Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
702267
label
Budget [1990] - Press Report #3 [2]
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
702267
sourceUrl
contentType
document
title
Budget [1990] - Press Report #3 [2]
citationUrl
identifierLocal
29141-006
collections
Records of the White House Office of the Chief of Staff to the President (George H. W. Bush Administration)
John Sununu Issues Files
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
702267
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
0cf9fb35721c229d
ocrText
Originally Processed With FOIA(s):
FOIA Number:
1998-0004-F[1]; 1998-0251-F
S
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the George Bush Presidential
Library Staff.
Record Group/Collection:
George H.W. Bush Presidential Records
Collection/Office of Origin:
Chief of Staff, White House Office of
Series:
Sununu, John, Files
Subseries:
Issues Files
OA/ID Number:
29141
Folder ID Number:
29141-006
Folder Title:
Budget [1990] - Press Report #3 [2]
Stack:
Row:
Section:
Shelf:
Position:
G
15
24
6
7
THE WALL STREET JOURNAL.
MONDAY, OCTOBER 22, 1990
Budget Talks
tax by at least nve cents a gallon and in-
creased the wage limit to $140,000 from the
crease the limit on wages subject to the
current $51,300. The Republicans would
Medicare payroll tax. President Bush ap-
raise the limit to $98,000. This would be the
Stall on Taxes
parently failed to win any cut in the capi-
equivalent of increasing the tax rate of up-
tal-gains tax. But the negotiators dropped
per-income people by 1.45 percentage
a provision-which Mr. Bush derided as a
points for employees, and twice that
Forthe Wealthy
tax increase on the middle class-that
amount for the self-employed.
would have delayed the inflation adjust-
The negotiators also were working to
ments of the tax brackets and the personal
reduce the amount of savings contained in
exemption.
the Medicare programs, compared with
Bush Agrees to Accept Rise
Over the weekend. House and Senate
the Senate-passed deficit-reduction bill.
negotiators exchanged several offers on
Specifically. Democrats proposed to set the
In Top Rate. Enhancing
tax-increase proposals. which would
annual Medicare deductible, now $75, at
amount to about $140 billion in new reve-
$125. This compared with $150 in the Sen-
Chance of Final Success
nue over five years.
ate-passed bill and $100 in the House ver-
The president's sharp departure from
sion.
past positions occurred when he said he
The two sides also disagree over how
By JEFFREY H. BIRNBAUM
would accept an increase in the top rate on
much to raise the federal gasoline tax,
And JACKIE CALMES
the richest Americans-who number about
which-is currently nine cents a gallon. The
Staff Reporters of THE WALL STREET JOURNAL
600.000-to 31%. Though Democrats said
Democrats offered to raise it five cents a
WASHINGTON - Budget negotiators
privately they wished they could get an
gallon: the Republicans proposed raising it
suffered a setback last night in a dispute
even bigger increase, they gleefully re-
about seven cents a gallon. The Senate-
over how to raise taxes on millionaires.
sponded with an offer that accepted the
passed measure includes a 9.5-cent in-
But the disagreement was a ripple in
31% rate.
crease. while the House bill called for no
the sea of change in President Bush's posi-
Democratic aides reasoned that Presi-
increase.
tion. Over the weekend. the president
dent Bush agreed to the 31' rate at con-
The weekend negotiations began Friday
agreed to raise the top rate on the wealthi-
siderable political cost. since he accepted
after the Senate. early that morning, ap-
est Americans to 31% from the current
a tax rate rise-something he long has
proved its five-inch-thick version of the
28%-a move that boosts the ultimate
vowed not to do-and yet failed to get in
deficit-reduction plan on a bipartisan 54-46
chances of success for the protracted talks,
return even a face-saving version of the
vote. Twenty-three Republicans supported
which seek a package of tax increases and
the package and 22 opposed it. while 31
spending cuts to shrink the federal defi-
tax change he has most sought this year, a
Democrats voted for the plan and 24 voted
cit.
cut in the capital-gains tax rate.
against it. including 12 of the 17 Democrats
Ever since he was a candidate for presi-
Republican strategists noted that, taken
facing re-election. The bipartisan Senate
dent. Mr. Bush has steadfastly vowed to
by itself, a 31% top rate would reduce mar-
action stood in contrast to the House's
resist any tax-rate rise. Now he has taken
ginal tax rates for about two million tax-
party-line passage of its budget plan last
a step closer to the Democrats' line. Both
payers. A family of four in this category
week.
sides now appear willing to set the top tax
makes between roughly $80,000 and $200,-
The tax and Medicare portions from the
rate at 31% and also limit most deductions
000 a year in adjusted gross income. Be-
House Ways and Means and Senate Fi-
taken by the wealthiest Americans, effec-
cause of an oddity in the tax code called
nance Committees account for about three-
tively boosting their tax rate even higher.
"the bubble." they pay a 33% rate on each
quarters of the package's proposed deficit
But early last evening, the negotiations
additional dollar of income.
reduction. The remaining quarter consists
broke off briefly because of a disagree-
But the negotiators aren't thinking of
of proposals from among 20 other commit-
ment over the narrow question of how to
stopping at tax rates in their drive to boost
tees. involving wide-ranging steps to cut
hit millionaires. The Democrats prefer a
taxes of the wealthiest Americans. Repub-
projected spending on programs involving
special surcharge. while the Republicans
licans and Democrats are considering se-
want a more stringent limit on deduc-
vere limitations on deductions, which are
farmers. federal employees. veterans and
student loans.
tions.
mostly taken by upper-income individuals.
While some differences divide conferees
Specifically, Democrats want to impose
The proposals amount to little more than
from the various committees. the similari-
a 7.5% surcharge on the tax liability of in-
backdoor rate increases.
ties between the House and Senate ver-
dividuals with taxable incomes over mil-
Both the Republican and Democratic of-
sions are great enough that negotiators are
lion. Republicans want to disallow $800 in
fers would disallow $400 in deductions for
expected to fall in line with compromises
deductions for every $10.000 in income
every $10,000 in income above $100,000 for
both couples and individuals, effectively
once it's clear that the tax questions are
above $100.000 for the same millionaires.
resolved.
Both proposals would raise roughly the
setting their marginal tax rate at 32.25%.
Even if a tax agreement could be
same amount of money. more than $5 bil-
The Republican offer also would raise the
reached soon. the efforts both to pass the
lion over five years. And the percentage of
disallowed deductions to $800 for every $10.-
deficit-reduction measure through both
taxpayers affected is minuscule-ten of
000 of income for millionaires. who num-
chambers and finish the fiscal 1991 appro-
thousands out of the 110 million taxpayers
bered about 65.000 in the last count by the
priations bills are likely to keep law-
in the country.
Internal Revenue Service. effectively in-
makers in session past Wednesday, when
The disagreement was SO severe. how
creasing their marginal rate to 33.4% The
the current stopgap government-funding
ever. that White House Chief of Staff John
Democratic offer was a 7.5% surcharge ap-
law expires. Mr. Bush signed the tempo-
Sununu left the negotiations on Capitol Hill
phed to the taxes owed by the same indi-
rary measure Friday. avoiding a repeat of
in a huff last evening. "They got to go
viduals.
the brief and unpopular government shut-
ngure out what their position is. he said
Republicans rejected the Democrats' of-
ter as a blatant tax-rate rise above what
down after he vetoed a stopgap measure
angruy. reterring to the Democrats.
earlier this month.
Speaking of the president. Sen. Bob
the president already said was his bottom
With just 15 days left before voters go to
Packwood R., Ore. said: "He IS willing
line 317. The Democrats were resisting
the polls. Congress already has set a post
to tax the rich extensively. But the Demo-
the Republicans deduction-limit proposal.
war record for remaining in session close
crats are not willing to tax the rich the
because they said they might lose crucial
to an election. The previous record was 17
way we want to go. Sen. Packwood went
votes in the House from the big delegations
davs between adjournment and elections.
on to quote Mr. Bush: "I ve gone three
from New York and California. where
quarters of the way. I've given up things I
property values. and therefore deductions.
didn't want to give up. I just don t want to
are higher than in most other parts of the
give up any more.
country
Despite the setback. Sen. Packwood and
The deductions subject to the limit
other negotiators resumed their talks later
would include tax payments to state and
in the evening and still hope to complete
local government. mortgage-interest pay-
deficit-reduction legislation this week. The
ments and charitable contributions. The
lawmakers are aiming for a measure that
limit on deductions in the Democratic pro-
achieves about half of the goal of trimming
posal would effectively produce a 32.24%
the budget deficit by $500 million over five
marginal tax rate for those taxpayers who
years. The remaining savings would come
currently are in a 28% bracket and would
from restraint in military spending. con-
be put in the 31% bracket by the new
tained in a separate bill. and from pro-
law.
jected savings from interest payments on
In another method to tax rich people.
the federal debt.
both Republicans and Democrats also are
Negotiators appeared to be moving to-
considering raising the amount of wages
ward a package that raised the gasoline
subject to the 1.45% Medicare payroll tax.
The latest Democratic offer would have in-
THE WALL STREET JOURNAL MONDAY, OCTOBER 22, 1990
Dejicit-Cutting:
Economic Experiment
WASHINGTON
George Bush and Congress are
about to embark on an economic exper-
Still in a Deep Hole
iment. Just as the economy appears to
Federal budget surplus (+) or deficit (-) as a
be sliding into a recession, they are
percentage of GNP; fiscal year data
about to raise taxes and cut spending.
2%
This is the opposite of the simple
0
Keynesian recipe for prosperity: The
-2
government should stimulate the econ-
omy when it's weak and restrain it
when it's strong.
6
"If you had your druthers, you should
have done this sooner. when the economy
'60
'65
70
75
80
'85
90
"B1
was in better shape," says Keynesian econo-
Assumes $40 billion deficit reduction package
mist James Tobin. a Nobel laureate. But
Source: Other of Management and Budget: administration forecasts
that doesn't mean the government should
delay. he adds. "The reputation of our gov-
establishing that credibility will be how
ernment to accomplish anything is at
tightly Congress ties its own hands as it
stake," he says. If a budget agreement
writes a new law enforcing the spending
causes interest rates to fall sufficiently. hel
constraints in the agreement.
believes, the short-run damage to the econ-
By delaying SO long, Congress and the
omy can be largely offset and its long-run
White House haven't made the Fed's job any
performance should be enhanced.
easier. Tax increases will begin to pinch in
In general, economists say that a
barely two months. Even if the Fed moved
budget deal is probably going to hurt a
immediately on interest rates, the beneficial
little now but that the patient should feel
effects wouldn't be felt for roughly six
better in a few years. "You don't cure
months.
cancer by waiting six months," says
No matter how the Fed handles the situa-
Robert Reischauer, director of the Con-
tion, some economists doubt the wisdom of
gressional Budget Office. "You start
raising taxes now. The supply-siders, who
chemotherapy even though it makes you
never think the time is right, are in full cry.
feel terrible. You're doing it to improve
John Makin of the American Enterprise In-
your prospects three, four, five years
stitute says the government ought to be cut-
out."
ting taxes to stimulate the economy and
Regarding the economy's prospects, he
raising interest rates to control inflation.
says that "what you have to believe is two
Nobel-laureate economist Milton Fried-
things: that the Fed will respond rather ag-
man says all this worry about whether the
gressively by pushing down short-term rates
package will help or hurt the economy is
and that financial markets will look at the
much ado about nothing. It doesn't matter
package, find it to be credible and a major
how much the government relies on debt or
change in fiscal policy, and that therefore
taxes. he reasons. What matters is how
long-term interest rates will fall."
much the government spends, and this pack-
President Bush believes. "We must re-
age won't change that significantly.
duce this deficit SO that interest rates can
In any event, the spending cuts and
come down," he said the other day. "Many
tax increases, as they are shaping up,
of you have heard what Alan Greenspan
won't do much more than nick the econ-
said: If we get a good package, they will
omy in the next year or SO. On paper,
come down."
they would reduce the fiscal 1991 deficit
How much? Administration officials talk
by $40.1 billion, but that includes a few
about a drop of one-half to one percentage
billion in gimmicks and excludes spend-
point in the short-term rates that the Fed-
ing on troops in Saudi Arabia.
eral Reserve influences directly. Many pri-
At most, the program will shave 0.6% off
vate economists use the same range.
the gross national product over the next
It isn't at all clear that Mr. Green-
year, and economists say that's simply not
span, the Fed's cautious chairman, will
very much. Another big change in oil prices
move that much, given the Fed's con-
would have a far greater effect. Of course,
cern about inflation, the slumping dollar
the impact in particular areas could be sub-
and rising interest rates in Japan and
stantial: A new 10% luxury tax surely won't
Germany. "If Alan Greenspan goes at
boost sales of Cadillacs.
one-quarter percentage point at every
The near-term benefits of implementing
open-market committee meeting, that's
the deficit-reduction package are probably
probably not fast enough," Mr. Tobin
oversold. If a recession is beginning. as
warns.
many forecasters say, it's too late to head it
Mr. Greenspan repeatedly has said the
off by cutting interest rates. The sun will not
Fed will wait to see whether financial mar-
break through the economic clouds the mo-
kets regard the final package as credible. If
ment Mr. Bush signs the final document.
so, market rates will fall and the Fed will
But if this works as forecast, the economic
help them along. If not. there's not much the
weather will improve in years ahead.
Fed can do. Mr. Greenspan believes that
-DAVID WESSEL
the bond market isn't as interested in the
first-year deficit-reduction figure as it is in
the believability of the five-year plan to re-
duce the deficit by $500 billion. One factor in
Bursting the Bubble
The Remocrats and Depublicans
would pay a new rate of 32.45%, or
negotiating the final details of your
roundly 33%. Above $100,000, the
tax increase are not SO foolish as to
Pease plan kicks in. A 5% loss of
give an advance look at it to anyone
itemized deductions for marginal
(with the exception of the Guccied
earnings is, until all deductions are
hordes lobbying for scraps from the
eliminated, simply a new marginal
tables of tax-the-rich But we keep
rate of 1.55%. So the $100,000-plus
wondering what it will do to marginal
folks now paying the bubble rate of
tax rates. Marginal rates. the tax paid
33% would pay a rate of 32.55%, or
on an additional dollar of income.
roundly 33%.
measure incentives to economic
For some bubble folks it would be
growth: cutting them was the key to
worse: As usually written, the Pease
the now-vanishing prosperity of the
plan's deduction limitation applies to
1980s.
adjusted gross income-not taxable
Both sides of the table professed to
incomes after exemptions and deduc-
start with concerns about marginal
tions. This means some unlucky bub-
rates. The notion that marginal in-
ble folks (with payroll income below
come tax rates shouldn't be increased
$100,000 but interest. dividends or cap-
was the only fig leaf President Bush
ital gains pushing their total income
had left after throwing in the towel of
above $100.000) would get hit with
his no-new-tax pledge. The Demo-
both the higher Medicare cap and the
crats, on the other hand, proclaimed
deduction phase-out, raising their
the objective of "bursting the bub-
marginal rate to 34%. Certain two-in-
ble." The bubble is that income range
come families who pay the payroll tax
subject to a special surtax to "phase
twice would also be double-wham-
out" personal exemptions and the ef-
mied. Thus would the Democrats
fects of a lower 15% rate on the lowest
"burst the bubble" and the Bush ad-
income bracket. When these "bene-
ministration avoid any increase in
fits" are extinguished, the surtax ex-
marginal rates.
pires. So folks in the bubble pay a
Naturally, folks above the bubble
marginal rate of 33% though an aver-
get a straightforward increase in
age rate below 28%; above the bubble,
marginal rates from 28% to at least
the average rate and marginal rate
32.55%. Theoretically, there would be
converge at 28%.
some income level at which the "ben-
We asked Steve Entin of the Insti-
efit" of itemized deductions would be
tute for Research on the Economics of
extinguished and the marginal rate
Taxation to calculate some marginal
would return to 31%. This level cannot
rates based on the following
be calculated precisely since itemized
all-too-likely assumptions about the ul-
deductions can vary, but it would ap-
timate Depublican-Remocrat bill: The
pear to be somewhere around the in-
bubble will be burst with a 31% tax
come reported by Michael Milken in
bracket on all income starting at the
his heyday. Such incomes are unlikely
bottom of the bubble. The Medicare
for anyone in the economic climate
tax, which now applies only on payroll
the new tax bill presages, but no
income up to $51,300 will be applied to
doubt the Remocrats and Depublicans
income up to $100,000. In what is
would revisit this issue in some future
known as the Pease plan, itemized de-
year. After all, it would be a new
ductions will be phased out for tax-
"bubble."
payers earning more than $100,000 at
To repeat, to make Mr. Entin's
a rate of 5%. How will this combina-
analysis you need to start with some
tion affect marginal rates?
assumptions about the new bill. The
Looking at the resulting schedule
assumptions excluded all the cats-
of marginal rates, the most notable
and-dogs tax increases sure to be in-
losers would be folks with taxable in-
cluded. So even if you fall into the
comes of between about $40,000, the
brackets that show a half-point reduc-
taxable income corresponding to the
tion in your marginal rate, forget it.
current Medicare cap, and $78,400, the
And the assumptions exclude any sur-
beginning of the bubble for a married
tax on higher incomes; a 10% surtax
couple filing jointly. These folks now
would add more than an additional
pay a marginal rate of 28%, and
three-plus percentage points to mar-
would get hit with the higher cap on
ginal rates. It predictably would pro-
the Medicare tax. While this is offi-
duce disappointing revenues, as high
cially part of payroll tax instead of
marginal rates invariably do. But Re-
the income tax, it does raise the mar-
mocrats and Depublicans want to ap-
ginal rate on wage and salary income.
ply it to incomes of more than $1 mil-
The employee's share of this tax is
lion, or maybe incomes of $200,000, or
1.45%, SO for these taxpayers the mar-
maybe compromise on $300,000.
ginal rate would go from 28% to
Or, soon to be, $100,000 or $50,000
29.45%. Actually, this understates the
or $25,000. For this analysis also ig-
effect, since economists agree that the
nores what will come after. Senator
employee also bears the employer's
Bob Packwood, the ranking Republi-
share. And it counts just the incre-
can on the Finance Committee, pre-
ment in the payroll tax. not the rest of
dicted Friday that if the new law
it already in place. With the payroll
raises the top 28% rate to 31%. Con-
tax and state taxes. marginal rates
gress will be back in a year or two to
are already well above 28% or 33%.
raise it to 35% or 37%. He said he re-
The Medicare boost also affects
mains strongly opposed to increases
taxpayers within the bubble but below
in the rate, but may lose. Along with
the $100,000 cap. Up to the cap, folks
everyone but the Remocrats and De-
now paying a 33% marginal rate
publicans.
The New York Times
MONDAY, OCTOBER 22, 1990
PRESIDENT'S AIDES
raising about $145 billion in new taxes
The disagreements were over who
over the next five years. Until the ne-
would be affected by the deduction
gotiations broke down, it appeared that
limit, how far the gasoline tax should
QUIT BUDGET TALKS
the differences between the two sides
be raised, how deep Medicare benefits
were narrowing.
should be cut and what amount should
As they left the Capitol, Richard G.
be subject to the Medicare payrol!
Darman, the White House budget di-
taxes.
IN TAX STALEMATE
Both sides are determined to raise
Continued on Page A16, Column ]
about $145 billion in new taxes over five
years as part of an overall plan that
Continued From Page Al
would reduce the Federal deficit, now
ACCORD IS STILL POSSIBLE
about $300 billion, by $40 billion this
rector, said he, Mr. Sununu and Treas-
year and $500 billion through 1995.
ury Secretary Nicholas F. Brady were
Effect of Each Offer
going to the White House to see the
Sununu, Brady and Darman
Each time an offer was made, staff
President. They had been meeting in
members scurried across the street to
Senator Dole's office.
run the plan through the computer of
Walk Out as Negotiations
Disagreement on Top Tax Rate
the Joint Congressional Committee on
Taxation and determine how the plan
Continue in Congress
A Democratic assistant said the Ad-
would affect taxpayers at different in-
ministration officials walked out after
come levels.
after the Democrats gave Republicans
The Democrats are determined that
a choice of a top tax rate of 32 percent,
the wealthy bear most of the new tax
By DAVID E. ROSENBAUM
up from the current 28 percent, or a top
bite. With that in mind, the plans put
Special to The New York Times
rate of 31 percent, with an additional
forth by the Democrats would place a
WASHINGTON, Oct. 21 Top White
7.5 percent surtax on millionaires.
surtax on incomes above $1 million.
House officials stormed out of the Capi-
Republicans refused to go above 31
Party leaders want to seize the oppor-
tol late this afternoon, accusing Demo-
percent for the top rate, and instead of
tunity to paint Democrats as the pro-
a surtax on millionaires, they proposed
tectors of the poor and middle class
crats of being unwilling to negotiate a
fair tax compromise.
that the deductions the super-rich
and Republicans as the patrons of the
The talks cannot be concluded with-
could take be strictly limited.
wealthy.
out the White House. But lawmakers
That was unacceptable to the heavily
"We feel very strongly there should
Democratic delegations from New
be a surcharge." the House Speaker
from both parties said that they ex-
York, California and other high-tax
Thomas S. Foley of Washington State
pected a resolution of the issues this
states, whose residents would be hurt if
said at a news conference.
week and that they saw today's devel-
they were unable to deduct all of their
Republicans resisted the sur ax and
opment as merely a temporary set-
state tax payments. "It applies differ-
the idea that they favored the rich.
back.
ently in different states," Mr. Gephardt
"This is one of the all-time false issues,
This evening, Representative Rich-
said. "A surcharge applies evenly
the rich-poor thing," Mr. Darma said.
ard A. Gephardt and George J. Mitchell
across all states."
"This compromise in the end will tax
of Maine, the Senate Democratic lead-
Another Democratic staff member
the rich."
er, resumed negotiations with Senator
predicted that an agreement would be
Mr. Darman, who also appear on
reached this week. "This is just the
Bob Dole of Kansas, the Senate Repub-
"This Week" confirmed publicly what
storm before the calm," he said.
lican leader. And Senator Dole said,
Mr. Brady had told lawmaker. pri-
Congress wants to adjourn.this week
vately that Mr. Bush would accept a
"The talks have not broken down."
to prepare for the elections two weeks
31 percent top tax rate, up from 28 per-
'We Made Them an Offer'
away. The Government's authority to
cent now, in "an otherwise totally satis-
spend money expires again at midnight
factory package."
John H. Sununu, the White House
Wednesday, and if no budget deal is
The direct effect of raising the top
chief of staff, said Democrats "could
struck, Congress must pass, and Presi-
rate to 31 percent would mean an in-
not agree among themselves."
dent Bush must approve, another stop-
come tax increase for families with
Getting into his car to speed off the
gap spending measure to keep the Gov-
taxable incomes of more than about
Capitol grounds, he continued: "We
ernment in business.
$200,000 a year and a small tax cut for
made them an offer that included all
Senator Bob Packwood of Oregon,
those with incomes from about $80,000
the criteria they could have wanted.
the top Republican on the Finance
to $200,000. Other taxpayers would no
They obviously would prefer not to ac-
Committee, said that he had spoken on
be affected.
cept a package."
the telephone with President Bush this
One Democratic proposal was to re-
afternoon and that Mr. Bush had said,
Democrats responded that it was the
duce by 4 percent the itemized deduc-
"I've given up so much already, I don't
Republicans who were divided and that
tions of taxpayers with incomes above
want to give up any more."
Mr. Sununu was posturing for the bene-
a certain high level. The income level
Senator Packwood said, "We may
could not be learned.
fit of the wing of his party that will not
have reached an impasse."
support any new taxes.
Meeting Through Day
The taxpayers affected would then
"The Republicans are asking us to
actually pay a top rate of 32.2 percent.
Mr. Darman, Mr. Sununu and Mr.
adopt proposals they want," said Mr.
And if a 7.5 percent surtax were im-
Brady met throughout the day with
Gephardt. the Democratic leader. "But
posed on millionaires, their tax rate
Senators Dole and Packwood. Periodi-
they are asking us to pass this proposal
would be nearly 40 percent.
cally;' the two Republican Senators
in the House with a preponderance of
would leave the Administration offi-
Democratic votes."
cials behind and walk down the hall to
Continued Opposition to Taxes
trade plans with Democratic leaders
who were meeting in Mr. Mitchell's of-
The House Republican whip, Newt
fice.
