS MOSTLY SHOW BIZ

The rhetoric coming out of Washington these days is downright torrid. A barnstorming President Bush warns voters that the Democrats plan to "raise your taxes" and, in words eerily reminiscent of his "read my lips" vow, threatens to veto any legislation that increases tax rates. Congressional Democrats, meanwhile, puff themselves up and charge that the President has abandoned the middle class in favor of wealthy Americans. "He showers the rich with tax breaks of tens of thousands of dollars, while the middle class takes a bath," says House Ways & Means Committee Chairman Dan Rostenkowski (D-Ill.).

Treasury Secretary Nicholas F. Brady describes the conflict as a "clash of values" between Democrats and Republicans. It is no such thing. There's barely a dime's worth of difference between these competing "economic recovery" plans. Both would provide modest incentives for capital investment. Both would give a few bucks to the real estate industry.

FANFARE. The Democrats want to cut taxes a bit for the middle class. In his State of the Union address, Bush also proposed a modest tax cut for workers. The only difference: Democrats would raise rates on the wealthy, while the President would tax the rich less directly, with proposals such as increased levies on annuities and higher medicare premiums for wealthy retirees. Lately, Bush has wandered away from both the tax cut and the offsetting revenue-raisers. But no matter. Neither plan has a real impact on the overall tax burden or the economy.

So why are the two sides insisting that they're poles apart on fiscal policy? Craven politics. The White House, harassed by primary challenger Patrick J. Buchanan, wants to portray Bush as tough on taxes. So, when Congress sends him a bill that includes a tax hike, the President, with great fanfare, will veto it. The White House hopes that will stifle Buchanan's criticism of Bush as a "tax and spend" President, and put the heat back on the Democrats. "This one," says one Bush strategist, "is a winner."

But Democrats are betting the White House strategy is wrong. So they're in the process of loading their tax bill with all sorts of goodies, even including a modest stab at health care reform (page 45). And they're ready to accuse Bush, after his veto, of killing a tax cut for average working Americans to protect his rich pals. Congressional Democrats believe that tax fairness was a powerful political message in 1990, and they are convinced it will remain so in 1992.

ROUND TWO. All hyberbole aside, this tax debate has the same hollow ring as last year's pitched battle over affirmative action. There was virtually no difference between the "compromise" 1991 Civil Rights Act that Bush signed and the Democratic proposal that he denounced as a "quota bill." But the White House felt that the running battle with Congress served the President's political interests. Washington is playing the same game today. All thought of passing a bill that might help the economy has long since been lost. The only goal now is finding a message that works at the polls.

Some politicians have their doubts about the strategy. Democratic Presidential candidate Paul E. Tsongas has publicly blasted both bills. And privately, a few strategists in the Administration and on Capitol Hill worry that their game of fiscal chicken will backfire. A White House aide frets that the expected veto of a middle-class tax cut "may not be an easy sell" to voters.

Then there are those lawmakers who fear that a backlash against Washington gamesmanship will hurt both Bush and Congress come November. "What worries me," says one House Democrat, "is that voters are going to get us all." He may be right.Howard Gleckman


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