Gingrich of Georgia, repeated in an in-
Mr. Mitchell and Mr. Gephardt, were
terview this morning on the ABC News
joined in the negotiations by Repre-
program, 'This Week,' that most of his
sentative Dan Rostenkowski of Illinois,
colleagues would vote against what-
chairman of the House Ways and
ever tax plan the negotiators develop,
Means Committee, and Senator Lloyd
even one President Bush supports.
Bentsen of Texas, chairman of the Fi-
The main division between the two
nance Committee.
sides is the Democrats' demand for a
In the early afternoon, the two sides
surtax on millionaires and the Republi-
appeared to have tentatively agreed on
cans' insistence on a stiff limit on de-
a 31 percent top tax rate. They also ap-
ductions millionaires could claim.
peared to agree generally on a limit, on
Mr. Sununu's statement followed a
deductions that could be claimed by
seemingly calm day in which White
upper-income taxpayers, a higher Fed-
eral gasoline tax, cuts in Medicare pay-
House officials and top Congressional
ments and an increase in the amount of
leaders huddled in private offices,
wages subject to Medicare payroll
preparing and exchanging plans for
taxes, staff assistants said.
The New York Times
MONDAY, OCTOBER 22, 1990
Behind the Dealing on Deficit Reduction,
Deals That Could Swell the Deficit
Congressional Budget Negotiators
Take Care of Some Constituents
By SUSAN F. RASKY
Special to The New York Times
WASHINGTON,
Oct.
21 - Buried in as "rifle shots," and they are hardly
a
ple who are too poor and too disabled to
the House and Senate deficit reduction
new phenomenon on Capitol Hill. In-
seek medical care outside their homes
plans that would raise the taxes of
deed, by past standards, there are rela-
or communities. This would cost the
nearly all Americans are special
tively few of them in the House and
Government $200 million over five
breaks to alleviate much of the burden
Senate deficit measures.
years.
for companies and industries fortunate
But this year, when so much of the
Mr. Hawkins, with strong backing
enough to be represented by the hand-
budget negotiating was handled by a
from Democratic liberals in the House,
ful of lawmakers negotiating the final
small group of senior lawmakers,
is likely to win some expansion of the
compromises.
rank-and-file legislators and even sen-
child care program to cover before-
Thanks largely to the efforts of the
ior members of the tax committees
and after-school care for children
Senate Majority Leader, George Mitch-
who have been left out of the horsetrad-
whose parents work during the day. It
ell of Maine, the UNUM Life Insurance
ing are furious.
would cost about $1 billion over five
Company of Portland, the largest pri-
"There are things all over the fine
years.
vate employer in the city, may pay a
print that we keep finding out about at
Mammography Screening
fraction of the new tax being imposed
the eleventh hour," complained Sena-
on the rest of the industry, and other in-
tor Daniel Patrick Moynihan, a New
But other lawmakers, like Repre-
York Democrat and a member of the
sentative Mary Rose Oakar, a Demo-
surers must take up the slack. Cost to
other insurers? About $1 billion over
Finance Committee negotiating team.
crat of Ohio, are fighting for provisions
Some House members think Mr.
that were widely supported by both
the next five years.
Moynihan has little to grouse about
parties and both chambers, but never
Taxes on wine would rise by 18 cents
since the Finance Committee bill in-
made it in to either package. Ms.
a bottle under the Senate bill and by 22
cludes a provision he sponsored to aid
Oakar's cause is expansion of Medi-
cents a bottle under the House version,
very wealthy taxpayers who donate
care coverage to include routine mam-
but thanks to the efforts of Senator Bob
paintings or manuscripts to public mu-
mography screening for breast cancer;
Packwood, the senior Republican on
seums and libraries.
and she had been promised by House
the Senate Finance Committee, win-
Mr. Moynihan argues that the tax
Democratic leaders that a $2 billion
eries that produce less than 200,000 gal-
break has a broad public purpose and
"cushion" in the Ways and Means tax
lons a year will not be affected. All of
notes that it was adopted, with strong
package would take care of it. "I'm
support, after discussion by the full Fi-
livid," she said, as she circulated a
nance Committee. "We have always
petition among House members de-
made accommodations to members
manding that the negotiators make
Breaks for cigar
behind closed doors, but it used to be
room for the Medicare change. "I've
that at least everybody was in the
collected a 100 signatures in just the
room," he said.
makers, wineries
past 15 minutes, and I'm going to hand
The insurance tax, and the break for
deliver it to each of the conferees."
UNUM is a good example. Both the
and others.
House and Senate bills would raise $8
Mammography tests are covered by
billion in new taxes from the insurance
Medicare if a doctor detects a lump in
industry by chainging the way that
a patient's breast and orders the proce-
companies now deduct their expenses
dure, but routine screening, now widely
for obtaining new policies.
recommeded as method of early can-
the 80 winieries in Mr. Packwood's
Under a complicated formula, a
cer detection, is not. "It's symptomatic
home state of Oregon happen to fall
company like UNUM, which special-
of the way we do things around here,"
into that exempt category.
izes in health and accident insurance
Ms. Oakar said, arguing that the esti-
According to a senior Republican tax policies that cannot be cancelled, was
mated $1 billion the new coverage
aide, all but 300 of the nation's 1,400 to have been treated like companies
would cost over five years would save
small- and medium-sized wineries also that sell certain types of high-priced
money in the long run.
fall in that category. And since these life insurance. But as a result of Mr.
"The cost to the Medicare program
wineries generally produce more ex- Mitchell's efforts, UNUM was placed
for treating a woman whose breast
pensive wines, this provision would ex- in a in a category with companies that
cancer is detected early is $10,000 or
empt most of the high-priced wines in sell group life insurance where the
less. The cost to the program for treat-
the country from the new levy.
writeoff formula was more generous.
ing a woman with later stage breast
Cost to the Treasury? Hundreds of
Make Up the Difference
cancer is between $65,000 and $125,000.
millions of dollars over five years, the
But the budget figures never take that
aide said.
Since the committee still wanted to
into account, and every time we think
raise a total of $8 billion from the insur-
Break on Big Cigars
we have this coverage in the program,
ance industry as a whole, other insur-
it gets taken out because somebody
And while higher tobacco taxes pro-
ance companies were required to make
says its too expensive."
posed in both the House and Senate
up the difference by bearing a larger
bills will increase the price of ciga-
share of the tax burden.
rettes eight cents a pack by 1993, the
Some lawmakers, like Senator John
cigar industry in Southern Florida
D. Rockefeller, a West Virginia Demo-
won't feel as much of the bite if the
crat who is also part of the Finance
House version prevails. Manufacturers
Committee negotiating team, but not in
of large cigars owe their break in the
the inner negotiating circle, or Repre-
House bill, worth $100 million over five
sentative Augustus Hawkins, a Califor-
years, to Representative Sam Gibbons,
nia Democrat who heads the House
a Tampa Democrat who is a negotiator
Education and Labor Committee, may
for the House Ways and Means Com-
still have a chance to make their pet
mittee.
initiatives on Medicaid and child-care
These carefully crafted tax provi-
part of the final budget compromise.
sions may change, of course, in the give
That is because the provisions they
and take of last-minute bargaining.
favor are at least part of either the
And other deals will almost certainly
House or Senate tax bills. In addition to
emerge as negotiators look for ways to
raising revenue, the tax committees
pick up the votes needed for approval
have jurisdiction over most of the
of the deficit package.
Medicare and Medicaid programs as
But who wins and loses has a great
well as tax provisions. that will will help
deal to do with which players sit at the
pay for child care.
bargaining table.
Mr. Rockefeller has put other nego-
In Congressional parlance, tax
tiators on notice that he will demand in-
breaks narrowly targeted to a few
clusion of new health care services in
companies or constituencies are known
the Medicaid program for elderly peo-
The New York Times
MONDAY, OCTOBER 22, 1990
While Congress Trims the Budget,
It Enlarges Programs (and Debt)
By ROBERT PEAR
Special to The New York Times
Cutting Here, Adding There
WASHINGTON, Oct. 21 - Even as the accumulated total of all Federal
Congress trims some programs to re-
borrowing, would soar to $5 trillion in
Senator Frank H. Murkowski of Alas-
duce the Federal budget deficit, it is ex-
1995, from the current $3.2 trillion.
ka, ranking Republican on the Vet-
panding other programs, and lawmak-
When President Reagan took office in
erans Affairs Committee, said he saw a
ers acknowledge that savings achieved
1981, the debt was slighly less than $1
"great inconsistency" in Congress's
with great difficulty this year may trillion.
schizophrenic instincts: cutting some
soon be offset by added spending.
veterans programs by $620 million a
The new spending comes about be-
A little-noticed provision of the defi-
year while expanding others by almost
cause of old-fashioned pork-barrel
cit-reduction bill passed by the House
exactly the same amount.
projects, policy choices in favor of new
would raise the statutory limit on the
Speaking of a new plan to make
or expanded programs and the deterio-
public debt to $5 trillion. If the higher
World War II veterans eligible for "re-
ration of the economy, which is in-
limit is part of the final bill, Congress
adjustment counseling," Senator Alan
creasing demand for benefits like
could avoid the annual ritual of in-
K. Simpson said, "It boggles the mind
unemployment insurance and food
creasing the debt ceiling. The ritual is
that veterans of World War II, the hide-
stamps.
politically embarrassing to lawmakers
ous war that ended 45 years ago, are
Whether any particular increase is
and occasionally brings the Govern-
still having trouble readjusting to civil-
good or bad is a political question with
ment to the brink of default. When Con-
ian life after military service."
a subjective answer; what seems es-
gress fails to extend the debt limit, the
Senator Pete Domenici, Republican
sential to one lawmaker or interest
Treasury must postpone new borrow-
of New Mexico, observed that "we all
group may appear wasteful to others.
ing from the public, as it did last week.
say, 'Spend less,' but we have more
But it is indisputable that Congress has
There is virtually no way for the Gov-
ideas and we want more things." Here
quietly enacted appropriation laws
ernment to reduce the debt unless it
are a few examples:
that increase spending, often in dis-
runs a budget surplus. A budget deficit
9The deficit-reduction measures
tricts represented by influential law-
in one year must be covered by further
passed by both houses of Congress
makers, while they publicly proclaim-
borrowing, which increases the debt
would expand Medicaid to cover" chil-
the need for deficit reduction.
and adds to interest costs in future
dren from poor families longer,
"The Federal debt is going from a
through age 12 under the House bill and
years.
quart to a gallon,' said Gerald H. Mill-
age 18 in the Senate bill. Under current
er, executive director of the National
Net interest payments on the Fed-
law, states must cover poor children
Association of State Budget Officers,
eral debt were the fastest-growing
through age 5. Pediatricians and public
"but Congress and the President are
major category of Federal spending in
health experts applaud the expansion.
taking out only a cup."
the 1980's. The increase in such pay-
But states pay, on the average, 44 per-
ments, from $52.5 billion in 1980 to $169
cent of Medicaid costs, and the Na-
Protests Over Medicaid
billion in 1989, exceeded all the savings
tional Governors' Association ex-
As part of the budget package being
Mr. Reagan achieved in health, educa-
pressed alarm at the cost of an expan-
negotiated on Capitol Hill, Congress is
tion, welfare and social service pro-
sion.
expanding Medicaid, for example, over
grams.
qUnder the House bill, the Federal
vehement protests from the nation's
Government would pay Medicare pre-
governors, who say they will be sad-
Dollars for Home Districts
miums for low-income elderly people,
died with more costs. The expansion of
Representative Jamie L. Whitten,
and the Senate bill would allow states
Medicaid would cost the Federal Gov-
chairman of the House Appropriations
to offer such protection with a combi-
ernment at least $400 million a year.
Committee, boasted that Congress had
nation of Federal and state funds.
In appropriation bills for the current
earmarked millions of dollars- for
Congress has just approved an ap-
fiscal year, Congress has approved a
water projects, highway construction
propriation bill that permits $14.5 bil-
$2.3 billion increase in spending for
and airport improvements in his Mis-
lion in highway spending this year, up
Federal highway projects, to $14.5 bil-
lion a year, and is providing $20 billion
sissippi district.
from $12.2 billion last year. Presiden'
Bush requested $12 billion.
in new money for specific park, land,
Congress also earmarked $3.4 mil-
9House and Senate negotiator:
energy and water projects.
lion for a highway demonstration
agreed last week to provide more tha:
"This session of Congress has de-
project in Pittsfield, Mass., the home of
$1.6 billion to help poor people' pa:
cided to vote again and again for pork
Representative Silvio O. Conte, the
home heating costs, as against $1.4 bi'
barrel, to fund projects that may or
ranking Republican on the Appropria-
lion last year. Mr. Bush requested $1.0
may not be better than other competi-
tions Committee. There was also
billion. Mr. Conte said the increase wa
tive projects, and to fund them only be-
money for a veterans' hospital in
needed because home heating oil ha
cause of who one may know on the Ap-
Northampton, Mass., and for a solar
become "outrageously expensive" as
propriations Committee or the leader-
heating plant at the University of Mas-
result of turmoil in the Middle East.
ship," said Representative Steve Bart-
sachusetts campus in Amherst, both in
Senator Claiborne Pell, the chief D:
lett, a Texas Republican who is one of
Mr. Conte's district.
tron of student aid programs in Co:
many members of Congress to make
The appropriation bills also set aside
gress, is pushing new legislation, th
such criticisms.
money for West Virginia University
Middle-Income Student Assistance Ac
Mr. Bartlett said the largess was bi-
and -for more than 20 public works
to expand eligibility for Feder
partisan. "There are projects in here
projects in West Virginia, the home of
grants.
for members of both parties," he said
Robert C. Byrd, chairman of the Senate
of one bill, which increases housing ap-
The purpose, he said, was to he
Appropriations Committee.
propriations by 22 percent, to $9.5 bil-
middle-income families pay for colleg
lion in the current fiscal year.
Senator Ernest F. Hollings said that
and to reverse cutbacks made und
the new deficit-reduction package
President Reagan. when "eligibili
Senator Dale Bumpers, Democrat of
"guts the Gramm-Rudman-Ho1lings
was tightened so that only the mo
Arkansas, said one subcommittee of
law" by making it easier for Congress
needy qualified."
the Appropriations Committee re-
to avoid meeting the annual deficit tar-
cently received 2,800 written requests
for park. land and water projects from
gets in the law. Mr. Hollings, a South
Carolina Democrat. was a co-author of
various senators. "Those same sena-
the 1985 law.
tors then come in here with unctuous,
pontificating statements about how, if
As originally passed, the law stipu-
we just freeze this or that, we could get
lated that the budget should be bal-
the deficit under control," Mr. Bump-
anced in the fiscal year that began on
ers said.
Oct. 1. The deficit, $221 billion in 1986,
hovered in the range of $150 billion to
To cover the increases in spending,
$155 billion in the next three years, but
Congress plans to raise the debt limit.
Under budget plans adopted by the
shot up again in the fiscal year just
ended. The Office of Management and
House of Representatives and the Sen-
ate, the Federal debt, which represents
Budget estimates that the deficit was a
record $231 billion in the fiscal year
that ended three weeks ago.
The New York Times
MONDAY, OCTOBER 22, 1990
Fine Print: Deals in the Budget Plans
Some members of Congress who are negotiating on the deficit
reduction package have been able to win special breaks for
companies and industriesin the states they represent Others
outside the negotiations are hoping to have their own proposals
Included in the final plan.
SPONSOR
PROPOSAL
INCLUDED IN THE BUDGET PLANS
Senator George Mitchell
Reduce burden of new insurance
Democrat of Maine
Industry tax for a company in Maine
Sénate Majority Leader
Senator Bob Packwood
Exempt certain wineries from increase
Republican of Oregon
in wine excise tax
Senior Republican
on Finance Committee
Rep. Sam Gibbons
Soften tobacco excise tax Increase on
Democrat of Florida
large cigars
STILL BEING PROMOTED
Senator John D.
Expand Medicald benefits for trail
Rockefeller the
eklerly
Democrat of West Virginia
Finance Committe
conteree (not Inner circle)
Rep. Augustus Hawkins
Expand child care provisions to Include
Deniocrat of California
program for Hatch-key children."
Rep: Brian Donnelly,
Ease provision in current tax law that
Democrat of
hurts New Bedford fishing Industry.
Massachusetts
Provision would be paid for by
Member of House/Ways
tightening current deduction for moving
and Means Committee
expenses Would raise $1.1 billion in
new revenue, which makes it a good
candidate for Inclusion In final pacakge
Rep. Mary Rose Okar
Expand Medicare coverage to include
Democrat of Ohio
mammography screening. Provision is
widely supported, but It would cost
the treasury $1 billion.
The New York Times
The Washington Times
MONDAY, OCTOBER 22, 1990
Democrats split
on budget details
By Major Garrett and Paul Bedard
THE WASHINGTON TIMES
Budget talks faltered yesterday as Bush ad-
bers by midnight Wednesday to
Mr. Bush's apparent willingness
ministration officials and congressional lead-
avoid a a government shutdown.
to accept a higher income tax rate
ers squabbled bitterly over new taxing
A similar situation occurred the
marks yet another flip-flop on taxes.
schemes aimed at the wealthiest taxpayers.
day before Mr. Bush and the con-
While campaigning last week in
"The Democrats got caught with their hands
gressional leadership announced
Omaha, Neb., Mr. Bush said holding
in the pockets of working men and women,"
the first budget compromise on
the line on income tax rates was
White House Chief of Staff John Sununu said
Sept. 30, later defeated in the House
"worth fighting for in my view."
after a meeting with GOP negotiators. "The
on Oct. 5.
Mr. Mitchell, appearing on NBC-
Democrats are negotiating with themselves.
Lessons learned from that defeat
TV's "Meet the Press," said, "I think
There's no point in continuing to meet tonight."
color these negotiations. Both sides
you can see with the president's re-
The leading GOP negotiators - Senate Mi-
are seeking more revenue from the
versals of positions on an almost
nority Leader Robert Dole and Sen. Bob Pack-
wealthy SO they can lower planned
daily basis that the White House has
wood of Oregon - said the talks had reached
gasoline tax increases and soften
been lacking any plan, any consis-
an "impasse." Both sides are trying to merge
scheduled cuts in Medicare, which
tency, any clear direction on what
divergent House and Senate budget bills.
affects 33 million Americans.
they want to do in this budget pro-
"I am disappointed that these important ne-
According to Mr. Packwood, Re-
cess, which has both damaged the
gotiations have reached an impasse," Mr. Dole
publicans are pushing for a limit on
president and the process."
said. "The president has gone more than half
all deductions for taxpayers with
way. I regret House Democrats indicate they
more than $99,000 in annually ad-
are unable to do the same."
justed gross income. Their plan
Less than two hours later, top Democrats
would eliminate 4 percent of deduc-
met with reporters to say the talks were con-
tions for those earning between
tinuing.
$99,000 and $1 million. Those earn-
"We intend to continue," said Senate Major-
ing more than $1 million would see 8
ity Leader George Mitchell of Maine, accom-
percent of their normal deductions
panied by House Majority Leader Richard
eliminated.
Gephardt of Missouri. "We hope very much to
Democrats oppose that proposal
bring these negotiations to a conclu-
because it would tend to hit high-tax
states such as California, New York
sion."
and Massachusetts. These heavily
The two had met most of the day
Democratic states have lobbied
with Rep. Dan Rostenkowski of Il-
strenuously against limiting deduc-
linois, chairman of the Ways and
tions on state and local taxes -
Means Committee, and Sen. Lloyd
which the GOP offer would affect.
Bentsen of Texas, chairman of the
"It applies differently in different
Finance Committee.
states," Mr. Gephardt said. "It falls
Despite the breakup, which many
inordinately heavy in high-tax states
viewed as temporary, it appeared
and inordinately high on those
both sides were close to agreement
who make charitable deductions."
on raising top income tax rates from
28 percent to 31 percent, thereby
Democrats have offered a 7.5 per-
cent surcharge on adjusted incomes
flattening the so-called tax "bubble."
above $1 million.
Currently, individuals earning be-
tween $47,000 and $109,000 are
Over five years, the GOP proposal
taxed at a rate of 33 percent but
would raise between $5.5 billion and
those earning more are taxed at 28
$6 billion from millionaires, and the
percent. The same is true of fam-
Democratic proposal would raise an
ilies. Those earning between $78,000
estimated $5.3 billion.
and $185,000 are taxed at 33 percent,
The revenue figures are minus-
but those earning more are taxed at
cule compared to the larger goal of
28 percent. This anomaly is called
achieving a five-year $500 billion
the "bubble."
deficit-reduction package, the larg-
The new proposal would lower the
est ever contemplated in U.S. history.
33 precent rate to 31 percent for
According to Mr. Packwood, Re-
these upper-middle-class earners
publicans lowered their five-year
and raise it from 28 percent to 31
target of Medicare cuts from $49
percent on the wealthier taxpyayers.
billion to $47 billion. The savings
It also appeared a capital gains
were to come from lower increases
tax cut, a centerpiece of President
in Medicare premiums, he said.
Bush's 1988 campaign, will not be
The Democrats, sources said, of-
part of the deal.
fered $44 billion in Medicare cuts, $1
"That will have to wait for another
billion more than approved in the
day," said budget director Richard
House-passed budget plan. Both
Darman on ABC-TV's "This Week."
sides are closer to an agreement on
At about 8 p.m. last night, Mr.
raising the amount of income sub-
Mitchell and Mr. Gephardt met in
ject to Medicare payroll taxes from
Mr. Dole's office to smooth out re-
$51,300 to between $125,000 and
maining differences. Administra-
$140,000.
tion officials and Mr. Packwood sat
Both sides are looking to raise
out the meeting, sources said.
gasoline taxes 7 cents per gallon.
Negotiators must get a budget
The Senate bill sought a 9½ cent per
compromise passed by both cham-
gallon increase while the House bill
did not touch gasoline taxes, cur-
rently 9 cents a gallon.
PRUDEN ON
Never has a Congress taken the subject of pre-
paredness so seriously,
POLITICS
and so literally. Those
wonderful folks who have
By
arranged for the average
two-earner family making
Wesley Pruden
$35,200 a year to pay an
additional $402 in 1991
had the foresight to give
Inviting the mob
themselves, on average,
up to an additional
to a lynching
$27,824, after taxes, for
1991.
The senators are taking
No matter how seedy and tawdry our congress-
a slightly smaller pay
men become, you can't say they're not consistent.
Tom Foley
raise, but retaining the
The more they soak the rest of us - not just the
right to make speeches
"rich," but all of us - the more they take care of
and charge for it. This may be the biggest scam of
themselves.
all, somewhat like a cop answering a burglar call in
For once the conventional wisdom may be right,
the middle of the night, only to ask the burglar and
that we're in an authentic crisis, and after a
the householder to bid for his services. Just as the
government-spending binge of monumental propor-
cop is paid to perform his duty, so is the senator -
tions we all may have to make sacrifices.
but the senator gets to exact a surcharge for
That's what Tom Foley, his sad hound's face ra-
performing the duty he was elected to do.
diating sobriety, tells us. So does George Mitchell,
This is enabling some senators to get rich. David
the Senate majority leader, reeking of oily self-
Pryor of Arkansas, for example, raised $1 million
righteousness.
this year to run for re-election in one of the poorest
Even Newt Gingrich, the minority whip, says (on
states, even though he had neither Democratic nor
most days) that things can't go on the way we've
Republican opposition. He'll keep the money. You
become accustomed to things going on. Robert
have to wonder what, in addition to a pretty little
Michel, who has the title of minority leader, has
senator, all those hardscrabble contributors imag-
been out of it for years but he, too, parrots the
ined they were buying.
Democratic line about sacrifice, as if he had fol-
You might think Speaker Foley and Sen. Mitchell
lowed George Bush into the tank.
would have enough Willie Horton-like humility to
But these guys don't really believe it. They want
tell their colleagues: "Look, this is just not the right
the rest of us to sacrifice - not to save the country,
time to grab such a spectacular raise, not when
but to save their congressional way of life. It's too
we're asking everybody else to go without."
much to expect them to have a sense of shame.
Pious platitudes about sacrifice are cheaper, of
since it's the lack of congressional shame that got
course.
us into this state of affairs in the first place, but you
Dr. Norman S. Ream, a Congregational pastor in
might expect them to pay for their own lunch.
Wauwatosa, Wis., diagnoses the congressional dis-
When someone asked Willie Horton whether he
ease this way: "Their office gives them power, and
would endorse the little Duke in 1988. Willie - even
they come to believe that because they have power
murderous Willie - had the decency to say, well,
they also have wisdom."
yes, but he didn't think anybody really wanted his
The American voter knows better, but he's always
endorsement.
slow to wake up, and when he does he often throws
But these guys steal and put out their hands for a
out the first bum he sees. President Bush, with his
tip. With the connivance of George Bush. the
repudiation of who he told us he was, makes guilt-
country-club president with the soul of the Texas
by-association easy.
congressman he used to be, the Congress gave itself
But as the recognition dawns on everyone that his
a raise in the middle of the night.
congressman. too. is a cur, reckoning will come to
Even then, they knew they were going to sock it
all. The fire next arrives in '92. They'll all be lucky
to the rest of us and, like good Boy Scouts, they
if the reckoning is not the lynch mob most of them
were determined to Be Prepared.
deserve.
THE WASHINGTON POST
MONDAY, OCTOBER 22, 1990
Fiscal Talks
Stall Again
Over Taxes
But Bush has said he would ac-
10 GOP votes for the House bill
cept neither the surtax nor a top
came from the New York delega-
rate higher than 31 percent. "He's
tion.
willing to tax the rich [but] the
"The Republicans are asking us
By John E. Yang
president will not accept their of-
to pass this with a preponderance of
and Steven Mufson
fer," Sen. Bob Packwood (R-Ore.)
Democratic votes," Gephardt said.
Washington Post Staff Writers
said after speaking with Bush by
"We are saying that we want
[a
Just four days before anoth-
telephone.
package] that we can sell so we can
er threatened shutdown of the
Packwood, the Senate Finance
pass it on the House floor."
federal government, talks fal-
Committee's ranking Republican,
The standoff developed as admin-
tered. again yesterday on a
quoted Bush as saying: "Gosh, I've
istration and Democratic negotia-
deficit-reduction package as
gone three-quarters of the way. I've
tors discussed how to level off the
top Bush administration offi-
given up things I didn't want to give
top two marginal income tax rates,
cials and congressional lead-
up for the good of the country and I
cutting the rate for about 3.5 mil-
ers tangled over how to get
just don't want to give up any
lion upper-middle-income taxpayers
more taxes from the wealthi-
more."
and raising it for. the approximately
est Americans.
Instead, administration officials
600,000 richest Americans.
Congressional leaders met
late into last night in hopes of
would prefer to limit the benefit of
Currently, married couples filing
resolving the problem and will
federal income tax deductions
jointly pay a 15 percent rate on tax-
resume today in the Capitol.
claimed by millionaires, based on a
able income up to $32,450, a 28
Earlier, White House Chief
plan proposed by Rep. Don J. Pease
percent rate on taxable income be-
of Staff John H. Sununu and
(D-Ohio). Yesterday, the adminis-
tween that level and $78,400, a 33
Office of Management and
tration proposed to disallow deduc-
percent rate between that level and
Budget Director Richard G.
tions equal to 4 percent of an indi-
$185,730 and a 28 percent rate on
Darman hurriedly left the
vidual's or couple's adjusted gross
income above that.
Capitol with other administra-
income in excess of $99,000 and 8
Appearing on ABC's "This Week
tion officials, saying they
percent of income in excess of $1
With David Brinkley," Darman
would consult President Bush
million.
praised the idea as "a tax cut for
about the impasse.
The latest Democratic version
about nine or 10 times as many peo-
"There is a feeling that the
would reduce itemized deductions
ple as get a tax increase. The
president has gone well over
half way to meeting their po-
by 4 percent of the amount that a
wealthiest would get a tax in-
crease."
sition and they haven't recip-
taxpayer's income exceeds
$100,000, whether an individual or
But congressional leaders from
rocated," an administration
both parties said any cut in income
official said of the Democrats,
married couple filing jointly, in ad-
charging "a lack of serious-
dition to imposing the surtax or
tax rates for upper-middle-income
ness on their side."
raising the top rate.
taxpayers should be offset with
But Senate Majority Leader
"We have a different idea of how
higher taxes in other areas.
the rich should be taxed," Packwood
"You're giving them a tax break
George J. Mitchell (D-Maine)
contended that "there's been
said. "We feel it's better tax policy
and they're relatively high income,"
give on both sides."
to limit deductions.
The Dem-
Gephardt said. That could be
As the negotiations stag-
ocrats would rather raise the
achieved by either increasing the
gered, Congress marched on
rates."
amount of income subject to the
to a dubious record: Never
The GOP plan to increase the
1.45 percent Medicare payroll tax
since World War II have law-
limitations on deductions for mil-
or by beginning to limit the benefit
makers adjourned less than
of deductions at a lower income lev-
lionaires would generate as much as
17 days before Election Day,
$6 billion in new tax revenue over
el. Democrats have proposed rais-
now just 15 days away. The
five years, while the Democratic
ing the ceiling for the Medicare
House was in session yesterday for
surtax would generate $5.3 billion,
payroll from $53,100 to $140,000.
only the eighth Sunday since World
Packwood said.
Another piece of the tax puzzle
War II-and the third this month.
But limiting federal deductions
under discussion yesterday was
The dispute centers on how best
creates both substantive and polit-
how much to raise the federal gas-
to raise taxes on those with taxable
ical problems. It would have an un-
oline tax. Democrats proposed rais-
incomes higher than $1 million a
even effect, hitting hardest at those
ing it to 14 cents a gallon, a 5-cent
year. "We hit millionaires, they hit
living in states and municipalities
hike, and Republicans offered an in-
millionaires," said an administration
with high taxes. "Our problem is
crease of about 7 cents averaged
official. "They want to do it their
that it applies differently in differ-
over five years.
way, we want to do it our way."
One controversial item that has
ent states," said House Majority
Yesterday, the Democrats of-
Leader Richard A. Gephardt (D-
bedeviled tax negotiations all year
fered two options: leveling off the
Mo.). "The surcharge applies across
long is apparently no longer under
top two marginal income tax rates
the country in a uniform way."
consideration: a cut in capital gains
at 31 percent and imposing a 7.5
It could also imperil the deficit-
taxes. "It does not appear to me
percent surtax on millionaires, or a
cutting package in the House,
that that will be negotiable," Dar-
32 percent top rate without a sur-
where lawmakers from such states
man said. "It will have to wait for
tax, according to congressional of-
as New York and California, which
another day."
ficials.
have high state and local taxes,
The additional revenue gener-
have vowed to oppose any plan that
ated by either change would have
would limit deductions. Half of the
been used to ease two politically
unpopular provisions: increases in
Medicare premiums and a hike in
the 9-cents-a-gallon federal gasoline
tax, the officials said.
USA TODAY MONDAY, OCTOBER 22, 1990
Budget talks
hit impasse
over surtax
By Richard Wolf
USA TODAY
Talks aimed at cutting the
deficit by $500 billion hit a tem-
porary impasse Sunday night.
The key dispute: how to
raise about $6 billion from the
nation's millionaires.
President Bush's aides
stormed out of the Capitol after
Democrats insisted on a 7½
surtax on those with taxable in-
comes above $1 million.
But both agreed to a new
31% tax rate - a decrease for
about 2 million upper-middle
income taxpayers now paying
a 33% marginal rate, but a
boost for 500,000 wealthy tax-
payers now paying only 28%.
Republicans offered an 8%
reduction in itemized deduc-
tions for incomes above $1 mil-
lion; Democrats continue to de-
mand a surtax. Both would
raise $5 billion to $6 billion.
Conflicting assessments:
Sen. Bob Packwood, R-
Ore., quoted Bush as saying:
"I've given up things I didn't
want to give up. I just don't
want to give up any more."
Senate Majority Leader
George Mitchell, D-Maine, in-
sisted the talks hadn't broken
down and called the surtax
"good public policy, and fair."
With three days left before
another threatened shutdown:
Democrats want to limit
any gasoline tax increase to 5
cents per gallon; Republicans
offered 7 cents, down from 9½
cents passed by the Senate.
Democrats want to cut $44
billion from planned increases
in Medicare. Republicans want
to cut $47 billion.
Democrats want to raise
the $52,300 income ceiling sub-
ject to the 1.45% Medicare
payroll tax to $140,000; Repub-
licans have offered $98,000.
White House chief of staff
John Sununu said Democrats
have "gotten caught with their
hands in the pockets of work-
ing men and women."
But House Speaker Thomas
Foley, D-Wash., defended the
surtax and higher rates, saying,
"We want to see fairness."
Deficit deal: 'It's
all politics now'
By Richard Wolf
USA TODAY
The politics of cutting the
deficit is threatening to over-
whelm the policy.
Because House Democrats
and a shaky bipartisan Senate
coalition passed divergent
plans last week, negotiators
must walk a fine line toward a
package that can win major-
ities in both houses.
Their dilemma was exposed
Sunday night:
Senate Republicans said
they oppose and President
Bush would veto, any plan in-
AP
cluding a millionaires' surtax.
ROSTENKOWSKI: His plan
House Democrats said
slapped tax on millionaires
they wouldn't pass a plan elimi-
nating 8% of millionaires' de-
THE BUDGET CRISIS
ductions because large delega-
tions from high-tax states -
Cover story, 1A
including New York and Cali-
Today's debate,
fornia - wouldn't buy it.
12A
It's "all politics now," said
Rep. Steven Gunderson, R-Wis.
Even if negotiators agree to-
that left income tax rates
day on a compromise five-
alone, limited the wealthy tax
year, $500 billion deficit-cut-
deductions and raised the gaso-
ting plan, they still need House
line tax by 9½ cents a gallon.
and Senate majorities.
A slim majority of both par-
And judging from last week's
ties voted for it. But Republi-
votes, their task is tough:
cans may lose votes by agree-
The House voted 227-203
ing to income tax rate hikes;
Tuesday for a plan by Rep.
Democrats in close elections
Dan Rostenkowksi, D-Ill., to
may fear voter reactions.
boost the top income tax rate to
"There's little negotiability,"
33% and add a 10% surcharge
said Sen. Phil Gramm, R-Tex-
on millionaires.
as. "I think the president's pret-
That package won only 10
ty much running out of room."
Republican votes, and Demo-
Divisions also remain within
crats can't count on many
each party:
more this time around. But as
House Democrats want in-
they compromise on their
come tax rate hikes; many Sen-
"soak the rich" approach, they
ate Democrats are opposed.
risk losing more Democrats
House Republicans are
than they can afford.
sticking to Bush's "no new tax-
House Majority Leader
es" campaign pledge of 1988;
Richard Gephardt, D-Mo., said
Senate Republicans are more
a GOP demand that million-
willing to raise taxes.
aires' deductions be cut would
"It's like a jigsaw puzzle,"
scare away New Yorkers and
said Rep. Sam Gibbons, D-Fla.,
Californians. "It's enough to
a House negotiator. "You find
drive them off voting for the
one key piece, and the rest of
package," he said.
them fit around it."
The Senate voted 54-46
Friday for a bipartisan plan
Bush welcome on trail
despite decline in polls
By Richard Benedetto
USA TODAY
President Bush hits the road
Tuesday to start an almost-non-
stop push for Republican can-
didates in the Nov. 6 election.
Even though some political
watchers in Washington ques-
tion Bush's value to campaigns
as his approval ratings slide,
Republicans across the USA
say they are happy to see him.
The main reason: He raises
money - $80 million in 92
campaign appearances since
taking office 21 months ago.
AP
With Election Day closing in,
HOPEFUL: Bush in Grand Rapids, Mich., last week with GOP gu-
he's cranking it up. Tuesday
bernatorial candidate John Engler, running mate Connie Binsfeld.
he'll make a one-day trip to
New Hampshire, Vermont and
poor" battle. "The White House
who voted against Bush on the
Connecticut. On Thursday he's
is booting away the entire lega-
a budget. "I can't confine my
off on a five-day trip to New
cy of Ronald Reagan."
support to somebody who
Mexico, Arizona, California,
State party leaders, howev-
agrees with me on a deficit
Hawaii and Oklahoma.
er, praise Bush's efforts.
deal today or some bill tomor-
"George Bush is a party
"We're glad to have him
row," Bush says.
chairman's dream," says Re-
come here," says Texas GOP
Democrats scoff at the Bush
publican National Committee
Chairman Fred Meyer, who
factor. "No positive help," says
Chairman Lee Atwater, on the
saw Bush raise $1.5 million for
Democratic National Commit-
sidelines since a brain tumor
gubernatorial candidate Clay-
tee Chairman Ron Brown.
was diagnosed in March.
ton Williams.
As the campaign ends, GOP
But Republican Congression-
"People here are just as will-
strategists say, a Bush appear-
al Committee Chairman Ed
ing to pay $1,000 to have dinner
ance can bring TV advertising
Rollins, has a different view:
with George Bush as they ever
money and energize workers,
Bush's policies on taxes and the
were," says Dan Schnur of the
SO critical in close elections.
budget are hurting his party.
California Republican Party.
In close races, says RNC's
Rollins told The Washington
Another plus: Bush isn't
Leslie Goodman, "he can turn
Post that Bush threw away
holding grudges against Repub-
out" votes for Republicans.
GOP gains among the voters
licans who oppose him.
letting Democrats turn the
One stop Tuesday in Ver-
budget debate into a "rich VS.
mont is for Rep. Pete Smith,
Republicans lament
broken tax-hike VOW
Ever since President Bush
COUNTDOWN
abandoned his "no new taxes"
pledge, many GOP candidates
find themselves at odds with
15
the president. The battle over
the budget isn't over yet, but
signs of GOP disarray abound:
Republican Ally Milder,
days until
had been criticizing freshman
Election Day, Nov. 6
Rep. Peter Hoagland, D-Neb.,
for supporting Bush's position
in just 35% of in House votes
while representing a district where Bush won 58% of the votes.
Then, she suddenly had to explain why she opposed the budget
compromise, endorsed by Bush but rejected by the House.
Bill Zeliff, a New Hampshire Republican, campaigns for
the House with a jar of pennies, saying: "Watch the pennies
and the dollars will take care of themselves." He helped in
Bush's key state primary win in 1988 and is a friend of White
House chief of staff (and former New Hampshire Gov.) John
Sununu. But when it came to Bush and Sununu's budget com-
promise, Zeliff quickly parted company.
Rep. Jim McCrery, R-La., went as far as to cancel TV
endorsements by Bush for fear he'd be identified with the pres-
ident's new-found willingness to raises taxes. In Louisiana, all
candidates run together in the Oct. 6 primary and anyone win-
ning more than 50% of the vote is elected. McCrery's 55%-to-
45% victory over an aggressive Democratic challenger is be-
ing cited by GOP strategists urging other Republicans to run
against the president's position on taxes.
A lot can still happen in the two weeks before Election Day,
but conservative Robert Novak, on CNN's Capital Gang, pre-
dicts a GOP "catastrophe around the bend." He says Republi-
cans could lose 12 to 18 House seats, and two Senate seats. The
president's party usually loses seats in non-presidential elec-
tions, but Bush carried few other Republicans into office with
him. If Novak is right, that would leave as few as 158 Republi-
cans in the 435-member House and 43 Republicans in 100-
member Senate - where the GOP stood before the Reagan
era and dashing its hopes of taking control of Congress in 1992.
IONDAY
Los Angeles Times
OCTOBER 22, 1990
Lots of Tax
Talk, No
Big Change
By TOM REDBURN
TIMES STAFF WRITER
WASHINGTON-"Taxes," said
burden of roughly 28%, compared
Oliver Wendell Holmes Jr., the
with 30% in the mid-1960s, they
Why would Democrats, trying to
distinguished Supreme Court jus-
are also now paying a greater share
recapture their image as the party
tice, "are the price we pay for a
of overall tax collections.
of average Americans, be prepared
civilized society."
Meanwhile, income inequality
to make such an apparently unfa-
vorable trade?
Ever since Abraham Lincoln im-
thas risen significantly over the last
"two decades, but largely as a result
"I take the cynical view that
posed the first U.S. income tax to
most Democrats would like to have
help pay for the Civil War, howev-
of deep underlying currents in the
their cake and eat it too," confesses
er, Americans often have been at
economy rather:than shifts in tax
each others' throats over just who
burdens.
one longtime Democratic tax re-
former.
should pay to keep us civilized.
"The tax system never did-and
Now we're at it again. This
doesn't now-redistribute income
"They want to be perceived as
year's battle of the budget has
very much," says Henry Aaron, a
restoring progressivity through a
Brookings Institution economist
higher rate on the rich," she says,
turned into a highly visible fight
"while winking at the same time at
over the issue of fairness, with
who is one of the nation's leading
tax scholars.
the party's wealthy contributors
Democrats promising to "tax the
rich" while avoiding harsh tax
There are strong political and
by saying, 'Look, I got this capital
gains tax break for you.'
increases on the middle class.
economic reasons why raising tax-
Meanwhile, President Bush's flip-
es usually fails to help narrow the
O
n the other side of the aisle,
flops on whether to trade a lower
-income gap.
Republicans have also talked
tax on capital gains for higher
Politically, wealthy individuals
one game while ending up playing
income-tax rates on the rich have
and special interest groups have
another. Bush defends his effort to
convinced many voters that the
great influence over the shaping of
hold down the top income tax rate
White House is interested more in
tax legislation. In the past, the
as necessary to prevent Congress
protecting the interests of the
higher rates moved, the more loop-
from raising taxes on everyone else
wealthy than in ensuring that the
holes were added on the grounds
as well. But Bush was quite willing
burden of deficit reduction is equi-
that they would help stimulate
as part of the budget agreement
tably shared.
reertain desirable activities, such as
negotiated by White House offi-
And just Sunday evening, the
erecting new buildings, investing
cials and congressional leaders and
budget negotiations broke down
in new factories and developing
rejected by the House to impose a
again over taxing the rich. The
alternative energy sources.
higher tax burden on middle- and
White House insisted that the cur-
And economically, the affluent
lower-income Americans.
rent top rate of 28% should go no
enjoy such a wide variety of ways
Moreover. under former Presi-
higher than 31%, but Democrats
'to escape taxation that efforts to
dent Ronald Reagan, the GOP
held out for a package that would
"soak the rich" through sharply
promoted income-tax cuts as a
raise tax rates on those with in-
Chigher rates usually end up losing
benefit to all, arguing that the
comes above roughly $200,000 to
:more revenue than they gain.
overall economy would gain as the
32% while imposing an additional
wealthy took advantage of lower
surtax on the superrich with in-
N
0 matter what happens in the
marginal tax rates that would allow
comes above $1 million.
current political debate over
them to keep more of their income
But for all the current political
'taxes, the tax system's effect on
to make productive investments in
firestorm over taxes, one unset-
income distribution isn't likely to
new enterprises.
tling fact remains: The tax system
Ichange. Both Democrats and Re-
"To help the poor and middle
has proven largely ineffective in
publicans have staked out positions
classes," argued George Gilder in
overcoming widespread disparities
that are triumphs of symbolism
Over substance.
"Wealth and Poverty," his early-
of wealth and income among
Americans.
For liberal Democrats, their cru-
1980s encomium to supply-side
It's true there was an erosion of
cial goal throughout the budget
economics, "one must cut the taxes
some of the mild progressivity built
Inegotiations this year has been to
of the rich."
into the overall U.S. system-
burst the so-called "bubble" by
But it didn't work out that way.
which exacts a slightly greater
pushing the tax rate on families
Average income, adjusted for
share of taxes from the most afflu-
with annual incomes of more than
inflation, grew by almost 16%, and
ent than from the middle class
about $200,000 from 28% to the
the income of those in the top 1%
throughout the 1970s and into the
hidden 33% rate paid by some who
soared by 87% to almost $400,000
early 1980s. That trend was only
learn less.
from about $214,000. But despite
partly reversed in the sweeping tax
But in hopes of luring Republi-
the general prosperity of the dec-
revision of 1986.
cans to make a deal and to win
ade, the lower-middle-class and
But from the beginning of the
essential support from Southern
working-class voters who provid-
1950s through 1963, when the top
and Western lawmakers in their
ed the decisive edge for Reagan
rate was set at 91%, to the late
own party closely tied to timber
actually saw their real incomes
1980s, when tax rates on top in-
interests. most Democrats have
stagnate or even shrink during the
comes fell to 28% even as Social
been willing to accept lower taxes
1980s.
Security taxes bit harder into mid-
on capital gains, profits on invest-
Changes in taxes, however, were
dle- and lower-income salaries,
ments earned overwhelmingly by
only a small factor in the widening
what people really end up paying
the wealthy.
gap between the rich and the poor.
in federal and state taxes has
"Raising the top rate to 33% and
While analysts still argue over the
changed remarkably little.
giving a big capital gains cut takes
reasons why the post-World War
For example, middle-income
from the wealthy with one hand
II trend toward slightly more equal
families paid 24% of their income
but gives with the other," com-
incomes reversed direction in the
in taxes in 1988, slightly more than
plains Sen. Bill Bradley (D-N.J.).
mid-1970s, the most common ex-
the roughly 23% share they paid in
"And it gives a lot more than it
planations revolve around the en-
the mid-1960s. Although the top
takes."
try of the huge baby boom genera-
10% face a somewhat lower tax
tion into the work force, the spread
of two-earner families and the
soak-the-rich plan, shows that you
growing disparity between skilled
berg tax policy," says Bruce Fisher
can improve fairness by closing
and unskilled labor as the U.S.
of Citizens for Tax Justice, a labor-
loopholes even when you're lower-
economy became more exposed to
supported group that advocates
ing the top rate."
global competition.
higher taxes for corporations and
It all depends on how tax rates
the wealthy. "The whole idea is to
Whatever the reasons, voters
are cut.
get the Southern 'timbercrats' on
who have not shared in the eco-
In the early 1980s, the top tax
board behind a Democratic plan.
nomic gains of the 1980s now want
rate was cut from 70% to 50%,
But all it really does is open up a
revenge, argues Kevin Phillips, the
corporate taxes were slashed, and
Pandora's box to more abuses of
iconoclastic Republican whose re-
capital gains rates reduced further
the tax code."
cent book, "The Politics of Rich
to 20%, but Social Security taxes
and Poor," helped galvanize Dem-
rose dramatically. As a result, the
History bears Fisher out. Take
ocrats to rally under the fairness
rich paid a smaller share of their
the oil and gas percentage deple-
banner in this year's budget wars.
income in taxes while the middle
tion allowance, a generous tax
"The 1980s were the triumph of
class and poor paid more.
break that was first proposed in
upper America," Phillips wrote,
But when the top rate was
1918-largely as an emergency
"an ostentatious celebration of
slashed even further in 1986 to
World War I measure to encourage
wealth, the political ascendancy of
28%, the wealthy began to bear a
the drilling of new oil wells to fuel
the richest third of the population
bigger tax burden because tax
the war effort. By the time Con-
and a glorification of capitalism.
shelters were closed and the poor
gress finally approved the bill in
were largely exempted from feder-
1919, the war was over.
free markets and finance."
But the current debate reflects
al income taxes.
Nonetheless, the depletion al-
the widespread confusion over
Although the level of progres-
lowance, although scaled back in
what role the tax system can
sivity in the U.S. tax system has
size in recent years and limited to
realistically play in curbing such
diminished from the mid-1960s, it
smaller oil producers, lives on to-
excesses. At the same time, it
has returned to almost what it was
day. Moreover, says Sen. Bradley,
continues to mirror the power of
in the mid-1970s.
"the oil depletion allowance en-
well-connected individuals and
In 1980, for example, the effec-
couraged other special interests to
special-interest groups to shape
tive rate of federal, state and local
seek comparable relief, which the
the tax code to their own benefit.
taxes on the top 10% of all taxpay-
legislators from the oil states sup-
While most Americans, in theo-
ers was 28.5%, according to de-
ported for fear that otherwise the
ry, favor a progressive tax system
tailed estimates prepared by
non-oil states [would] oppose oil
that imposes higher taxes as in-
Brookings Institution tax experts.
depletion."
come rises, in practice lawmakers
By 1985, that burden had fallen to
As a result, more than 100 differ-
repeatedly have undermined that,
26.4%, but it has now rebounded
ent "minerals"-including such di-
goal by inserting a wide variety of
back to 27.7%.
verse products as oyster and clam
tax incentives that were designed
The overall tax system, assum-
shells, gravel, talc, sand and co-
to encourage certain types of in-
ing that corporate taxes are paid by
rundum-have been granted spe-
vestments or economic behavior.
shareholders rather than consum-
cial tax breaks over the years.
"Congress doesn't like to hand
ers, is at best only mildly progres-
There is even a tax break applying
out explicit subsidies," says Alan
sive today. And to the extent that
to clay used to make flowerpots.
Reynolds, chief economist at the
corporate taxes are passed on to
That's why proposals to create
conservative Hudson Institute in
consumers in the form of higher
new tax breaks or revive some old
Indianapolis. "But handing out tax
prices, the real tax burden of
ones, even under a new rubric and
breaks provides a hidden subsidy
different income groups is just
promoted as only having a limited
without having to acknowledge the
about the same.
impact, are likely to open the door
cost."
House Democrats, in moving to
to even greater loopholes in the
As a result, whenever rates have
risen in the past in an effort to
reshape their own budget proposal
future.
force the wealthy to pay more, rich
last week to ensure that the
"People like low rates," says
Brookings' Henry Aaron, "but they
taxpayers have invariably man-
wealthy pay a greater share of the
aged to escape such burdens
added tax burden, tried to craft a
don't often recognize that the only
through a host of perfectly legal
capital gains tax cut that would
way to keep them low is to prevent
loopholes.
prevent many rich investors from
loopholes from creeping back into
taking advantage of it. It was
the tax code."
I
n the 1950s and early 1960s, for
targeted at small businesses,
example, when the top rate was
homeowners, and owners of assets
91%, the richest 1% of America's
such as timber that take years to
taxpayers ended up paying little
earn a profit.
more than 25% of their income in
federal taxes. The wealthy learned
But even longtime tax reformers
to divert their income to tax shel-
question whether the House Dem-
ters, invest in tax-free municipal
ocratic approach, which excludes
bonds, buy luxuries for themselves
stocks and bonds and limits the tax
by running up business expenses
advantage to $100,000 over a life-
and take advantage of popular
time, makes economic sense.
deductions such as those for home
"Politically, it may be a clever
mortgages and charitable contri-
move but it's a lousy Rube Gold-
butions to avoid facing an oppres-
sive tax burden.
THE.U.S.TAX BURDEN.WHO PAYS
Finally, in the one significant
effort in history to reverse the
Effective rates of federal, state and local taxes by population percentiles,
expansion of tax breaks, Congress
selected years
agreed to eliminate many such
loopholes in 1986, finding that the
Income group
1966
1970
1975
1980
1985
1988
wider tax base actually forced the
Lowest 10th
16.8%
18.8%
19.7%
17.1%
17.0%
16.4%
rich to pay more despite sharply
2nd 10th
18.9
19.5
17.6
lower rates.
17.1
15.9
15.8
"Most people think the only way
3rd 10th
21.7
20.8
18.9
18.9
18.1
18.0
to improve progressivity is to raise
4th 10th
22.6
23.2
21.7
20.8
21.2
21.5
the rates on the rich," says Joseph
5th 10th
22.8
24.0
23.5
22.7
23.4
23.9
Minarik, staff director of the Joint
6th 10th
22.7
24.1
23.9
23.4
Economic Committee in Congress.
23.8
24.3
'But tax reform in 1986, even
7th 10th
22.7
24.3
24.2
24.4
24.7
25.2
though it was not intended as a
8th 10th
23.1
24.6
24.7
25.5
25.4
25.6
9th 10th
23.3
25.0
25.4
26.5
26.2
26.8
Upper 10th
30.1
30.7
27.8
28.5
26.4
27.4
AVERAGE
25.2
26.1
25.0
25.3
24.5
25.4
Source: Brookings Institution
Los Angeles Times
Partisan Fight
Provokes New
Budget Impasse
pay an equitable share of taxes.
By WILLIAM J. EATON
Republicans have embraced a plan
In the past, the White House has
and TOM REDBURN
that would raise taxes for this
linked the 31% rate to a trade-off
TIMES STAFF WRITERS
affluent group by disallowing 4%
for a lower capital gains tax. Demo-
WASHINGTON-Budget talks
of most deductions on income
crats insisted that the top rate
would have to rise to 33% before
virtually deadlocked Sunday night
above $100,000, and by disallowing
in a sharp partisan dispute over
8% of these deductions for persons
they would go along.
with taxable income above $1 mil-
Under a quirk in current law
how to tax the rich, dashing hopes
lion.
whereby couples with incomes be-
for a quick accord on a new deficit.
This approach, known as the
tween $80,000 and $200,000 pay a
reduction plan.
Key Republicans, declaring the
Pease plan for its chief advocate,
marginal tax rate of 33%, about 2
negotiations at an impasse, accused
Rep. Don J. Pease (D-Ohio), is
million taxpayers would get a tax
cut if the 31% rate was included in
Democrats of refusing to budge in
opposed by many Democrats on
their demands for a surtax on very
grounds that it is a roundabout way
a budget package. Another 600,000
wealthy Americans and of stiff-
of raising tax rates and could
people with income above $200,000
adversely affect residents of states
who now pay a 28% marginal rate
arming a GOP counterproposal that
would hit the rich by reducing
like New York and California that
would pay higher taxes.
have high state income tax rates.
Overall, according to Packwood,
deductions.
Democrats insisted that they
Republicans, however, counter
adopting a 31% top rate would
raise about $5 billion over the next
would continue their effort to
that their plan would raise more
revenue than the Democrats' plan.
five years.
reach agreement on a $500-billion
"This is one of the all-time false
deficit-cutting package, despite the
They add that it would be better
dramatic public blow-up and the
tax policy because it would not
issues, the rich-poor thing," said
Richard G. Darman. director of the
angry departure from Capitol Hill
affect rates set by the tax reform
law of 1986 and thus would protect
White House Office of Manage-
of top White House officials in-
the tax code from being riddled
ment and Budget, on ABC-TV's
volved in the bargaining.
Despite the harsh rhetoric from
with new loopholes.
"This Week with David Brinkley."
the Republican side, congressional
Democrats in the budget talks
He said that the compromise the
negotiators from both parties as-
have proposed a 10% surtax on
White House supports would "tax
sembled late Sunday night in the
taxable income above $1 million,
the rich."
office of Senate Minority Leader
along with other provisions to put
John H. Sununu, the White
more of the tax burden on those
House chief of staff, left Capitol
Bob Dole (R-Kan.) for yet another
Hill after discussions with Repub-
try at a budget agreement.
with incomes of more than $50,000.
While the gap was closing on
House Majority Leader Richard
lican negotiators and charged that
Medicare cutbacks and the size of a
A. Gephardt (D-Mo.) said that a
the Democrats were "negotiating
gasoline tax increase, a few partici-
surtax would have a uniform effect
with themselves" over tax policy.
pants said that the politically
across the country, while any lim-
Mitchell said that Sununu is not
charged issue of taxing upper-in-
its on deductions would have a
taking a direct part in the negotia-
come individuals threatens to de-
disparate effect on citizens of vari-
tions and added: "The Democrats
stroy chances for an agreement.
ous states.
are unified."
"These important negotiations
Another Democratic aide said
have reached an impasse," Dole
that any new plan must be closer to
said in a press release, blaming
the House-approved measure, with
House Democrats for an unyielding
its primary emphasis on taxing the
stance.
rich, or it won't be able to pass
With Congress moving into the
Congress.
final days of its session just two
"The White House just wants to
weeks ahead of the November
take the old [defeated] budget
elections, negotiators conceded
summit agreement, dress it up and
that they would have little time to
send it back to the floor," the aide
get a budget bill adopted unless
said. "We don't think that will
negotiators break the stalemate
work."
today or Tuesday.
The clash overshadowed a possi-
It also raised concerns about a
bly significant move toward a com-
new crisis at midnight Wednesday,
promise when the Bush Adminis-
when federal spending authority is
tration indicated that it would
scheduled to expire and a new
accept an increase of up to 31% in
government shutdown could occur.
the top-bracket rate if the budget
President Bush expressed disap-
package met all its other objec-
pointment at the failure to make a
tions.
deal by Sunday's self-imposed
Democrats agreed to a 31% top
deadline, according to Sen. Bob
rate but demanded that other pro-
Packwood (R-Ore.), who talked to
visions be included in the agree-
Bush by telephone.
ment. Their demands included the
"I've gone three-fourths of the
millionaires' surtax, although they
way and just don't want to give up
were willing to accept 7.5% rather
any more," Bush was quoted by
than the 10% in the bill passed by
Packwood as saying.
the House, and application of the
Democrats said that the Repub-
health insurance payroll tax to the
licans were seriously divided, with
first $140,000 of earnings a year
most House GOP lawmakers com-
instead of the current cap of
mitted to opposing any tax increas-
$51,300. Democrats also asked for
es and almost half the Senate
an increase from 21% to 23% in the
Republicans voting against the
alternative minimum tax-the tax
plan endorsed by Bush.
on wealthy persons who have so
At the heart of the dispute is how
many deductions that otherwise
to make sure that wealthy persons
they would pay no tax.
COLUMN RIGHT/
PAUL M. WEYRICH
A Grand
Old Party,
in Two Parts
One side stands for reform, the
other for reelection. The split
'Party Republicans are
professional politicians without
may become permanent.
an agenda beyond staying in
T
he ongoing fracas over the budget and
office. They represent the
tax policy has revealed to the public
what insiders have long known: there are
Establishment of wealth and
two different Republican parties. Until
privilege that average
now, they have managed to get along, at
least in public. But the tax question has
Americans resent deeply.'
sent them after each other's throats,
creating an open split that may become
budget deal, the Reform Republicans
permanent.
crossed their Rubicon. Now, if they go
The two groups are the Reform Republi-
back to the sort of "deal for a deal's sake"
cans and the Party Republicans. The
the Party Republicans want, they will find
Reform Republicans put their agenda
they have alienated their own base. Hav-
above loyalty to the party institution. That
ing put their agenda above their party
agenda has two parts. In policy, it visualiz-
loyalty once, they will find they must
es an America made prosperous through a
consistently do so or shatter and turn upon
revitalized free market, which requires big
themselves.
cuts in taxes and reduced government
Where does this leave the Republican
spending and absorption of capital through
Party? The Reform Republicans are right
borrowing.
in sensing a growing wave of popular
Reform Republicans see the deficit and
indignation against politicians. Their popu-
Gramm-Rudman as opportunities, not
list, "outsider" message could enable the
dangers. They would use them as leverage
party to ride this wave to power. Politi-
to reduce federal spending and borrowing
cians who in effect come out against
through a total freeze on spending (includ-
themselves with support for measures like
ing entitlements) or by letting the
term limitation can still be credible with
Gramm-Rudman ceilings take effect. Re-
the public.
form Republicans see the rising tide of
But the Republicans most visible to the
anger at Washington now manifesting
public through the budget fiasco have been
itself across the country, and want to run
the Party Republicans. They come across
as critics of the Establishment, not mem-
like what they are, professional politicians
bers of it.
without an agenda beyond staying in
Party Republicans have fundamentally
office, and the public reaction has been
different perceptions. They have no real
strongly negative. They represent the
policy agenda; their focus instead is on
Establishment of wealth and privilege that
"making deals." They are process men,
average Americans have come to resent
concerned much more with keeping things
deeply. Not only are they out of touch with
on an even keel than with pushing any
their constituents, the constituents know
particular set of policies. They seek har-
they are out of touch with them.
mony between the Congress and the
Their image shaped by the Party Repub-
President, looking to the White House for
licans, Republican incumbents may take a
leadership and guidance; they are uncom-
severe drubbing in November. In the long
fortable with partisanship, and they find
run, that could be good for the party,
any public bloodletting distasteful. "No
because it could open the door to ascen-
new taxes" has little policy or political
dancy of the Reform Republicans, who
importance in the their eyes, especially
have far greater potential public appeal.
when compared with the need to make a
But there is also a danger that the public
deal, and they view Gramm-Rudman as a
will not be able to distinguish clearly
grave danger, not an opportunity to reduce
between Reform and Party Republicans,
the size of government dramatically.
and will slaughter both indiscriminately.
Politically, the Party Republicans are
The challenge facing Reform Republi-
establishmentarians. Their "real world"
cans at this point is getting their difference
lies inside the beltway, and their political
from Party Republicans across' to their
barometers are the White House, Wall
constituents. The next proposed "deal" on
Street and one another. They have little
the budget should give them another
feel for what is happening back in Kansas,
opportunity to do so. But the hour is late,
and not much interest in it either. They
and courage may be waning. Will the
have no ambition to become a majority
Reformers see that their only hope lies in
party in the House: reelection of incum-
separation? We will soon find out.
bents (themselves), not party growth, is
their goal.
Paul M. Weyrich is president of the Free
When House Republican whip Newt
Congress Research and Education Founda-
Gingrich announced his opposition to the
tion, Washington.
THE
SUN
OCTOBER 22, 1990
Budget talks
hit new snag
over taxes
Details are debated
of rates for wealthy
By Peter Osterlund
Washington Bureau of The Sun
WASHINGTON - Long-running budget talks
Some Democrats wondered
"We have to have a package that
between key members of Congress and top Bush
whether the Republican outbursts
can pass on the House floor," said
administration officials hit another roadblock last
were part of a coordinated effort to
Mr. Gephardt. "Absent a majority of
night as negotiations stumbled over a dispute be-
put public pressure on Democrats to
Republicans, It is going to have to be
tween Republicans and Democrats about which
accept the latest GOP budget offer.
passed with a preponderance of
taxes to raise on the wealthiest Americans.
noting tartly that Mr. Sununu had
Democratic votes."
The latest obstacle in the tortuous budget dis-
stormed out of a meeting of Republi-
Republicans, in turn, rejected the
cussions arose after both parties had agreed in
cans.
surtax, proposing instead to tighten
principle to increase the income taxes levied on
"Talks have blown up? What does
deduction limits on millionatres.
top earners. That consensus led participants and
'blown up' mean?" asked one Demo-
According to a source present at
observers yesterday to predict agreement on a
cratic staff aide. "I'm still here, and
yesterday afternoon's meeting of
comprehensive deficit-reduction agreement within
we're all going to be working past
congressional negotiators, senior
hours, five months after the first budget talks got
our bedtimes tonight. So what's
Democrats informed Republicans
under way.
changed?"
that an insufficient number of Dem-
But as the day progressed, talks became entan-
Indeed, it seemed improbable that
ocrats would support the budget
gled in a disagreement over the kind of tax in-
the talks could break down at this
agreement If it included the GOP lim-
crease to be imposed on individuals with taxable
stage, with the two sides so close to
Itation proposal. The choice before
annual incomes above $1 million. Lawmakers
agreement.
Republicans, they said, was to ac-
and administration officials planned to meet again
On Saturday, Republicans offered
cept a 32 percent top rate or the 7.5
today to try to find a way out of the impasse.
to raise the top income tax rate from
percent surtax.
"I am disappointed that these important negoti-
28 percent to 31 percent, a signifi-
After consulting with Mr. Bush by
ations have reached an impasse," Senate Minority
cant reversal from the Bush admin-
telephone, the source continued, Mr.
Leader Bob Dole, R-Kan., said in a statement.
istration's repeated opposition to any
Dole returned to the meeting to say
"The president has gone more than halfway. I
change in income tax rates.
that the president wouldn't agree to
regret the House Democrats indicate they are un-
Democrats, who had crafted the
a surtax or a higher rate. It was then
able to do the same."
deficit-reduction bill passed last
that the talks hit, in Mr. Dole's word,
Lawmakers are attempting to craft a compro-
week by the House, had demanded a
an "impasse."
mise between two very different versions of a
top rate of 33 percent. They, in turn,
It is estimated that the million-
$250 billion deficit reduction bill passed last week
responded by accepting the 31 per-
aires' surtax, affecting about 65,000
by the House and Senate. The legislation. which
cent top rate, coupling it with a 7.5
individuals. would raise $5.3 billion
would increase a variety of taxes and trim expend-
percent surtax on taxable incomes in
over five years.
itures on Medicare, agriculture and other benefit
excess of $1 million. as compared to
Republicans say they oppose in-
programs. Is to serve as, the centerpiece of a
the 10 percent surtax called for in
come tax rate increases and surtaxes
planned 5-year, $500 billion reduction in the defi-
the House bill.
because. they fear, such hikes will
cit.
In another significant concession,
open the door to further increases in
As a result, the legislation includes almost all
Democrats said they would limit de-
the future.
ductions paid by individuals with
In yesterday's talks, the two sides
taxable incomes exceeding $1 mil-
narrowed differences over Medicare,
lion.
an area where partisan differences
BUDGET, from 1A
Such limits would especially af-
are defined largely by dollars.
fect individuals in high-tax states,
The House deficit bill had pro-
the most controversial provisions.
such as California and New York,
posed a $43 billion trim in the Medi-
Much of the rest of the deficit cuts
since state and local taxes can be
care program. Yesterday. Senate Re-
would come from reductions in de-
deducted for federal income tax pur-
publican negotiators offered to lower
fense spending and lower interest
poses and, therefore, any limit in fed-
their proposed reduction from $49
payments on the national debt.
eral deductions effectively increases
billion to $47 billion.
Mr. Dole's comments were echoed
the costs of the state and local levies.
by White House Chief of Staff John
Those high-tax states have large
H. Sununu, who. along with Treas-
congressional delegations, mostly
ury Secretary Nicholas F. Brady and
Democrats. who might vote against
Budget Director Richard G. Darman,
the overall budget agreement if It in-
conferred with senior Republicans
cludes proposals that individual law-
yesterday.
makers believe might adversely af-
Bursting out of Mr. Dole's office, a
fect their states.
conspicuously agitated Mr. Sununu
Democratic leaders, attempting to
exclaimed, "There's no deal.
The
cobble together a tenuous coalition
Democrats are negotiating with
in support of the final agreement, are
themselves."
thus wary of provisions that might
Despite these exclamations, Sen-
alienate substantial numbers of
ate Majority Leader George J. Mitch-
House members.
ell, D-Maine, and House Majority
Leader Richard A. Gephardt, D-Mo.,
planned to meet late last night with
Mr. Dole.
THE
SUN
SATURDAY
OCTOBER 20, 1990
Congress struggles
to blend versions
into single budget
By Peter Osterlund
Washington Bureau of The Sun
"I don't know why we have to go
The rate increase is linked to a
WASHINGTON - After nearly six
through a process of producing a bill
variant of the capital gains tax-cut
months of tortuous negotiation. members of
that will not be signed," said Sen.
proposal long championed by the
Congress launched the final push yesterday
Pete V. Domenici. the top-ranking
president. But that capital gains
for a compromise deficit reduction package.
Republican on the Senate Budget
break is so limited and the accompa-
President Bush signed a stopgap spend-
Committee. "Ultimately, we need a
nying income tax rate increase so
ing bill enabling the federal government to
bill, one that the president can sup-
steep that Mr. Bush has promised to
continue normal operations through mid-
port."
veto any legislation containing it.
night Wednesday, the third temporary ex-
Mr. Bush himself made a rare ap-
The administration reiterated
tension of the federal government's spending
pearance on Capitol Hill. conferring
yesterday its earlier offers to couple a
authority since September. Key lawmakers,
with lawmakers to emphasize that
31 percent top tax rate with a sharp-
meanwhile, settled down to the difficult task
of melding the very different versions of
point. Mr. Bush restated his prefer-
er cut in the capital gains rate. But
ence, adding: "I, for the first time, feel
Democrats seemed as ready to reject
budget legislation adopted this week by the
optimistic that we can get this job
that offer now as they were during a
House and Senate.
done for the American people."
budget summit between congres-
Lawmakers and their staffs planned to
Democratic leaders who met with
sional leaders and the White House
work through the weekend in hopes of
last month.
reaching a final agreement by tomorrow eve-
the president were just as ready to
ning. each armed with a 13-pound, half-
lay out their side of the case - that
After a closed-door caucus yester-
foot-high stack of papers that supposedly
the administration ought to be ready
day morning, several House Demo-
held the key to a deal.
to accept some of the elements of the
crats said they might be willing to
House bill If it wanted to see any
abandon the effort to change tax
"I think the pieces are all there," said
rates if they could win the assent of
House Budget Committee Chairman Leon E.
kind of deficit legislation emerge
Republicans in the Senate and
from Congress.
See BUDGET. 5A, Col. 1
For the bill to pass the House,
White House to the 10 percent mil-
lionaires' surtax.
they told Mr. Bush, a clear majority
of Democrats would have to support
it. since most members of the minor-
ity Republicans have committed
BUDGET, from 1A
themselves, to voting against any
compromise legislation likely to come
Panetta. D-Calif. "It's just going to be
before the chamber.
"I told him he had to look at the
a matter of putting them in place."
That is a goal more easily uttered
math." said Mr. Panetta. "We got 10
than realized. The deficit reduction
Republicans to come along with us
bills, adopted Tuesday by the House
[on passage of the House deficit bill],
and early yesterday by the Senate,
and, given their posturing on this is-
both increase a variety of taxes and
sue, it's going to be difficult to get
cut Medicare, agriculture and other
more than 40 on board any compro-
benefit programs. Both bills serve as
mise. So the rest of the support is
the keystone of a promised $500 bil-
going to have to come from Demo-
lion reduction in the federal deficit
crats, and we're not going to be able
during the next five years.
to hold on to enough of them [to pass
But the House bill. passed with
a bill] if we offer them something
little Republican support. calls on
they can't support."
the well-off to contribute a larger
Actually. the two packages ad-
proportion of their income to the
vanced by the House and Senate
cause of deficit reduction than legis-
have much in common. Both would
lation endorsed by a slender biparti-
increase taxes on tobacco. alcohol,
san majority in the Senate. Indeed,
airline tickets and luxury items such
after the Senate passed its bill. some
as private planes. Both would en-
of its Democratic supporters called
large tax credits for low-income peo-
on the president to support a com-
ple. But several issues will require
promise reflecting the priorities of
tricky balancing acts between the
the House deficit package.
two bills and between the political
"I much prefer the House package
agendas espoused by Republicans
with regard to revenues." said Senate
and Democrats.
Budget Committee Chairman Jim
The House bill includes perhaps
Sasser, D-Tenn. "It puts a heavier
the most controversial single ele-
burden on the wealthiest Americans
ment in the budget debate - a pro-
to pay their fair share."
posal to increase from 28 percent to
President Bush has tacitly en-
33 percent the tax rate levied on the
dorsed the Senate's version, promis-
highest wage-earners, coupled with
ing to veto the document adopted by
a 10 percent surtax on after-tax in-
the House. But since neither bill will
comes of over S1 million.
emerge intact from House-Senate ne-
gotiations for the president's signa-
ture. both parties became entangled
yesterday in a game of rhetorical
chicken. each warning the other of
the perils of pressing their cases too
insistently.
The Philadelphia Inquirer
Monday, October 22, 1990
Bush team
stalks out of
budget talks
By Charles Green
and R. A. Zaldivar
Republicans say that higher rates
come earners. The 31 percent rate
Inquirer Washington Bureau
would bring pressure to reinstate the
would apply to couples with taxable
WASHINGTON - White House ne-
loopholes and tax shelters elimi-
incomes of more than about $200,000.
gotiators abruptly walked out of
nated in the 1986 Tax Reform Act.
Democratic bargainers also pro-
talks on a deficit-reduction bill last
Packwood said both parties' pro-
posed a5 percent, limit on deductions
night after a sharp dispute with con-
posals would raise about $6 billion
for taxpayers making more than
gressional Democrats over how to
over five years from those making $1
$100,000, a Senate aide said. Demo-
tax the rich.
million or more in taxable income.
crats would also impose the 1.45 per-
White House chief of staff John H.
That amount is small compared with
cent Medicare payroll tax on the first
Sununu, accompanied by budget di-
the revenue that would be raised by
$140,000 in income, more than double
rector Richard G. Darman and Treas-
other tax changes under consider-
the present cap of $51,300
ury Secretary Nicholas F. Brady,
ation. For instance, the budget bill
By itself, a new top income tax rate
stormed out of the Capitol, blaming
passed by the Senate last week would
of 31 percent would mean a tax cut
Democrats for the sudden hitch.
raise $43 billion over five years
for a few million upper-middle-in-
Negotiators said the dispute was
through a 91/2-cent increase in the
come Americans and a tax increase
over whether to raise taxes on the
gasoline tax.
for the 600,000 wealthiest taxpayers.
rich through a 7.5 percent surtax on
The goal of the talks is to reconcile
But other tax increases under con-
taxable income over $1 million - as
the differences between the Senate
sideration would wipe away any sav-
Democrats want - or to reduce the
and House deficit-cutting plans, de-
ings for most taxpayers, meaning
wealthy's tax deductions by 8 per-
livering a package of tax increases
that all but poor and lower-income
cent of taxable income exceeding $1
and spending cuts that would reduce
people would see their taxes rise.
million, as Republicans prefer.
the deficit by about $40 billion this
Currently, a single person with no
The two sides also differed on how
fiscal year and by $500 billion over
dependents is taxed at the "bubble"
much to increase the gasoline tax.
five years. The Pentagon would bear
rate of 33 percent on taxable income
with Democrats proposing 5 cents
the brunt of the cuts, although the
between $44,900 and $93,130. Income
and Republicans holding out for 7
elderly, farmers and students would
above that is taxed at 28 percent rate.
cents. Also, Democrats want to cut
also see benefit programs reduced.
Under the proposed change, the sin-
Medicare by $44 billion over five
With stopgap spending authority
gle filer would pay a 31 percent rate
years. while Republicans were seek-
due to expire at 12:01 a.m. Thursday,
on income above $44,900. Income be-
ing $47 billion in reductions.
negotiators had hoped to produce an
tween $18,550 and $44,900 would con-
Democrats insisted that the talks
agreement yesterday or early today.
tinue to be taxed at 28 percent, and
would continue, and a senior Repub-
Yesterday began on an upbeat note
income below $18,550 at 15 percent.
lican aide said it was unclear why
as Darman confirmed that Bush
Sununu and the other administra-
would accept an increase in the in-
tion officials had left.
come tax rate for the wealthiest tax-
"Throughout this process there
payers from 28 percent to 31, percent
have been disagreements," said Sen-
without insisting on a capital gains
ate Majority Leader George J. Mitch-
tax cut.
ell (D., Maine). "At each step. despite
Bush's concession appeared to im-
our difficulties, we have come back
prove prospects for a budget deal, as
and been able to narrow our differ-
negotiators said they were close to
ences significantly:"
agreement yesterday afternoon.
Mitchell and other congressional
Even Sununu was optimistic.
negotiators resumed their talks last
"Ninety-five percent of the package
night without the White House team.
is already decided on," he said.
Sen. Bob Packwood of Oregon, a top
But hours later. Sununu stalked
Republican negotiator, said Presi-
out of the Capitol, saying that Demo-
dent Bush would not accept the 7.5
crats could not agree on whether to
percent surtax.
drop the surtax proposal.
The dispute appeared to be driven
The 7.5 percent surtax on million-
partly by political symbolism. Demo-
aires would be on top of the 31 per-
crats, who have rallied to the banner
cent income tax rate for upper-in-
of tax fairness, see a surtax as a way
of demonstrating that the wealthy
will shoulder their fair share of the
burden in reducing the deficit.
Republican negotiators prefer a
less flashy way of taxing upper-in-
come earners: Packwood said they
want to reduce deductions by 4 per-
cent for those with taxable incomes
above $98,000. and gradually reduce
deductions further as income rises.
NEW YORK POST, MONDAY, OCTOBER 22, 1990
Bush aides break off
budget negotiations
WASHINGTON (AP) - Bush
selves," said White House Chief
administration officials angrily
of Staff John Sununu,
stalked out of deficit-reduction
Bush administration officials
negotiations yesterday, com-
plaining that Democrats were
pushed a plan, first floated late
divided over a Republican offer
Saturday, to boost the income-
to raise taxes on the wealthy.
tax rate on the richest taxpayers
The setback in efforts to work
from 28 percent to 31 percent.
out a compromise $250-billion
Sununu said the package also
limited deductions available to
package of tax increases and
spending cuts came late on a
the highest-income people.
weekend in which the two sides
Democrats rejected the pro-
seemed to be moving toward
posal and responded with a coun-
each other on ways to boost
teroffer of their own. Throughout
taxes on the richest Americans.
the day,the two sides offered
"We're not going to negotiate
refinements on their plans at pri-
with Democrats who can't come
vate meetings and in telephone
to an agreement among them-
conversations.
Budget talks
falter; Bush
team walks
By SUSAN MILLIGAN
crease, the depth of Medicare
News Washington Bureau
cuts and the tax rates on
wealthy Americans.
WASHINGTON - Efforts to
reach an agreement on a defi-
Compromise?
cit-cutting package stalled last
Earlier in the day, it ap-
night as angry Bush adminis-
peared some movement was
tration officials left Capitol
being made on those sticking
Hill complaining the Demo-
points between the House and
crats did not know what they
the Senate. Staffers familiar
wanted.
with the talks said negotiators
"We aren't going to negotiate
were discussing a 5-cent gas
with Democrats who can't
tax increase and a top income
work out an agreement with
tax rate of 31%, each about
themselves," White House
halfway between the House
chief of staff John Sununu said
and Senate proposals.
as he walked out of the Capitol
Sununu said he had offered
with Budget Director Richard
a plan that would put the top
Darman. "They obviously
tax rate at 31%. The Bush
would prefer not to accept a
plan would also limit itemized
package."
deductions, so that taxpayers'
Senate Majority Leader
deductions would be reduced
George Mitchell (D-Maine)
by 4% of the amount of their
played down the remarks by
earnings over $99,000, and 8%
Sununu, who is known for his
for earnings higher than $1
combative style.
million.
The administration-offered
Still talking
package would also cut Medi-
"We continue to meet at
care by $47 billion, more than
this very moment to develop
the House wants to cut.
such a package," Mitchell
"We want to see fairness in
said, adding that congressio-
the package," House Speaker
nal leaders would continue to
Thomas Foley (D-Wash.) said
meet throughout the evening.
yesterday. "That requires
The break in negotiations
some additional burdens to be
came as Congress and the
shared by the highest-income
White House fought to get a
people in this country."
budget agreement by Wednes-
day night, when the third
House Majority Leader
stopgap funding measure to
Richard Gephardt (D-Mo.).
keep the government running
looking tired and unhappy.
expires.
said negotiators could not
The House and Senate have
agree on one part of the pack-
passed widely divergent plans
age without determining how
to cut the deficit by $500 bil-
the whole plan would affect
lion over five years. The two
different income groups.
sides and the White House
"It's the totality of the pack-
have been squabbling over
age, how it comes out and who
the size of any gasoline tax in-
pays." he said.
AN INTERNATIONAL DAILY NEWSPAPER
MONDAY, OCTOBER 22, 1990
50c ($1.00 CANADIAN)
THE CHRISTIAN SCIENCE MONITOR
US Budget Pact
Likely to Need
Overhaul by '93
lutely nothing prevents the ap-
der to be accepted over the long
By Robert P. Hey
propriations committees from
term by the public, Dr. Ornstein
Staff writer of The Christian Science Monitor
raising spending," says economist
says. Otherwise Congress will be
Dan Mitchell of the Heritage
tempted to respond to building
WASHINGTON
Foundation. Americans would be
constituent pressure and scrap a
able to adhere to the restrictions
ET used to the phrase:
tax that has not yet taken effect.
G
budget-deficit problem.
of a leaner budget, "but Congress
Although new taxes may re-
In another two or
won't," he adds.
main in effect, within five years
three years, Americans probably
Members of Congress think
circumstances of one kind or an-
will be hearing once again about
they will demonstrate more re-
other are likely to unbalance
the need to make significant cuts
sponsibility than that. "We will"
whatever plan is finally adopted
in the deficit, although Congress
adhere to the spending limits in
this week, says economist Marvin
and the president say what they
any new five-year budget plan, in-
Kosters of the American Enter-
are trying to agree on this week is
sists Sen. Patrick Leahy (D) of
prise Institute. "Based on the ex-
Vermont.
a five-year program that will solve
perience of the last few years,"
the problem by reducing the defi-
The theory may not work
Dr. Kosters adds, Congress "will
that is central to the current defi-
cit $500 billion.
change the targets and goals
Many economists and political
cit-reduction plans: that a deficit
when they're pinched. Gramm-
scientists say the deficit problem
can be ended by a combination of
Rudman is now undergoing
will not go away in five years for
higher taxes and slower spending
change for the second time.
several reasons:
growth. "We may in the end dis-
"In the 20 or so years I've been
The recession that econo-
cover that the deficit is chronic
in Washington, it's been rare that
mists believe the United States is
and keeps tending to occur unless
I haven't seen predictions of the
now entering is expected to re-
we are able to increase economic
budget coming into balance in
duce the taxes that government
growth," says economist Henry
four or five years from now -
takes in and increase the money it
Aaron of the Brookings Institu-
whenever 'now' is," he says.
pays out for federal programs. If
tion. "And over the long haul we
What if the deficit isn't
the recession is sizable, the
really don't know how to do that."
substantially reduced in the next
budget deficit will remain high
Dr. Aaron notes that the rate at
five years will that be horrific for
and "in two years we'll have to
which America's economy grows
the US? Probably not, the experts
come back and go at it again,"
has slowed substantially in recent
say, but ultimately it will result in
says political scientist Norman
decades: "If we grew [now]-the
a lower standard of living for
Ornstein of the American Enter-
way we did in the past, in the '50s
Americans.
prise Institute.
and '60s, nobody would be wor-
"If you don't save, and if you
The budget-reduction pro-
rying about the deficit. It would
don't reduce the deficit, our
posals now being worked over by
be going away."
whole standard of living will go
congressional conferees contain
Despite this somber outlook,
down within a decade," Dr. Thur-
unrealistic elements that may
many experts insist that Ameri-
ber forecasts.
make it impossible to meet the
cans will tolerate most of the new
Kosters cites New Zealand as
$500 billion deficit reduction in
taxes now generally discussed for
an example. For years it held a
the five-year current budget
protectionist posture. he says, but
five years, says political scientist
package - taxes on cigarettes, al-
changed that during the 1970s
James Thurber, director of the
cohol, gasoline.
when it found itself with a 1950s-
Center for Congressional and
Even a higher gas tax, which
level income. "Cumulatively, over
Presidential Studies at American
many Americans hotly oppose, is
time, these things do matter, and
University.
unlikely to be rescinded once en-
we need to make a change," he
He considers unrealistic the
acted, says economist Alice Rivlin
adds.
exclusion of most of the $500 bil-
of the Brookings Institution: "My
If the budget deficit remains
lion or more cost of the savings
expectation is that people will
high over the next few years, the
and loan bailout from the budget,
fuss about it at the beginning, and
US will be "paying a larger and
and the assumption that petro-
then not roll it back. It becomes
larger amount of money to for-
leum will cost a relatively inex-
part of life."
eign investors" to keep America's
pensive S24 a barrel. "There's a
But higher taxes' must be
economic engine operating,
lot of blue smoke and mirrors" in
phased in during the first year of
Kosters says. This trend could
the five-vear plans being dis-
a deficit-reduction package in or-
continue "for a long time without
cussed, he says.
becoming unbearable," he adds,
In a year or two Congress
but it would be a heavy burden on
may find it impossible to resist
American taxpayers.
spending more money than the
budget plan calls for on govern-
ment programs various interest
groups consider essential. "Abso-
The Journal of Commerce
MONDAY, OCTOBER 22, 1990
Tax the Rich, Fool the Poor
By MARC LEVINSON
upper class is taxed more than the
two weeks ago. Curbing deductions
OK, so we're gonna tax the rich.
middle class and raise some reve-
for the wealthy punishes them if
Or, to be more precise, we're gonna
nue, too.
they use their high incomes for
tax folks who earn a lot of money,
What's wrong with being pro-
consumption, which benefits only
whether or not they're rich.
gressive? Two things, one political
themselves, but not if they save
And why. not?
and one economic.
and invest their earnings, which
The high-income groups did
marvelously well in the 1980s. The
Politically, high tax rates inevi-
benefits everyone.
tably lead to pressure for special
Another good way to tax the
tax code helped them. Between
favors. At the moment, there aren't
rich is to curb their government-fi-
1984 and 1987, when the number of
many special favors in the personal
nanced health benefits, by raising
taxpayers reporting over half a
income tax system; tax shelters,
their premiums, increasing their
million dollars of income increased
deductibles or both.
150% and their total income soared
low tax rates for capital gains and
Yes, I know, this violates some
a host of other provisions that
just as sharply, the average income
aided the wealthy were swept
sacred principle or other. But it's
tax paid by each of those high-
away in the same 1986 tax reform
time to face an unpleasant fact:
flyers actually declined.
that lowered rates.
programs for the elderly are the
The corporate moguls and Wall
only substantial non-military budg-
Raise the rates for high-income
Street wheeler-dealers have had
et issue. Add up Amtrak and the
groups and before you know it the
their day. So now that the bill's
arts endowment and subsidies to
tax code will be riddled with loop-
come due, let'em pay for the party.
beekeepers and the whole thing
holes once again. Already, you can
doesn't amount to a hill of beans
Fair enough. But there are ways
hear some of the same populist
next to spending on senior citizens.
to tax the rich, and there are ways
politicians who urge higher rates
If we're serious about reducing
to tax the rich. Some of them make
on the rich urging lower rates on
the budget deficit without a mas-
sense. Others may end up hurting
capital gains. That combination ac-
sive tax increase, we can do it by
the rest of us.
tually would reduce, not increase,
cutting benefits for the elderly
The easiest way to tax the rich,
the amount of tax many high-in-
across the board, or we:can do it
of course, is to raise the income tax
come households pay.
by cutting benefits for those people
rate. It's also one of the dumbest.
Economically, too, high rates
who don't need them. There are no
Most high-income people pay
are a loser. Like it or not, the
other serious alternatives.
only 28 cents of each extra dollar
wealthy perform an important so-
Even as we find a more sensible
they earn as federal income tax.
cial function: their capital meets a
way to tax the rich, we should do
That's the same marginal rate
large part of the country's invest-
some thinking about how we tax
most middle-class families face (al-
ment needs. Without it, the econo-
the less well-to-do.
though high-income folks end up
my would grow more slowly.
You can see a lot of hand-wring-
paying that rate on a greater share
Higher tax rates cut directly into
ing on Capitol Hill about the osten-
of their income). The conclusion is
that capital accumulation.
sibly "regressive" nature of certain
obvious: let's make the tax system
Far better to tax the rich by
types of taxes.
more progressive: By creating a
shrinking their deductions, as did
Congress is right to pay atten-
few new tax brackets, say, 33% and
the tax and budget package the
tion to income distribution, but I
35%, we can make sure that the
House of Representatives rejected
find it hard to get upset that in-
creased taxes on cigarettes, beer
and gasoline have a disproportion-
ate effect on the poor.
No one requires any poor person
to smoke cigarettes, and the dam-
aging health effects of doing so are
well understood by all. While beer
is less damaging, at least in small
quantities, the federal beer tax
hasn't risen in decades; I wish the
brewers who are so concerned
about the effect of higher beer tax-
es on the poor would show the
same concern when they price
their products.
As for gasoline, the truly poor
buy little of it. Anybody who can
afford the $1,000-a-year or so it
costs to insure a car in New Jer-
sey, Pennsylvania or California
won't be too devastated by paying
an extra dime a gallon for gas.
They might even end up driving
less - exactly the sort of behavior
a higher gasoline tax is supposed to
induce.
If Congress is really so con-
cerned about income distribution, it
could shelter families in lower in-
come brackets from the regressive
social security payroll tax, which
swallows 7.65% of every single dol-
lar they earn. That would do far
more to help the working class -
and to shift the tax burden to the
more prosperous - than holding
down the price of cigarettes.
Marc Levinson is editorial director
of The Journal of Commerce.
The New York Times
BUSH TERMED OPEN
ever the negotiators produce. The
House Republican whip, Newt Gingrich
SUNDAY,OCTOBER 21, 1990
of Georgia, said as much in a speech on
On Friday, the Senate passed a bi-
the House floor today, maintaining that
TO TAX RATE RISE
partisan bill, supported by Mr. Bush,
any new taxes would further damage
that would raise $146 billion, 42 percent
the economy.
of it from households with incomes
Although they had no direct word
ON UPPER INCOME
above $100,000. Tax rates would not be
from the talks, experts following the
increased under this measure, but the
negotiations from the outside sketched
Federal gasoline tax would be raised to
out a possible compromise that would
18.5 cents from the current 9 cents.
raise $160 billion over five years, giving
The conference committee working
the lawmakers about $15 billion extra
SUBJECT OF COMPROMISE
on the differences in the two versions
that they could use to reduce cuts in
hopes to finish by Sunday night. The
Medicare benefits or to pay for tax
full House and Senate must pass the
breaks that might be needed to win
votes for the final package.
President May Accept Taxes
compromise and President Bush must
sign it for it to become law.
These are the elements that such a
of 31%, Up From 28%, on
Under a measure enacted Friday,
compromise might include:
the Highest Earners
Continued on Page 28, Column 1
Deduction Limit. The Senate bill
would reduce itemized deductions by 5
percent of all adjusted gross income
Continued From Page 1
above $100,000. If the limit were raised
By DAVID E. ROSENBAUM
to 10 percent, that would generate $56.5
Special to The New York Times
the Government's authority to spend
billion over five years and would have
WASHINGTON, Oct. 20 - In a break
money will lapse at midnight Wednes-
the effect of making the tax rate of
dav.
those affected as high as 34.1 percent.
that could lead to a compromise in the
¡.Mr.- Brady said Mr. Bush would
This provision, probably acceptable
budget negotiations, Treasury Secre-
agree to a top tax rate of 31 percent, so
to the Bush Administration, is opposed
tary Nicholas F. Brady has told law-
long as the "bubble" was eliminated
by lawmakers from high-tax states like
makers that President Bush could ac-
from the tax code. The bubble is jargon
New York and California. Senator Dan-
cept an increase in the tax rate for the
for the anomaly in the current tax law
iel Patrick Moynihan, Democrat of
wealthy to 31 percent from 28 percent
New York, said he feared that it would
that forces families with taxable in-
now, staff assistants from both parties
be the first step toward further limita-
come from about $80,000 to $200,000 to
tions on deductions. But Mr. Moynihan
said today.
pay 33 percent on each additional dol-
is the only lawmaker from New York
No specific word seeped out of the
lan they earn.No taxpayers pay more
and California among the tax negotia-
private tax negotiations that went on
than 28 percent of their total income in
tors.
all day. But a variety of political advis-
ers to senior lawmakers and tax ex-
One effect of such a change would be
Surtax. The House bill would place a
perts who are familiar with the issues
to raise the taxes of those with incomes
10 percent surtax on incomes over $1
and the views of the participants said
of more than $200,000 a year and lower
million. If the income level were low-
the taxes somewhat of those with in-
that Mr. Bush's concession on a rate in-
ered to $500,000, it would raise $11.7 bil-
cames of $80,000 to $200,000.
lion over five years. The Administra-
crease brought the shape of a possible
Another effect would be to permit an
tion opposes the surtax, but few in Con-
compromise into sharper focus.
increase in the alternate minimum tax
gress have objected to it. It would
They said other aspects of the com-
rafe. to 23.25 percent from 21 percent.
mean, in effect, that the tax rate on the
promise would probably include a sur-
This is paid by rich people who have so
very rich would be as high as 44.1 per-
tax on the very rich, a limit on the item-
many deductions that their rate falls
cent.
ized deductions the wealthy could
below the minimum tax level. The rate
claim and a modest rise in the Federal
alternative minimum tax is
Gasoline Tax. The Senate bill would
gasoline tax.
determined by taking 75 percent of the
more than double the gasoline tax, now
top
9 cents a gallon, to 18.5 cents. That
Is a Smaller Rise Acceptable?
These changes would not raise much
steep a rise is unacceptable to House
Mr. Bush had previously said he
money, perhaps as little as $3 billion
Democrats, who say it would put too
would reject any budget deal that pro-
over five years. But they would give
much of a burden on the poor and mid-
vided for a top tax rate of 33 percent, a
Democrats the political benefit of hav-
dle class. But Mr. Rostenkowski has fa-
level that would be imposed under a
ing forced the President to eat crow on
vored a higher gasoline tax in the past
pledge not to raise tax rates.
budget bill passed by the House last
and might accept a 5-cent increase.
Moreover, other changes under con-
That would raise $21 billion over five
Tuesday. But he had been less explicit
sideration could actually push the top
years.
as to whether a smaller increase would
rate for the wealthy above 33 percent.
be acceptable.
Jehn H. Sununu, the White House
With President Bush's top policy ad-
chief of staff, and Richard G. Darman,
Payroll Tax. The Senate bill would
visers looking over their shoulders,
the Administration's budget director,
require state and local employees, who
Senators George J. Mitchell, Bob Dole
met this morning with Senator Dole of
are entitled to Medicare benefits, to
and Lloyd Bentsen, Representative
Kansas, the Republican leader, and
pay the Medicare payroll tax. Mr. Ros-
Senator Bob Packwood of Oregon, the
tenkowski is adamantly opposed, ap-
Dan Rostenkowski and a few other law-
top Republican on the Finance Com-
parently because of the effect on public
makers huddled today trying to work
miltlee, in Mr. Dole's office in the Capi-
employees in Chicago and Illinois. But
out the final tax deals that are the most
tel:
if his objection can be overcome, it
controversial aspects of a budget plan
Down the corridor, Senator Mitchell
would generate $5.2 billion over five
that is supposed to reduce the Federal
of Maine, the Democratic leader, and
years.
deficit by $40 billion in the 1991 fiscal
Senator Bentsen of Texas, the Demo-
year and $500 billion over five years.
cratic chairman of the Finance Com-
Corporate Interest Deduction. The
"It's suddenly starting to dawn on
mittee, were also plotting strategy.
Senate bill would not allow companies
people that they're not too far apart,
Several times, Mr. Dole and Mr.
to take a deduction for the interest they
that this may not be so hard after all,"
Packwood, with stacks of paper under
owe on back taxes. If the House accepts
said a staff assistant to one of the main
their "arms, left Mr. Darman and Mr.
this provision, it would raise $4.1 billion
Sununu behind and walked down the
over five years.
negotiators.
hallto confer with Mr. Mitchell and Mr.
Gas Guzzlers. The House bill would
Demands of Bush and Democrats
Bentsen.
double the sales tax on cars with low
The main difficulty the negotiators
Onone such trip, the two Republican
gasoline mileage. This could raise $500
face is to reconcile the political needs
Senators were hailed just outside the
million over five years.
of the President, who insists that tax
Senate chamber by Senator Bob Ker-
Many provisions of the House and
rey Democrat of Nebraska. He wanted
rates not be raised significantly, with
Senate bills are identical or so similar
to introduce them to his weekend com-
the demands of Democrats that the
that compromises should be easy to
panion, the actress Debra Winger. That
work out.
wealthy bear the brunt of deficit reduc-
may have been the only meeting today
These include higher taxes on alco-
tion.
in public.
holic beverages and tobacco products;
Last Tuesday, the House, voting
This afternoon Representative Ros-
a 10 percent luxury tax on expensive
along party lines, approved a Demo-
tenkowski, the Illinois Democrat who
cars, boats, planes, jewelry and furs;
cratic bill that would raise taxes by
heads the Ways and Means Committee
an increase in the amount of annual
$149 billion over the next five years, 68
and dominates the House negotiators,
wages subject to the Medicare payroll
percent of it from taxpayers with an-
walked over from his office across the
tax, and. an increase in the tax credit
nual incomes above $100,000. The cen-
street to meet in Mr. Mitchell's office.
for poor workers.
tral part of this bill would increase the
Altogether, these provisions total
The strong support of Mr. Rosten-
$69.7 billion in the House bill and $59.3
tax rate on the richest taxpayers to 33
kowski and his House Democratic col-
billion in the House bill. Even if lower
percent from 28 percent.
leagues is essential to any compro-
mise, since most Republicans in the
of the two versions is accepted on
House will probably vote against what-
many provisions, the total should come
to at least $58 billion in new taxes over
five years.
The New York Times
SUNDAY, OCTOBER 21, 1990
Distaste for public
Lost
relations and lack
of a Plan B lead to
For Words
his first domestic-
policy crisis.
of the silliest moments of his Presi-
dency: When he responded to report-
ers' questions about whether he was
George Bush's
ready to give up on a capital gains
tax cut by replying, as he jogged,
"Read my hips!"
On the political trail on Monday
and Tuesday, Mr. Bush talked tough
Communication
about vetoing a new continuing reso-
lution to keep the Government open
this weekend. "Enough is enough,"
he said in Dallas, shaking a fist at
Congress. "This Friday, time's up."
Breakdown
But when the Senate sent the tempo-
rary spending bill to the White House
on Friday, the President signed it.
Mitch Daniels, a political director
in the Reagan White House who re-
On the Budget
mains close to the Bush White
House, conceded that the Democrats
had outmaneuvered the White House
in creating the impression that the
President was trying to "help his
rich buddies" in the budget deal.
"The reaction against the so-
By MAUREEN DOWD
mass communications, is it smart to
called government-by-entertain-
WASHINGTON
resist the notion - as President
ment of the Reagan years is a
Bush does - that perception can
healthy one, but I do think you can
EORGE BUSH liked Ronald
G
Reagan. And he was so def-
quickly harden into reality?
pay a price if you so consciously
The public relations blackout at
disregard the formation of public
erential, shrinking into the
the White House during its first do-
opinion that you leave yourself na-
background in their meet-
ings, that he created the illusion that,
mestic policy crisis has thrown Mr.
ked to your enemies," Mr. Daniels
Bush's expediency into sharp relief.
said. "For good motives, the Bush
though an inch taller than Mr. Rea-
White House may have been too
gan, he was a much smaller man.
Unlike Mr. Reagan, Mr. Bush does
But Mr. Bush also had secret dis-
not have a set of core political con-
studiedly indifferent to aggressively
dain for Mr. Reagan's White House.
victions that he can fall back on
getting their story out."
Once the bipartisan deal fell apart,
He was appalled by the manner in
when he gets in trouble. As he wa-
the Democrats swiftly united to criti-
which the men around. the Gipper
vered on taxes and capital gains
cize the Administration for its un-
treated the President like a prop and
cuts, as he clung to the Democratic
leadership and kept House Republi-
willingness to raise the tax rate on
the White House like a set at M-G-M.
the wealthiest Americans. It was
He was repelled by the way the Rea-
cans at a distance, it was all too
apparent to furious conservatives,
only late in the week, after several
gan handlers, men like Michael Dea-
among others, that for this President
days of being called country-club
ver and his own good friend James
names, that the Administration
Baker, turned politics into an exfen-
nearly everything is negotiable.
sion of public relations, exercising
"He has lost control of the agenda
roused itself to argue that the index-
iron control over the theme of the
not only because he's inexpert at
ing. measure in the House Demo-
day, the definition of the story, the
imagery but because he has no pro-
crats' budget plan would have put
coordination of sound bites and pic-
gram and no mandate," said Sidney
more of a burden on the middle class
tures, the concentration on a few
Blumenthal, a writer for The New
than the Senate plan that Mr. Bush
simple goals in speeches.
Republic and author of "The Perma-
supported.
As President, Mr. Bush rejected
nent Campaign" and "Pledging Alle-
"Bush is too scattershot, bouncing
the public relations skills that Ron-
giance: The Last Campaign of the
around from subject to subject, los-
ald Reagan had used so effectively,
Cold War." "Bush may have con-
ing his voice because there's no co-
believing that it showed more integ-
tempt for the Reagan techniques he
herency to his positions," said Mi-
rity to run things in an ad hoc, defi-
believes are illusory, but even if he
chael McCurry, a Democratic strat-
antly unvarnished way.
tried to apply them, it would be hard
egist. "The bully pulpit is not an open
But the chaos and confusion
to hide his hollow core."
microphone. You have to target it
shrouding the White House during
President Bush's advisers explain
very carefully."
the budget debacle has raised ques-
his seeming confusion by saying that
The White House contempt for
tions in Republican circles about the
he has been striving to exercise a
clever communications is com-
efficacy of the Bush style: What
consensus style of leadership that
pounded by Mr. Bush's belief that he
good is integrity if your failure to
would bring both parties together to
does not need to bring the public
offer a coherent strategy and mes-
solve intractable problems. But a
along with him as he forms his criti-
sage hurts your ability to push your
few weeks before an election is prob-
cal policies. "He does not understand
agenda and rends your party? What
ably not the best time for a biparti-
the need to educate the public on big
good is it to-strip governing of public
san approach.
policy shifts," said a longtime Bush
relations if it allows your opponents
Because Mr. Bush and his budget
associate. "He thinks you should just
topaint you as a protector of the rich
strategists, Chief of Staff John Sunu-
spring it on them full-blown."
and a politician of convenience?
nu and Budget Director Richard
Mr. Bush has been faulted by his
In the era of the permanent cam-
Darman, had no Plan B ready in
own allies for not making an early
paign, is it wise to ignore the fact
case their budget summit agree-
and persuasive case to the public
that politics and governing are two
ment failed, the Administration
about why he now believes bringing
sides of the same coin? In the era of
looked anchorless. Mr. Bush's fail-
down the budget deficit is more im-
ure to explain his flip-flops on vari-
ous budget plans culminated in one
Continued from page 1
"Too scattershot,'
going his way and with the focus on exciting events
says a Democratic
abroad, it did not matter that President Bush seemed
determined to be the Mediocre Communicator. It did
strategist. "There's
not matter that he had a vaccuum where his middle
layer of White House expertise should have been, or
no coherency to
that the jobs involving lobbying, imagery, communi-
cation, speechwriting and political strategizing had
his positions.'
all been downgraded to near oblivion.
After President Bush and Mr. Sununu, there is a
sheer drop in the ability of anyone to talk for the
White House or act on Mr. Bush's behalf. When the
Republican party chief, Lee Atwater, became ill, Mr.
portant than keeping his no-new-tax-
Sununu assumed that he could take on political
es pledge. That would be tricky since
strategizing himself. But as it turned out, no one was
it would involve explaining why he
looking at the big picture.
was willing to ignore the mounting
deficit as a Vice President and a
Presidential candidate. Mr. Bush as-
The Plunge
sumed that eyeryone would'suddenly
None of this mattered until the budget deal col-
agree that the deficit was the more
lapsed and it became apparent to panicked Republi-
important thing and would go along
cans that the White House had no fallback strategy.
with an agreement that an elite
The crisis underscored the weaknesses in the Bush
group negotiated in secret.
White House: the lack of any unified voice, the dearth
of talented professionals making sure the White
His Own Party
House point of view was represented in articles, the
lack of any long-term or even short-term political
When it became clear that in doing
strategy, the inability of Mr. Bush to articulate a
so Mr. Bush had fundamentally mis-
persuasive case for his goals on television. All these
read the mood of Congress and his
problems combined to turn the President's stumble
own party, disgruntled Republicans
on the budget deal into a free-fall that set pundits
began comparing him unfavorably
talking about "the disintegration" of the Bush Presi-
with Ronald Reagan for the first
dency.
time since he took office.
White House officials are trying to figure out how
It is not that Republicans want to
they can put their acts back together. Republicans
return to the kind of manipulation
hope Mr. Bush can be persuaded that paying atten-
that existed in the Reagan White
tion to orchestrating strategy and showcasing the
House, with Mr. Reagan offering
agenda is not the same as selling the Presidency like
scripted banter and standing wher-
soap.
ever his aides laid the masking tape.
Roger Ailes, who was Mr. Bush's campaign media
They just think that Mr. Bush may
strategist, would certainly be available to help. Mr.
have overcorrected.
Ailes is a firm believer that governing well requires
"Using the art of persuasion to
a professional presentation to win the consent of the
move people to your position is the
governed.
noblest of political endeavors, not the
As he once put it: "The reality is that every
cheapest," said John Buckley, a Re-
successful politician in the history of the world had
publican consultant. "The Bush
people around to make them look good. Who do you
White House equates that with Mi-
think told Caesar to wear the purple cape? Who do
chael Deaver. They should equate it
you think told him he needed- six horses pulling a
with Benjamin Disraeli."
chariot instead of just four? Why do you think he rode
It was ironic, since Mr. Bush is far
through Rome denying he wanted to be king? Who do
more obsessed with polls and press
you think thought that up, him? C'mon!"
clippings than Mr. Reagan ever was,
that he was so rigorous in rebuffing
the very mechanisms that would
have helped protect his image and
promote his agenda when the inev-
itable first crisis hit.
But when the speechwriters had
their privileges to eat at the White
House mess taken away at the dawn
of the Bush Administration, it was an
omen that in this- Administration,
words were not going to count for as
much. The passion of a Peggy
Noonan was O.K. for a campaign, but
not for governing.
For the first 20 months, with luck
Continued on page 5
The New York Times
SUNDAYOCTOBER 21, 1990
- IN THE NATION Tom Wicker
Bush: No Mo Big Mo
N
0 matter what kind of Federal
average American."
budget finally comes out of the
Beginning with his abandonment of
unseemly scramble that has so
the no-new-taxes pledge, and continu-
demeaned Congress and the White
ing through the ups and downs of the
House in recent weeks, a long-suffer-
budget negotiations, Mr. Bush's per-
ing public is more likely to remember
formance also displeased the Repub-
the process than the product. Seldom,
lican right wing. The President failed
if ever, has Washington looked more
either to take a hard-right ideological
self-serving and less effective.
stand, or to provide tough leadership
There's plenty of blame and ridi-
for whatever position he did take at
cule to go around, but on first analy-
any given moment - which was
sis, the big loser - certainly of what
sometimes hard to tell without an
he once called Big Mo - seems to be
interpreter of Bushspeak.
George Bush. But the President has
A modern Republican President
lost a good deal more:than the politi-
can ill afford to offend his right wing,
.cal "momentum" he had earned
which dominates Republican national
from his adept mobilization of the
conventions and ideological debate
collective-security effort against Sad-
within the party, and is seldom will-
dam Hussein in the Middle East.
ing to lower its voice in the interests
Most obviously, Mr. Bush's overall
of party unity. At least in these pre-
approval rating dropped meteorical-
cincts, Mr. Bush in the budget scram-
,ly, from a nearly incredible 76 per-
ble might even have resurrected the
cent in August to 60 percent last
wimp's reputation that he and Willie
week, in the continuing New York
Horton, with the aid of bloodshed in
Times/CBS News Poll. That's still
Panama, had so nearly buried.
pretty good, but it was a new low for
Even Mr. Bush's respect for the
the Bush Presidency. Worse, on spe-
"vision thing," never much in evi-
cific questions, the President got even
dence, must have seemed to many
lower marks - 52 percent disap-
proved of his handling of the econ-
omy, 58 percent opposed his conduct
in the budget debacle and 46 percent
criticized his savings-and-loan "res-
The President
cae."
Less demonstrably but not less
is the big
plausibly, the President's bob-and-
weave performance in budget negoti-
loser in the
ations with the Democrats combined
disastrously with his earlier abandon-
budget fiasco.
ment of his "no new taxes" pledge.
Together, they undermined the public
belief that Republicans, and Mr. Bush
personally, were more responsible
onlookers less compelling than usual.
and reliable than Democrats in fiscal
A President presumably should have
matters.
a sense of where he wants to take the
The one point on which the Presi-
country, in economic as well as other
dent and his aides had seemed most
terms. Mr. Bush appeared, instead, to
nearly adamant, moreover, was their
have no central conviction for which
resistance to an income-tax increase
he was willing to fight (other than the
on the rich - even as the President
capital-gains tax break), and to be
kept insisting on a capital-gains tax
more concerned about escaping
break for the same rich. Mr. Bush
blame than asserting leadership. As
was willing, however, to accept a gas-
such caution often dictates, he man-
oline tax and "sin taxes" on whisky,
aged neither.
beer and cigarettes - all of which
The nation may be the winner in
bear down hardest on the poor and
one respect. Polls also show declining
middle class.
approval of the U.S. military pres-
Never mind that Democratic nego-
ence on the Saudi Arabian border.
tiators accepted these levies, too. It
Either from second thoughts about
was the President who was threaten-
Operation Desert Shield or declining
ing to veto anything else, and it was
confidence in Mr. Bush's general
the Democrats who were also de-
leadership, support for his handling
manding higher taxes on the wealthy
of the Middle East crisis already has
- even pushing a bill explicitly de-
plunged from 76 to 57 percent.
signed for that purpose through the
This sharp drop suggests that there
House. The net result may be that
would be little support for an actual
blue-collar and ethnic groups that
war in the desert, either to liberate
voted Republican in the 80's - Ron-
Kuwait or to bring down Saddam
ald Reagan's greatest gift to his par-
Hussein. For that reason, Mr. Bush
fy - will come to the predictable
may think long and hard, and more
conclusion of Ron Brown, the Demo-
than twice, about taking the nation
cratic national chairman: "The Re-
into such a war - probably without
publican Party favors the wealthy
allies in the region and with too little
and the Democratic Party favors the
enthusiasm at home.
The New York Times
SUNDAY,OCTOBER 21, 1990
The President: Read His Slips
dle of the budget crisis when he was
By James Reston
trying to get the support of the lead-
ers of the Democratic Party, he took
WASHINGTON
time off to campaign in North Caroli-
ost Presidents run
na for the re-election of Senator Jesse
M
into unavoidable
Helms, of all people. He was deter-
trouble by the time
mined at the start to "hit the ground
they reach mid-
running," forgetting that this is what
term, but George
John Kennedy did when he ran into
Bush is different.
the Bay of Pigs, and Lyndon Johnson
Many of his troubles were not only
did when he ran into Vietnam.
avoidable but predictable, and this
These are the "little things" that
has hurt him because they raise ques-
trouble even many of his most loyal
tions about his judgment.
supporters, and some of them are not
In a way, the criticism of his budget
so little. One of his major foreign
difficulties has been extreme if not
policy objectives was to persuade Mi-
unfair. Fights between Republicans
khail Gorbachev not to use military
and Democrats over how to raise and
force to achieve political objectives in
spend money are unavoidable. Put a
the Baltic states and Eastern Europe,
few hundred billion on the table and
but he invaded Panama against his
they usually pounce on it like pit bulls.
treaty commitments to the United
But the main thing is not that they
Nations in order to capture a two-bit
disagreed about how to cut it up, but
dictator, and didn't know what to do
that they agreed to reduce the deficit
with him when he caught him. Having
by half a trillion dollars in the next
defied the U.N. in Panama, he then
five years. This may be the single
relied on it in Iraq.
most important economic decision of
It wasn't enough for him to block-
the last two years.
ade Iraq and punish Saddam Hussein
George Bush is better at the big
things than the little things. His objec-
tive on the budget was admirable but
his handling of it was comical, and
when he's mocked as weak or indeci-
Some skull
sive, he's unpredictable. We saw this
in the campaign when he overcame
practice
his better qualities and followed John
Sununu, Lee Atwater and James Bak-
won't hurt.
er down the low road.
After he won, he promised to nomi-
nate the best advisers available and
told us we were living in an age of
as "another Hitler," but he insisted
terror when life was fragile, and then
on sending the biggest U.S. Army
picked Dan Quayle of Indiana for
since the last war into the desert, not
Vice President. This was clearly an
wanting to use it, not knowing how to
avoidable blunder, and an injustice to
get it out and facing once more the
both Mr. Quayle and the country,
taunts of the armchair warriors, who
which fortunately can be corrected
say he must not only restore the
next time if his party thinks about it.
independence of Kuwait but also get
The odd thing about George Bush is
rid of Saddam Hussein and the threat
that he plans his fumbles. He didn't
of Iraq's Army as well. This is a
have to promise not to raise taxes in a
dangerous situation for a President
future he could not possibly foresee,
dropping in the popularity polls and
or remind the country about his infa-
facing both a deficit crisis and a mid-
mous wisecrack, by telling the report-
term election.
ers during the budget mess "read my
In such a pickle, a little half-time
hips." They read his flips instead.
skull practice wouldn't hurt, but
He has done some very good things.
sometimes he's all bones and no skull,
No President since the last great war
and can't sit still and think. He's all
has made a greater effort than
over the lot - fighting for the rich,
George Bush to reach out to the oppo-
campaigning not only in North Caroli-
sition leaders for compromise and
na but in California, driving in from
understanding. He has been on televi-
Camp David to conserve gas and
sion almost as much as Dan Rather,
letting his helicopter return empty,
and has held more press conferences
jogging in the morning and flying to
in more strange places than any
the world series in Cincinnati at
President since the inception of that
night, always on the move, always
jumping-jack institution. He has
pleasant and even cheerful.
many other good qualities, but fore-
He is the first President in memory
sight isn't one of them.
who has not been able to get the votes
When he ordered 200,000 men into
of a majority of the members of his
the Afabian desert, he went on vaca-
own party for a major bill in the
tion and delivered his war communi-
Congress, but he has even tolerated
qués from the back of a golf cart, and
Newt Gingrich, the Republican whip
was genuinely surprised that most
in the House, who has not only defied
people didn't think this showed
the President on the budget but hasn't
"grace under pressure." In the mid-
even had the decency to resign.
He may come smiling through and
James Reston is former Washington
even be re-elected, but it will take him
correspondent and former executive
a while to recover from the planned
editor of The New York Times.
fumbles of the first half.
SUNDAY
OCTOBER 21, 1990
Los Angeles Times
The President Who Can't Lead Unless
He Hears the Roar of the Crowd
Style: The common element
running through the Bush
strategies of caution and
lieutenants and congressional leaders on a
New and Fair Deals and Richard M. Nixon
boldness is the avoidance of
deficit-reduction plan when the chief
after the Great Society. Today, Bush is
requirement for success was that he lead
essentially a centrist Republican who
difficult choices.
by making clear what he wanted. At that
desires to manage government well after
point, Bush. backed off from leadership,
Ronald Reagan's anti-government and
By Erwin C. Hargrove
because difficult choices were required.
anti-communist activism of the '80s.
Caution and boldness can be appropri-
This kind of government relies heavily
NASHVILLE, TENN.
ate styles of leadership, depending on the
on career professionals who understand
G
eorge Bush's style as President is
circumstances. The problem with Bush's
political and bureaucratic realities at
puzzling. He is cautious, seeks
style is that caution may turn to muddle,
home and abroad. Bush has surrounded
consensus, reveals few strong be-
boldness to rashness.
himself with such people. His inner
liefs and puts his faith in the customary
Perhaps this is because he is not
circle-James A. Baker III, Nicholas F.
policy-making procedures to produce
completely sure of himself. He falters
Brady, Brent Scowcroft and Dick Che-
good results. This style can unify. It can
or-to avoid uncertainty-overreacts. It
ney-is composed of seasoned, experi-
also divide-especially if the President is
is not difficult to find this oscillating
enced men who are strong on operations
unclear about his goals or turns over
pattern in Bush's job history.
and weak on ideology. The only exception
leadership responsibility to the policy-
In all the executive posts he has
is White House Chief of Staff John H.
making apparatus in the hope that it will
held-U.S. ambassador to the United
Sununu.
produce a decision that all can accept. But
Nations, Republican National Committee
But even a President of Consolidation
the President is also capable of bold,
chairman, ambassador to China, director
must have some beliefs, provide some
decisive action that may surprise his
of Central Intelligence, vice president-
sense of direction. This was certainly true
advisers and confound his opponents.
Bush largely stayed above disputes. He
of Eisenhower and Nixon. Bush appears
How can we reconcile these seemingly
was more the "social leader" than the
to govern in a more ad-hoc style, in which
opposite strands of leadership style? Or-
"task leader." When at the CIA, for
he and his lieutenants respond to events,
more aptly-how does President Bush do
example, Bush created a Bteam of outside
often quite intelligently, but with little
it?
advisers in response to conservative criti-
reference to overall visions or plans.
Both styles are rooted in Bush's need
cisms that the CIA was minimizing Soviet
This kind of leadership is adequate if
for approval-the central theme of his
threats. As for himself, he never took a
events do not overwhelm the President
political career. Bush wants to be a
stand. Instead, Bush was content to
and his advisers. But precisely because he
consensus leader, whether he is presiding
manage appearances.
does not provide much substantive lead-
over negotiations or leading a charge. In
As President, Bush has been equally
ership and relies on process, Bush is more
seeking consensus, the President fulfills
sensitive to political pressure. He is a
likely to be overtaken by events, like
his campaign wish "to be on everybody's
cautious poll watcher when it comes to
recession. As a result, the government
side."
domestic policy, trying to avoid giving
will appear rudderless in a time of trouble.
But such caution-which approaches
offense. For example, when Congress was
Bush has neither the sense of purpose
timidity at times-leads to charges that
torturing itself about whether to rescind
that characterized prominent Re-
he is a "wimp." And in response, the
new charges that Medicare recipients
publican public executives such as
President is combative. Thus he "kicked
were to receive as part of a long-term
Elliot L. Richardson, James R.
ass" during the vice-presidential debate
care policy, Bush simply withdrew from
Schlesinger and George P. Shultz.
with Geraldine Ferraro in 1984, shouted
the fray, saying it was up to Congress to
Nor does he have the political skill
down Dan Rather on the evening news
decide.
and experience of Howard H. Bak-
early in the 1988 presidential primary
But when he joins the fray, the results
er Jr. or Bob Dole in creating
campaign, got even with Panama's Gen.
can produce political turmoil. Earlier this
coalitions. He has presided over
Manuel Noriega in his first year in office
month, he seemingly could not make up
agencies, not run them, and it
and now vows to bring down Iraq's
his mind on the issue of taxing the
shows in his presidency. But if the
Saddam Hussein for invading Kuwait.
wealthy in exchange for a capital-gains-
the born-again "wimp" charges
While taking these bold actions, he seeks
tax break. Back and forth he went, with
stick, Bush may indulge himself in
approval. Indeed, they are calculated to
Congress increasingly mystified at every
some bold action to redeem his
rally support for his leadership.
twist and turn. Washington was filled
reputation.
The common element running through
with charges that Bush was "Carterizing"
Most successful presidential pol-
the Bush strategies of caution and of
himself by failing to lead.
iticians have harnessed their needs
boldness is the avoidance of difficult
It is difficult for Congress to act
for attention and respect, and their
choices. In one case, he relies on process;
coherently and boldly on money matters
desire to please, to policy objec-
in the other, he rallies the troops. Neither
unless the President is also engaged. If he
tives. This is what is missing in
strategy is a fully developed form of
withdraws, all parties run for cover. Bush
George Bush. It is not enough to
political leadership, in which difficult
has been something less than an enthusi-
win approval just for having gotten
choices are made and coalitions con-
astic leader of the deficit-reduction effort,
to the top of the greasy pole. The
structed.
in part because he has been unwilling to
President will have to overcome
Bush, then, can be-and is-very good
alienate anyone. The President's boldness
his overriding need for approval if
at crisis management when he can rally
in the '88 campaign that he would not
he is to be an effective leader.
support against an enemy like Iraq's
raise taxes, challenging people to "read
Hussein. The President was not SO good,
my lips," helps to explain his timidity
however, at fashioning a coalition of his
now. He has been forced by economic
facts to backtrack on his pledge but does
not wish to advertise it. The President
would take cover behind a consensus-if
one would only emerge.
Still, Bush is ideally suited-and posi-
tioned-to be an effective President of
Consolidation. We have had such presi-
dencies after periods of government ac-
tivism-Dwight D. Eisenhower after the
The Washington Post
SUNDAY. OCTOBER 21. 1990
Republicans Offer New Tax Proposal
That Would Raise Rates on Wealthiest
The tax talks took place as law-
By Steven Mufson
tiators were considering a threshold
Washington Post Staff Writer
makers tried to do in days what
of $300,000, which would generate
they ordinarily would do in weeks of
enough revenue to cut the Senate's
Bush administration officials and
hearings, debate and negotiation:
proposed reductions in projected
congressional Republicans yester-
fashion a compromise budget ac-
Medicare spending and trim its pro-
day offered to raise the income tax
ceptable to Congress and the White
posed increase in the gasoline tax,
rate on the wealthiest Americans as
House.
negotiators said.
part of a tax package without de-
"You had five months of agony
An administration aide said yes-
manding a cut in the capital gains
and tradeoffs," said House Budget
terday that erasing the anomoly in
rate in return, according to admin-
Committee Chairman Leon E.
income tax rates, which now are 28
istration officials and a GOP con-
Panetta (D-Calif.) of the prolonged
percent for the wealthiest earners
gressional leader:
negotiations that took place over
but 33 percent for upper-middle-in-
The move seemed designed to
the summer between the White
come earners, would cut taxes for 5
defuse Democratic charges, repeat-
House and Congress. Now, Con-
million people, raise taxes for
ed throughout the months-long bud-
gress is trying to duplicate the bud-
700,000 and generate about $7 bil-
get negotiations, that the Repub-
get-summit talks in a few days.
lion in revenue.
licans are the party of the rich.
Darman predicted that the final
Some Democrats said that if the
"There is some feeling that if we
don't flatten the bubble, it will be
budget agreement would resemble
talks fail to get rid of the so-called
the one worked out by the budget-
income tax "bubble," it will serve as
right back again next year," said
Senate Minority Leader Robert J.
summit bargainers at the end of
a useful political tool. "That will
September. "Many members said
take us right into '92," said Rep.
Dole (R-Kan.), referring to the
Barney Frank (D-Mass.). A House
anomaly that creates a top marginal
they didn't want to be dictated to by
Democratic strategist said, "The
tax rate of 33 percent for upper-
their leaders," Darman said last
bubble's our best friend right now."
middle-income earners and 28 per-
week. "They may come right back
Administration officials were not
cent for the richest Americans.
to something similar to what their
happy about the proposed surtax on
Talks adjourned until today after
leaders did."
wealthy taxpayers. "In effect, it's a
Democrats offered a counterpro-
In many areas, including agricul-
fourth rate," said one administra-
posal, details of which were not im-
ture, veterans' affairs and the bud-
tion aide. But Democrats like the
mediately clear.
get process, Senate and House bar-
measure because it places the ad-
The Republican proposal would
gainers ironed out differences be-
ministration in the awkward posi-
have created a uniform top income
tween the two chambers and adopt-
tion of standing up for millionaires.
tax rate of 31 percent, which would
ed variations of measures agreed to
Administration officials entered
lower the 33 percent rate on upper-
by the summit.
the negotiations divided over how
middle-income earners and raise
Some Bush administration offi-
difficult it would be to forge an ac-
the 28 percent rate for Americans
cials said they took this as evidence
ceptable compromise. Darman pre-
with the highest incomes.
the summit served a purpose de-
dicted early in the week that the
The GOP proposal also would
spite the Oct. 5 defeat of the agree-
package would resemble the agree-
have phased in limits on deductions,
ment by the House. Brady said the
ment reached in the budget summit
which would have begun to affect
summit "did something that Con-
talks held in September. "This thing
people with incomes of $85,000 a
gress couldn't do for itself."
lost by only 39 votes. All you've got
year and would have reduced de-
But congressional leaders inter-
to do is bring back some of those
ductions most for people with in-
preted the progress in the past days
votes," he said.
comes of more than $1 million. In
as a vindication of the legislative
Meanwhile, work continued on
addition, the current 9-cents-a-gal-
process. "In these final days of this
other provisions of the massive def-
lon federal gasoline tax would have
grueling year, members of Con-
icit-cutting bill. Bargainers reached
increased by less than the 9½ cents
gress from both parties have quietly
agreement over a child-care pack-
proposed in a plan passed last week
repudiated the charge that we can-
age by making explicit how states
by the Senate.
not do our work," said Senate Bud-
could use federal grants under the
Much of what concerned con-
get Committee Chairman Jim Sass-
program. House Education and La-
gressional leaders involved in the
er (D-Tenn.).
bor Committee Chairman Augustus
talks was whether or not a new
In the crucial area of taxes, con-
F. Hawkins (D-Calif.) wanted to
package could win both congres-
gressional bargainers also discussed
make sure money went for the care
sional and administration approval.
a variation of the House plan to
of children whose parents both
"I think the people in that room
work outside the home.
place a 10 percent surtax on the
could have settled it in three or four
income of Americans who earn $1
Staff writers John E. Yang and Don
hours," said House Ways and Means
million or more a year. The nego-
Phillips contributed to this report.
Committee Chairman Dan Ros-
tenkowski (D-III.) after emerging
last night from talks among con-
gressional leaders. But he said that
"there are things we can't pass in
the House and there are things we
can't pass in the Senate
We
can't deliver the way we used to."
Although they did not meet face
to face with Democrats, White
House budget director Richard G.
Darman, Chief of Staff John H.
Sununu and Treasury Secretary
Nicholas F. Brady huddled at the
Capitoi with Republican leaders
yesterday.
The Washington Post
Austerity
SUNDAY. OCTOBER 21. 1990
Also Brings
some of the old meat-and-potatoes pro-
The resulting appropriations bills contain
grams: a $554 million, 27 percent increase
more money for space. But there is also more
A Windfall
in the Headstart preschool program; $1
for social programs that slipped far down the
billion more than last year for education
priority ladder during the Reagan era.
programs for the disadvantaged; a commit-
Few have come away fully satisfied. Lob-
ment to build 10,000 public housing units;
byists say there is still far too little money
Appropriators Guard
and funding for two new Department of
for education, health, environmental
Veterans Affairs nursing homes.
cleanup, consumer protection and alterna-
'Discretionary' Funds
The relatively flush position of the Appro-
tive energy. Money for the atom-smashing
priations committees in the final days of the
Superconducting Super Collider in Texas
session results from the tenacity and power
was cut at the last minute by $75 million
of a few influential members during last sum-
By Dan Morgan
and the allocation for the space station was
mer's budget negotiations, and the relentless
Washington Post Staff Writer
reduced sharply. The space station cuts
spending pressures on both parties.
drew a protest from Sen. Jake Garn (R-
At times during last week's
Senate Appropriations Committee Chair-
Utah), who has flown on a shuttle mission.
House-Senate conference on the
man Robert C. Byrd (D-W.Va.) recently
But the $243 million for the super collider
1991 transportation appropria-
described nonmilitary domestic spending as
tions bill it seemed as if someone
the "little runt pig" of the budget that has
See SPEND, A7, Col. 1
had forgotten to tell members
been "on the cutting table for 10 years."
there was a budget crisis.
The $182.7 billion available in 1991 rep-
SPEND, From A6
During a session chaired by
resents only about 13 percent of the bud-
Sen. Frank R. Lautenberg (D-
get, compared with nearly 25 percent in the
is still more than was provided in
N.J.), the bipartisan conferees ap-
late 1970s. Its share of gross national prod-
1990, and NASA's budget was in-
proved a $2.5 billion, 18.8 percent
uct has slipped, too, from around 6 percent
creased by 13 percent. "It's not as if
increase in federal aid to states for
to close to 4 percent.
we're gouging them," said Sen. Bar-
highway and bridge construction;
This is the "discretionary" pool of money.
bara A. Mikulski (D-Md.).
channeled $125 million to the
that Congress has to finance the nondefense
electrification of the Northeast
operations of government and most federal
Moreover, the appropriations
rail corridor between New Haven
system adjusts, if slowly. For exam-
support for science, health, space, environ-
and Boston; and directed the De-
ple, the new batch of appropriations
mental protection, waste cleanup, health, ed-
partment of Transportation to
bills contains more than $2 billion
ucation, law enforcement and infrastructure.
spend more than $30 million to
for research and treatment of
In last summer's deficit-reduction nego-
study magnetic levitation trains
tiations, Byrd reportedly fought relentlessly
AIDS, not even recognized as a dis-
and "intelligent" cars.
to prevent a further raid on this domestic
ease in 1980. Late Friday, confer-
They threw in $1 million to de-
pot. In private and public, he gave the same
ees added another $67 million for
velop a "national transportation
screening, early intervention and
policy" on bicycling and walking,
speech: "It's time we started spending some
noting the potential in energy sav-
money on this country."
grants to cities hardest hit by the
That view is reflected in the deal that
AIDS epidemic.
ings and reduced traffic conges-
emerged from the summit and that is being
Yet the appropriations process is
tion. "You have to leave room for
the new, with some uncertainty of
revised on Capitol Hill. The deficit will be
messy and this year has once again
where it leads you," said Rep.
reduced by $500 billion over the next five
raised questions about the way the
Martin Olav Sabo (D-Minn.), a
years, through tax increases and cuts in au-
U.S. government sets priorities. The
sponsor of the bike proposal.
tomatic benefit programs. But none of the
battle over the funding of the AIDS
Such scenes are part of a little-
cuts will come from the pool of "discretion-
care bill signed by Bush in August
noticed story in this month's budget
ary" domestic funds controlled by Byrd and
has pitted AIDS sufferers on the one
debacle. While defense spending
his House counterpart, Appropriations Com-
side against cancer patients, the el-
and automatic benefits such as
mittee Chairman Jamie L. Whitten (D-Miss.).
derly and the education community
Medicare and farm programs were
This pool of money will grow at the in-
on the other. All are financed by the
slashed by the deficit-reduction
flation rate until fiscal 1994, when the ap-
same appropriations bill.
agreement between the White
propriators will be free to increase it fur-
As old programs battle new ones,
See SPEND, A6, Col. 1
ther by "raiding" defense accounts under
pork-barrel projects claim their
their control.
share. Language in one bill, pro-
The $182.7 billion available for 1991 al-
moted by Sen. Ted Stevens (R-
SPEND, From A1
ready reflects a small "peace dividend," be-
%
Alaska), could lay the groundwork
cause the summiteers allowed the appro-
for the University of Alaska to ac-
House and Congress, the Appropriations com
priators to reallocate the defense cuts to
quire a computer to study ways to
mittees came away with a small windfall.
the domestic side. The domestic pot for
capture energy from the aurora
NW Predictably, a healthy chunk of it is going
1991 is about 10 percent bigger than the
borealis, or northern lights.
to home-state projects of influential com-
$166 billion-in 1990, though inflation eats
Problems such as homelessness
mittee members. But the fattened appro-
away some of the increase, as does a special
and drugs, funded to the hilt when
priations coffers have also allowed the com-
$7.5 billion expenditure to renew expiring
they were visible, fashionable is-
"inittees to address new issues and start re-
leases on subsidized federal housing.
sues, continue to incur large obli-
building old, proven programs that fell on
The package before Congress also pro-
gations on appropriations accounts
lean times in the Reagan years.
tects the Appropriations committees from
even though they have faded from
There is money to study global warming
having to absorb the costs of Operation
headlines.
"and the health impact of high power trans-
Desert Shield in the Persian Gulf. It will be
mission lines on humans. The budget of the
paid for in a special appropriation next year.
Last week, House-Senate confer-
Environmental Protection Agency is to
Neither the White House nor congres-
ees used the purse to address the
grow by 19 percent, and the space program
sional Republicans had much heart for fur-
latest Topic A. They approved
ther cuts in domestic accounts, sources
$159.5 million for investigating and
was restructured to provide more money
for probes to monitor the Earth's ecology.
prosecuting savings and loan fraud,
said. The White House wants to channel
more than triple the White House
The 13 major national laboratories that
more resources to the National Aeronautics
request.
are the core of American scientific prowess
and Space Administration, whose facilities
In other areas, good causes seem
rgot increases of as much as 18 percent. De-
are concentrated in Sun Belt states that
to require political clout to move
epite talk of austerity, the appropriators
could be important to President Bush's
Found money to continue funding the exotic
along. Last week, for example, Sen-
and the futuristic, from the Search for Ex-
1992 reélection. Meanwhile, most House
ate conferees succeeded in boosting
traterrestrial Intelligence to the CRAF-Cas-
and Senate Republicans agree with Dem-
funding of the 1989 oil spill preven-
sini probes that will meet un with a comet
ocrats that government needs to invest
tion and response act from the
and visit Saturn later in the decade.
more in the nation's infrastructure, educa-
$11.2 million sought by the White
There will be much more money for
tion and industrial competitiveness.
House to $52.2 million.
The Washington Post
SUNDAY. OCTOBER 21. 1990
explain why appropriations bills
have such broad constituencies.
Others suggest that the small
windfall allowed appropriators to
avoid tough choices while attempting
to satisfy every constituency and
The key was the New Jersey-
loading up on pork. An aide noted
New York team of Sens. Lauten-
that the new VA nursing homes and
berg and Alfonse M. D'Amato (R-
public housing construction will
N.Y.). Lautenberg is chairman and
mean rising operating costs later.
D'Amato is ranking Republican on
"We're all wanting to add the new
the Appropriations transportation
[projects and programs]," said Sen.
subcommittee. They assured that
Pete V. Domenici (N.M.), ranking
the extra money was approved.
Republican on the Senate Budget
Among other things it will be used
Committee. "We could decide there
to establish a new Atlantic Coast
are some programs that are worth
"strike team" in the Coast Guard to
more than others."
deal with oil spills in New York/-
But Domenici has been no more
New Jersey harbors and the Del-
willing than other senators to allow
aware River.
cuts in programs affecting his state.
Also included in the transporta-
As a member of several Appropri-
tion bill was $3 million for a New
ations subcommittees, he helped
York-New Jersey consortium that is
protect research funds for Los Ala-
developing electronic toll collection
mos National Laboratory and sup-
systems and signs that can vary
ported a $211.6 million allocation to
their messages to drivers. To some,
improve U.S. facilities along the
those are examples of a marriage of
U.S.-Mexican border, including sev-
good politics and good policy, and
eral in New Mexico.
The Washington Post
SUNDAY. OCTOBER 21. 1990
Shutdown Cost $1.6 Million, GAO Study Finds
Closing Government for Columbus Day Weekend Increased Expenses,
Lowered Revenue
By Dana Priest
Washington Post Staff Writer
The federal government is $1.6
on whether the potential for disrup-
The inspector general's office at
million deeper in the hole than it
tion is sufficient to elicit that coop-
the Department of Housing and Ur-
would have been had it not closed
eration.
ban Development was forced to re-
down for the three-day Columbus
The extent a shutdown disrupts
schedule a trial in Michigan because
Day weekend because of the budget
the federal government, federal
a special agent was unavailable to
impasse, according to a General
workers and the public is not easy
testify.
Accounting Office study released
to assess. Part of the calculation is
The State Department told the
yesterday.
anecdotal: employees who spend
GAO that the department's "senior
Most of the $1.6 million loss was
time worrying about personal fi-
level management is besieged by
attributable to uncollected revenue
nances rather than doing their jobs
the endless number of scenarios
and the costs of planning and car-
or who say their morale has taken a
possible" and that "losses of produc-
rying out the shutdown, according
bruising; Americans who have be-
tivity are widespread."
to the study.
come incensed that the nation's
The Government Printing Office
The 14 executive departments
parks, including the Washington
did not print the Federal Register.
and the Environmental Protection
Monument, were closed Columbus
The Library of Congress prohib-
Agency, General Services Admin-
Day weekend because Congress
ited the 1,000 to 1,500 researchers
istration, NASA and the Office of
and the president could not bridge
Personnel Management also told
their differences.
who normally use the library from
doing so.
GAO it would cost $398 million to
The GAO study offers a more
shut down the government for
concrete assessment of the dam-
three days during the workweek.
age.
"Playing chicken" by threatening
Of the $1.6 million the govern-
to shut down the government costs
ment lost over the three-day week-
"government employees and the
end, about $926,000 was in admin-
community they live in," said Rep.
istrative costs-planning for a shut-
Gerry Sikorski (D-Minn.), who re-
down and keeping employees no-
quested the GAO study. "It cost the
tified of developments. These are
president over 10 points in the polls
expenses departments otherwise
and it cost the American taxpayers
would not have incurred.
money."
The Energy Department calcu-
Experts across the political spec-
lated it spent $395,000 on admin-
trum agree that the U.S. Treasury
istrative costs. The Labor Depart-
reaps no financial benefit when the
ment reported its administrative
government shuts down, as it must
costs were $300,697.
do if there is no spending author-
The Interior Department, which
ity-either in the form of a tempo-
runs the national parks, the Smith-
rary continuing resolution, such as
sonian Institution and the monu-
the one in effect until 12:01 a.m.
ments on the Mall, including the
Thursday, or standard appropria-
Washington Monument, estimated
tions bills.
its net loss at $315,000.
Even so, shutdowns, including
Some departments and agencies
the one earlier this month, have not
offered incomplete explanations for
really closed down the government.
the shutdown costs. The Defense
At most, 500,000 of 2.4 million ci-
Department did not provide any
vilian federal employees have been
cost information, citing national se-
sent home during previous shut-
curity considerations.
downs. The rest were deemed "es-
sential" by their departments and
Other departments, asked to ex-
agencies.
plain any negative impact from the
Since the fiscal year began Oct.
shutdown, gave the following exam-
1, Congress has passed and Pres-
ples:
ident Bush has signed three "con-
The Department of Education
tinuing resolutions," stopgap fund-
said there were delays in the prep-
ing measures giving the govern-
aration of year-end financial re-
ment authority to spend and borrow
ports.
money for a limited period to keep
The EPA noted that some work
the government running until there
in an emissions-testing lab in Ann
is a budget agreement.
Arbor, Mich., was delayed.
In theory, the threat of a shut-
down is supposed to be enough to
force Congress, now Democratic-
controlled, and the administration,
now Republican, to focus on the
budget problem and reach an agree-
ment. Experts disagree, however,
THE SUN
SUNDAY, OCTOBER 21, 1990
years. affecting perhaps 65,000 peo-
Compromise
ple, according to the Internal Reve-
nue Service. A 20 percent surtax at
the $200,000 level, on the other
hand, would hit about 500,000 cou-
considered
ples and individuals.
Other sources said that no such
proposal had been put on the table
on tax rise
and that the Democrats had not at-
tempted to broaden the 10 percent
millionaires' surtax to a larger group
of wage-earners.
The back-and-forth over the is-
Republicans suggest
sue, however. did suggest other
areas where the two sides might be
top bracket of 31%
able to find a middle ground. The
Senate bill. for example. proposed a
9.5-cent increase in the federal gaso-
line and diesel fuel tax, bringing
By Peter Osterlund
nearly $43 billion into federal coffers
Washington Bureau of The Sun
over five years, while the House bill
rejected any such increase.
WASHINGTON - Key Republican budget ne-
Sources close to the talks said
gotiators, aiming yesterday to craft a final, com-
that House negotiators had accepted
promise budget package to put before lawmakers
a gas tax increased in theory and
this week, seriously considered higher taxes for
that the only question was the
the top income bracket.
amount by which the levy would be
The possibility of such a tax compromise sug-
raised.
gested that the end of the year's tortuous budget
Similarly. the Senate would limit
stalemate might at last be at hand. Sources close
the itemized deductions of people
to yesterday's closed-door negotiations said that
with incomes over $100,000 a year.
the outlines of a deal had already begun to emerge.
permitting individuals in that catego-
"I hope they'll be able to reach a conclusion by
ry to write off only 95 percent of their
the end of the weekend." House Speaker Thomas
deductions against any part of in-
S. Foley. D-Wash., told reporters. "I've generally
come that exceeds $100,000. The
heard that they've been doing well."
limit would not affect deductions for
Last week, the House and Senate each adopted
medical expenses. investment inter-
sharply different versions of a deficit-reduction
est or casualty losses.
package that would raise taxes and trim Medicare,
The House bill does not include
agriculture and other benefit programs. Both
such a provision, and Democratic
would serve as the linchpin of a five-year plan to
leaders are reluctant to include it in
cut the federal deficit by $500 billion.
the final. compromise bill because
The House plan. written by the majority Demo-
they fear allenating voters in high-
crats, would saddle the well-to-do with more of the
tax states such as New York that,
costs of deficit reduction than the plan endorsed
traditionally, have been Democratic
by a slim bipartisan majority in the Senate, which
strongholds.
would spread the burden more evenly between the
The Senate's proposal, however,
middle and upper classes.
would raise $29.5 billion over five
The House bill would boost the top income tax
years, and, once again. Democratic
rate from 28 percent to 33 percent. impose a 10
leaders in the House appear to have
percent surtax on taxable incomes over S1 million
accepted the idea that some kind of
and provide a capital gains tax break targeted to
limitation will have to be included in
benefit especially the middle class. It also would
the final bill. The only question,
raise from 21 percent to 25 percent the alternative
sources say, is at what level the ulti-
minimum tax. designed to ensure that higher-in-
mate limit will be set.
come people pay some tax regardless of how many
Tax negotiators met yesterday
legitimate deductions they claim.
with White House Budget Director
President Bush has said that he would veto the
Richard G. Darman and Chief of
House bill because of its proposed rate changes,
Staff John H. Sununu. A source
which. in total, would increase federal revenues
close to the negotiations said that
by nearly $42 billion over five years. But yester-
they were "proceeding smoothly
day. Senate Minority Leader Bob Dole. R-Kan.,
towards what looks like a conclu-
and Sen. Bob Packwood, R-Ore., suggested that
sion."
Democrats agree to increase the top rate to 31
But, the source continued, "It will
percent and drop the tax break on
be easier to wrap these negotiations
capital gains - the profits on invest-
up than It will be to sell the final
ments such as stocks and real es-
product to the floor."
tate.
Indeed, rank-and-file members of
Reports from the negotiations
Congress will be asked to approve
conflicted over the issue of what
the deal by midnight Wednesday, at
Democrats had proposed in return.
which point the government is
In lieu of the income tax rate in-
scheduled to run out of money again.
crease, some Democratic sources
That will be just two weeks before
said they were pushing for a 20 per-
Election Day.
cent surtax, proposing to drop the
The House already has rejected
Income threshold at which it would
one compromise negotiated between
apply to $200,000. Their hope was
the White House and congressional
to persuade Republicans ultimately
leaders, largely because of provisions
to accept a 20 percent surtax at
that would have increased gasoline
$300,000.
taxes and raised the out-of-pocket
The millionaires' tax would raise
costs of the Medicare program.
an estimated $7.6 billion over five
It appears virtually certain that
some variant of those same two pro-
visions will be included in the new
compromise.
Come tax time, 'soaking the rich'
is difficult: Just who are they?
By Dan Fesperman
Washington Bureau of The Sun
WASHINGTON - If a tax-hungry Congress
ever decides to soak the rich in Lizard Lick,
"Let's go and get It from those
with her assessment. They voted
N.C., lots of people everywhere will be in trou-
who've got It," she said. "I think that
down Ms. Mikulski's tax-the-
ble come tax time.
If you have the opportunity in this
$200,000-and-over amendment,
"If you live in Lizard Lick, you're rich If you
country to make over $200,000,
55-45.
make $25,000." surmises semiofficial mayor
then you ought to accept the respon-
Perhaps next time around Ms. Mi-
Charles "Woody" Wood, who is something of a
sibility to make sure that this gov-
kulski can get them to look at hous-
town tycoon with his wrecker service, welding
ernment works."
ing prices in Lizard Lick, where Mr.
shop and "the world's smallest TV studio" in
Jean Adamski, a waitress at the
Wood said one can get a comfortable
cramped. low-priced Bridge Restau-
three-bedroom home on a pleasant
his van, where he produces a one-hour weekly
rant in downtown Baltimore, would
one-acre lot for about $75,000. If you
show for local access cable in the nearby me-
agree with that definition, and then
really want to show off, you can get a
tropolis of Smithfield.
some.
huge place for maybe $100,000 to
Mr. Wood's definition of wealth, If perhaps
"When you have $50,000 in the
$125,000.
a bit whimsical, points to the question at the
bank, I assume that's being rich,"
The more Mr. Wood talks about
center of debate right now among lawmakers
she said. What about annual in-
the question of who's rich and who
and anyone who pays taxes: How rich is rich?
come? "In this economy," she said,
isn't, the more philosophical he gets.
The answer may well determine whose tax-
"you'd have to make at least
For him, he concludes, wealth
es get raised.
$100,000."
means staying happy and healthy.
To the Internal Revenue Service, the an-
Her opinion and a sampling of
But if you're just going to consider
swer is a cut-and-dried matter of tax brackets,
others from people with varying in-
income, he said, then the rich are
which say that, for the 1990 tax year. the rich
comes illustrate a truism about the
those people "rich enough to be able
way people decide who is rich:
to hire enough lawyers to keep from
are individuals making more than $97,620.
It is almost always whoever
and married couples and families making
paying any taxes."
makes more money than they do.
more than $162,770.
But the most telling answer to the
But not so fast. Those numbers can be de-
Tell a family living in Manhattan
question "who is rich?" may have
that $200,000 a year is rich, for ex-
ceiving when used in arguments because they
come from the Gucci store in Beverly
represent income after deductions and person-
ample, and they might disagree. "Of
Hills, Calif., on fashionable Rodeo
course, in a way it is rich, because
al exemptions.
Drive. (Attention, K mart shoppers:
A home-owning Baltimore family of four
it's definitely at the upper end of the
That's pronounced "Roe-DAY-oh.")
income scale," said a Manhattan real
with an Income of $200,000, for instance,
This is a place that deals all day long
would get $8,200 in personal exemptions this
estate agent. "But in terms of living
with rich people.
year, and might typically deduct $12,500 for
well, by the time you buy a home
A store employee named Stuart
and send two children to private
state income taxes, $10,500 for home mort-
Lighton fielded our question. "Let me
school, It probably doesn't feel that
refer you to someone else," he
gage Interest payments. $6,000 for real estate
way."
sniffed. "Or you might try Louis Vult-
taxes and $800 for charitable contributions
She should know. She's handling
ton." (That's another highbrow shop
and other deductions.
the sale of a five-room, two-bedroom
down the drive). He then gave us the
Those totals bring the family's taxable in-
apartment with a terrace in a "full
phone number for a Gucci public re-
come down to $162,000, meaning that this
service building." Asking price:
lations woman in New York, who de-
$200,000-a-year household would barely es-
$875,000. And that's in the midst of
cided she didn't want to answer the
cape being labeled rich by the government's
a horrendous price slump in the
question.
only statistical definition.
Manhattan real estate market.
Which only goes to show: People
It is the over-$200,000 families, then. that
The majority of the members of
who know what rich really is don't
he House of Representatives proposes to
the Senate probably would agree
want to talk about it.
"soak" by raising the tax rate for
their income over that amount to 33
percent. The Senate would leave the
tax rate on that income at 28 per-
cent, although it would reduce by 5
percent the amount of deductions
that a family can take on any of its
Income that exceeds $100,000.
For most of the wealthiest taxpay-
ers, the House plan would produce a
bigger tax increase than the Senate
plan.
So, then, are families making
above $200,000 per year rich?
Maryland Sen. Barbara A. Mikul-
ski thinks so.
On Thursday she proposed an
amendment to the Senate bill that
would have raised their tax rates the
same as the House bill.
Democrats unlikely to prosper
with the issue of fairness
By Karlyn H. Keene
and Everett C. Ladd
of the party still exists.
Sensitivity to "fairness" was so
he two main political disputes of
tial demand. The party's principal
T
acute in the early Reagan years that
1990 - over control of govern-
response has been to attempt to re-
the White House Office of Policy In-
ment and over the shape of the
direct the protest - away from the
formation issued two documents
federal budget - have been
establishment of big government, to
about the Reagan record, Fairness I
brought together by their coin-
an older establishment, the rich and
and Fairness II, to address the accu-
ciding calendars in an explosive mixture.
privileged.
sations.
The talk in Washington now has It that the
The political rationale can be
What are the consequences of the
coming blast, triggered by concerns over
grasped by any bright 5-year-old. If
perceptions of a GOP tilt toward the
"fairness," will probably rock George Bush
the Democrats are the party of es-
rich? If we look at the results of the
and the Republicans. The Democrats are, of
tablishmentarian government, the
last six presidential elections, the
course, doing their best to see that this hap-
Republicans remain associated in
answer would appear to be "not
pens - and have gotten an unexpected
the public's eye with privilege. If the
much." In every election but one,
measure of help from the president.
year's powerful anti-establishment
Americans have voted for the Re-
Even so, the underlying frustration mov-
Impulses could be rechanneled
publican candidate who - by poll
ing American voters today - as through-
against the rich - by arguing, in
findings - would appear to be more
out the year - is something quite different
effect, that both parties want more
disposed toward the rich.
from a sense that the rich have profited
taxes, but that the Republicans
This obvious observation is con-
unduly during the Reagan years and that
would let the rich escape from them
firmed by other evidence suggesting
they may do so again when and if a budget
- the Democrats might regain
fairness is not a politically potent
package materializes.
ground lost to the GOP in the 1980s.
weapon. Identification with the GOP
The cause of voter anger is the sense
Just such a strategy was outlined
is now at record heights, a signifi-
that the government taxes too much and
by Brookings Institution political an-
cant gain for the GOP since the early
apends unwisely. fattening all manner of
alyst Tom Mann: "Now I think [the
1980s. The picture is even more
Democrats) can play their 'fairness
striking among 18- to 29-year-olds,
special interests at the expense of the pub-
card' [In the coming elections] and
who in CBS data identify themselves
lic good.
talk about how they couldn't get a
Elements of this reaction, often referred
as 58 percent Republican, 34 per-
deal because they are trying to get
cent Democratic - hardly an indi-
to as a taxpayers' revolt, have been around
the president to tax the rich."
cation of significant Republican vul-
for a long time, of course, and ushered in
:-
Republicans do suffer from the
nerability.
Reaganism a decade ago. But increased tax
perception that they favor the rich.
The public clearly has a number
bites, especially at the state and local level,
When CBS News asked potential
of different standards for assessing
together with a slowing economy, have
voters in 1988 which party would do
the parties. The GOP still leads the
been fanning the protest through 1990.
more for the poor, only 12 percent
Democrats as the party best able to
"There's a perception that government
said the GOP (74 percent, the Demo-
manage the economy and the the
isn't working." political analyst William
crats). The results for the middle
nation's defense: the Democrats lead
Schneider concludes.
class weren't much better; little
on fairness. Presidential voting and
"People are mad at the system, and term
Imore than a quarter (28 percent)
party identification trends suggest
limits are the perfect expression of their
said the GOP would do more; 56 per-
that the GOP's overall advantage is
views."
cent, the Democrats. The results
the greater one.
The manifestations of the revolt are all
were reversed for the rich. By 73
Another reason the issue may
around - in the widespread push For limits
percent to 10 percent, Americans
have little political punch is that
on terms that elected officials can serve, as
thought the Republicans would be
while most Americans don't consid-
cited by Mr. Schneider; in tax limitation
more solicitous.
er themselves rich (fewer than 1 per-
initiatives: in the wholesale repudiation of
This Is hardly new. Franklin D.
cent, according to a May 1990 poll),
the Democratic establishment in Massa-
Roosevelt labeled the Republicans
many think they - or their children
chusetts last month; in a general surge of
"economic royalists" and "princes of
- could be someday. Nearly six in
"kick the rascals out" sentiment.
privilege," and a'residual suspicion
10 Americans told Gallup in May
The prime target of the voter revolt of
1990 is indeed "the establishment," though
not in earlier understandings of that term.
It's the establishment of modern U.S. gov-
ernment.
Many Democratic officials and strate-
gists have understood this, though only a
few, such as Gov. L. Douglas Wilder of Vir-
ginia, have responded directly to its essen-
percent in the United States com-
rich than the middle class, and polls
pared with 76 percent in both Brit-
show widespread support for the
ain and West Germany, 87 percent
proposition that the rich aren't pay-
in Italy and 90 percent in Austria.
ing their fair share of taxers. This
Another reason the administra-
fall the Republicans gotten them-
tion might not take a hit from the
selves caught in a situation in which
fairness charge is that the difference
they are being successfully por-
between rich and poor Americans in
trayed as the party willing to bend
their evaluations of the Bush presi-
on tax increases - for everyone but
dency is modest - in other words,
the rich. Score one for the Demo-
he is not polarizing. If we look at the
crats.
votes in 1988, all income groups
But the public is simply fed up
save the lowest - those under
with fiscal mismanagement in Con-
$24,999 - voted for George Bush.
gress and wants to hold the line on
And, about those polls showing
taxes. Blame is passed around. Ra-
Mr. Bush dropping to his pre-Iraq
dio talk show hosts report that
approval ratings, Mr. Bush is still
Americans are spontaneously men-
the most popular president in the
tioning Congress' willingness to
history of the Gallup Poll at the end
raise its salary while not addressing
of his 21st month in office.
budget problems.
Still another reason why the GOP
While 56 percent of Americans
may not be vulnerable to charges of
approve of the job George Bush is
being unfair relates to changing con-
doing in the ABC News/Washtngton
ceptions of the idea of fairness Itself.
Post poll of Oct. 10-14, far fewer -
ASSOCIATED PRESS/1943
According to sociologist Daniel Yan-
34 percent - approve of Congress'
FRANKLIN D. ROOSEVELT
kelovich, Americans are pulled back
performance - a record low in the
Called GOP "economic royalists."
and forth between two competing vl-
poll. In a CBS/New York Times poll
sions of fairness - the idea of help-
taken Oct. 7. only 32 percent of
ing the deserving and the idea of en-
Americans felt that Congress was
that If they had a chance, they
titlement. The former is associated
likely to come up with a plan that
would like to be rich. Nearly one-
more with the Republicans, the lat-
would be "fair to people like you": 53
third of Americans felt they could
ter with the Democrats.
percent said that was unlikely. Score
be. While two-thirds believe that
In a time of economic unease,
one for the president.
wealth should be distributed more
when Americans know they can't
The idea of a polarized electorate,
evenly, 63 percent responded to an-
afford to pay higher taxes to help
split along class and income lines,
other question that America benefits
others, they are pulled more toward
seeing unfairness in the activity in
from "having a class of rich people."
the Republican vision. That's where
Washington in the last few weeks,
The lack of resentment in our so-
they are today. The Democrats are
may be compelling and provide
clety makes efforts to polarize the
still associated with excessive enti-
much provocative journalistic hype,
political debate fall flat.
tlement spending, and that negative
but It simply isn't valid.
It's worth noting that Americans
may blunt GOP problems.
The GOP does have some prob-
are very different in this respect
Looking at the tax issue itself this
lems with fairness - as the Demo-
from others. In a similar survey of
year, it clearly cuts both ways. Just
crats do with excess. The effort to
eight countries by the National Opin-
as the GOP has problems in terms of
rechannel anger from the modern
ion Research Center in 1987, a
providing tax breaks for the rich, the
big-government establishment to the
smaller percentage in the United
Democrats have problems of being
older establishment of the rich is a
States than in any other country
too willing to spend - and to tax all
political tactic, plain and simple.
surveyed felt that income differences
Americans to pay for it.
Nov. 6 will give us some clues on its
in their societies were too large, 58
The public would rather tax the
success.
sex with a 16-year-old girl.
Safe seats
So then why all the fear?
ant, leaving the institution limpand
unable to move forward.
First. the comfortable party sup-
port systems of old have declined. At
Some argue- that any change
fail to make
one time the party offered members
eroding the old power of the bosses is
help at election time. whether in
beneficial. Indeed, power is now
money or in workers. That bolstered
shared more readily with representa-
for courage
courage to go along with the some-
tives of previously ignored parts of
times politically unpopular plans of
the electorate. And what can be SC
party congressional leadership.
bad, after all, if a congressman-be
on issues
"They were backstopped by the
comes more responsive to his con-
party, which now and then would
stituents, even if it makes him a'little
say, 'Go ahead, take a chance, we'll
squeamish now and then?
1607
By Dan Fesperman
be there if you need help,' Mr. Bak-
But with all the other factors
Washington
er said. "Now they are their own last
line of defense. so they hesitate to
thrown in, critics say, the extracseri-
o guts, no budget.
sitivity easily degenerates into para-
That was the story
risk offending anybody.'
"It is subjective vulnerability,"
lyzing fear. The result is a mess such
this past week from
Capitol Hill, where
said Thomas E. Mann, director of
as the one over the budget.
N
the political courage
governmental studies for the Brook-
Wait a minute, says Mr. Marm.
of members of Con-
ings Institution. "To the extent they
flashing a beacon of hope through
gress seems to have
do something that is out of synch
the haze. No matter how
become inversely pro-
with public sentiment, they believe
wishy-washy members of Congress
portional to their abil-
they provide an opponent an open-
have become. he says, don't judge
ity to get re-elected.
ing at some future point."
the present Congress until it's fin-
The safer they be-
Speeding this erosion have been
ished work on this year's legislation.
come, the more timid-
the quick-buck contributions of spe-
"The logjam seems to have been
ly they cower in their
cial interests. This money is cheaply
broken on child care legislation. We
corners, unable to
obtainable with a few big-ticket
may well get a Clean Air bill. And/if
reach any consensus
Washington fund-raisers, and ' it's
we get a major deal on the budget
that carries the slightest twinge of
the main reason incumbents so casi-
and taxes right before an election
pain to voters or contributors.
ly outspend challengers. But It also
and in the middle of an economic
"They're guided by sheer, unshirt-
obligates the lawmakers to a second.
slowdown. it will be quite remark-
ed fear." said Ross Baker, a Rutgers
more vengeful constituency.
able." he said. In the end. "This Con-
University political scientist.
Naturally. these contributors ex-
gress may not look so bad."
"They're paranoid about elections
pect a willing ear and favorable votes
that they have no reason to fear."
for their money. "This works pretty
Mr. Baker is not so optimistic.
As the irrational fear grows, judg-
well for these organized interests,"
Don't look for decisiveness in Con-
ment wavers. Votes flop back and
Mr. Marini said, "but it doesn't work
gress any time soon, he said. "In fact,
forth. Indecision and paralysis reign
very well for the general public.
things are going to get worse."
- all of which infuriates constitu-
But even if a lawmaker's vote of-
ents and contributors, and in turn
fends a contributor, monied interests
makes the fear stronger.
these days often seem reluctarit to
The result? The lawmakers bend
back challengers of either party.
to every breeze of public sentiment
Campaign terror lurks nonethe-
that drifts their way. "You don't have
less. "Intellectually they understand
members really responding to a co-
they have nothing to fear," Mr. Baker
herent set of principles as much as
said. "But there's always that one
to a galaxy of special interests," Mr.
hypothetical opponent out there,
Baker said. "And as e.e. cummings
that strong charismatic state senator
once said, 'If you stand for nothing,
or that popular insurance commis-
you can be toppled by a slogan.'
sioner."
That's the way it goes with fear.
And feeding this fear is the night-
But Is it that irrational? What about
mare specter of a negative television
the "throw the bums out" movement
advertising campaign. "The exam-
supposedly sweeping the country?
ples of the media blitzes that have
Members of Congress have picked
turned around opinion in individual
up the theme along with everybody
districts and states carry a lot of
else. said John A. Marini, a political
weight." Mr. Mann said. "It reinforces
scientist at the University of Ne-
their belief that lightning can strike
vada-Reno and co-author of the
at any time."
1989 book, "The Imperial Congress."
Structural changes in Congress
"You see a lot of them running
over the years haven't helped make
'against the system,' he said. and
members courageous, either. The
so far voters haven't seemed "to
once-centralized committee system
make the connection that these
has split and multiplied like a swarm
[members of Congress] are the people
of microorganisms, leaving the domi-
doing what they say is being done by
nant party to divvy up chairman-
'the system.'
ships of 51 committees and 244 sub-
Even where voters regard the lo-
committees.
That fragments the power of lead-
cal Honorable as some kind of bum,
ership, and with so many chieftains
opposition is often invisible. The re-
at work, the desire to wield influence
form-minded Common Cause organi-
zation took a look recently and found
seldom seems to go beyond parochial
interests. "The norms of the Institu-
that 95 percent of the 405 incum-
tion have changed so much that just
bents running for re-election were ei-
about everyone now is a pork barre-
ther unopposed or faced "financially
ler," Mr. Marini said. "and no one
non-competitive" challengers.
wants to be a leader. They can do
Thus, victory margins in congres-
sional races are at an all-time-high.
pretty well just functioning as inde-
pendent entrepreneurs.'
The only incumbent who lost in the
And when all the chairmen start
latest primaries was a 59-year-old
Ohio Republican convicted of having
getting grabby. each one's self-serv-
ing dose of mini-power can affect the
body of Congress like a muscle relax-
DAILY NEWS
Sunday, October 21, 1990
Soc Sec measure
bad news
More may lose city jobs
By MARCIA KRAMER
Daily News City Hall Bureau Chief
President Bush and Congress are poised to
enact a change in Social Security legislation
that would add another $225 million to the city's
budget gap next year.
The move could force the
the slots.
Dinkins administration, al-
Employe contributions
Almost a sure thing
ready considering at least
must be matched by the em-
Judy Chesser, the city's
15,000 layoffs to close budget
ployer - in this case the city
chief Washington lobbyist,
gaps, to give pink slips to an-
- which would pay 6.2% of
said she is pessimistic that
other 8,000 workers, city bud-
earned wages up to a maxi-
the provision will be defeat-
get officials said.
mum of $51,300 a year per
ed because it was in both
The change in legislation
employe.
budget bills under consider-
reflects a desire to force
The increased costs would
ation.
workers not in the Social Se-
be $225 million for the fiscal
The House version, she
curity system to join, swelling
year starting July 1, said city
said, would start the program
contributions to the Social
Budget Director Philip Mi-
in January, while the Senate
Security Trust Fund - and
chael.
version would begin it a year
helping to lower the federal
'On our backs'
later.
deficit. This would happen
"They're trying to balance
Chesser said her best hope
because the Social Security
system takes in more money
their budget on our backs,"
is to try to convince Congress
Michael said.
to phase in the program over
than it has to pay out annual-
The city is struggling with
three years.
ly, and the surplus is used as
an economic downturn that
"That would spread our
a budget-balancing gimmick.
has lowered tax revenues,
pain out somewhat," she
Pay up or else
higher prices caused by the
said. noting that it would
Persian Gulf crisis, unsettled
then.cost the city about $30
The effect would be to
labor contracts and investor
million" 1991. $60 million in
force nearly 50,000 city em-
1992 and $100 million in 1993.
ployes - provisional workers
uncertainty because of a
who have not had to join the
warning by Wall St. agencies
Social Security or city pen-
that its bond rating is in jeop-
ardy.
sion systems - to begin mak-
ing weekly payments to the
If the plan went through
federal government for old
unchanged. it would increase
age and disability insurance.
the size of next year's budget
The provisional workers have
gap to $1.6 billion. The gap in
jobs because of patronage
the current budget is $300
and because the city hasn't
million and would increase
offered Civil Service tests for
by an undetermined amount
Brad Johnson, New York
State's chief lobbyist in
Washington, said the state
also would have to shell out
an additional $20 million to
$35 million because of the
change.
Chicago Tribune
Sunday, October 21, 1990
Bush seeks
way out
of corner
By Timothy J. McNulty
Chicago Tribune
WASHINGTON-The political
Continued from page 1
drama of the White House pitted
force employers to use quotas in
tial veto on a similar measure this
hiring to avoid expensive lawsuits.
weekend.
against Congress over taxes is being
played out again this weekend as
It's also possible Congress will
"People love it when the govern-
President Bush hopes to regain the
send Bush a clean-air bill with
ment shuts down," said. the party
what he considers an objectionable
official.
initiative on domestic policy.
provision about jobs in it. That
Two weeks ago, the convention-
With Democrats and Republicans
would force the "environmental
al idea was that such a veto and
locked in the closing struggle to
reach a budget agreement that would
president" to veto the nation's
the eventual forced compromise
satisfy the White House, Bush ac-
newest environmental legislation
would show decisive leadership on
ceded to the lawmakers' request late
and embarrass him further.
Bush's part as well as make his
Friday to continue government op-
Presidential objections to the
partisan point against the Demo-
erations five more days while they
civil rights and clean-air bills add
crats on Capitol Hill.
to complaints by Bush's critics
"But the whole dynamic has
negotiate.
that he is defending rich business
changed," said the party strategist,
But as negotiators were predicting
interests who believe the legisla-
reflecting on events of the past
an agreement could be reached be-
tion will cost them money.
two weeks. "With the Republicans
fore Monday, the president clearly
It also compounds the overar-
splitting and Bush going back and
remained on the defensive on the
budget and tax issue despite what his
ching problem Bush already has
forth and all this infantile behavior
with presidential opposition to the
emanating from Washington, the
spokesman described as his efforts to
budget and the perception that he
question the country seems to be
"cajole, threaten, push and shove to
wants to sustain tax breaks for the
asking is whether anybody in
get the legislation.'
rich and increase the tax load on
Washington is competent."
Bush intends to spend 12 of the
the middle class.
Conservative Republicans, such
next 16 days campaigning for Re-
Fitzwater railed that "Democrat-
as Daniel Mitchell, a senior fellow
publican candidates, but the bick-
ic political ballyhooing" is trying
at the Heritage Foundation, are
ering and hesitation in the budget
to nurture the idea that the Re-
urging Bush to go even further and
process has taken a toll on presiden-
publican Party is the party of the
allow the budget sequester, which
tial prestige as well as on congres-
rich. And they seem to have been
would mean a 40 percent across-
sional incumbents who worry that
successful in promoting that per-
the-board cutback in the federal
their chances for re-election have
ception.
government. That would define the
been damaged in this drawn-out pro-
Bush went on the offensive last
issue in the starkest tax or no-tax
cess.
week, claiming Democrats were
terms, they believe, and help the
So far Bush has been outmaneuver-
using "Washington doublespeak"
president and Republicans regain
ed by the Democrats and wounded
when they called for "soaking the
their previous no-new-taxes stand.
by his own failure to articulate what
rich" by raising tax rates for the
"That's the cut-off-your-nose-to-
he really wants in the budget. More
wealthiest Americans.
spite-your-face crowd," said the
than that, the president faces other
But Democratic Party Chairman
party strategist, who nonetheless
domestic issues where his position is
Ron Brown shot back: "This de-
concedes that party regulars fear
best described as backed into a cor-
bate is about who pays for the
they have lost their main iden-
ner.
folly of the 1980s. Democrats will
tifying issue in this election and the
On Friday afternoon, civil rights
not allow the budget to be bal-
next one.
marchers joined three groups of fed-
anced on the backs of working
While the domestic fight boils,
eral employees picketing for a budget
Americans."
the president also is fighting rear-
compromise outside the White
Ed Rollins, co-chairman of the
guard action in foreign fields, espe-
House while administration officials
national Republican congressional
cially maintaining cooperation in
tried mightily to find an agreement
committee, sent a letter to GOP
the Persian Gulf against what Sec-
that would be acceptable to Bush, an
leaders last weekend outlining a
retary of State James A. Baker III
effort that failed.
very pessimistic view.
called the "siren song" of appease-
Congress completed work Friday
"It suggested the apocalypse is
ment.
on a civil rights minority-hiring bill,
about to happen," said one recipi-
During two days of testimony on
but Democrats planned to wait until
ent. "The best-case scenario has us
Capitol Hill last week, Baker was
Monday to send the measure to the
losing 15 seats. This whole budget
questioned repeatedly about
White House in order to achieve
deal is death for the party."
whether the U.S. might be slipping
maximum publicity and embarrass-
When Bush refused to sign a
toward a war in the Middle East
ment for Bush, who has vowed to
temporary spending bill and al-
that few want or are prepared to
veto it.
lowed the government to shut
accept. And there was pressure
Officials said Bush will immediate-
down over the Columbus Day
from abroad to consider some
ly propose an alternative version.
weekend. a Republican strategist
peace feelers by Iraq.
"We will staple our new bill to the
had eagerly anticipated a presiden-
Bush did not hesitate in foreign
veto message and send it right back
policy as he did on the tax issue,
up." said White House spokesman
and he vowed anew that Iraq's ag-
Marlin Fitzwater.
gression and takeover of Kuwait
Although Bush presumably could
will "not be rewarded by some
compromise."
overcome a veto override. it is politi-
cally damaging and Republican poli-
cymakers think that a veto would SC-
riously hurt his efforts to court
minority and women voters.
The administration's main objec-
tion to the civil rights legislation is
that it would make it easier for
women and minority workers to
bring discrimination suits against
their employers. That, the White
House contends. essentially would
See Bush, pg. 1'
DAILY NEWS
Sunday, October 21, 1990
Not new taxes,
just more
Federal jaws sure to take bigger
chunk from many
By ROBERT RANKIN
Knight-Ridder Newspapers
And because Democratic ne-
pack of Budweiser that Byron
will for his Heineken. And
WASHINGTON - Your
gotiators from both sides in-
whether it's Gallo or chateau-
federal taxes are going to go
tend to improve the progres-
bottled Pouilly Fuisse, the
up next year unless you make
sivity of tax rates in whatever
less than $20,000. And the
final compromise they strike,
tax on table wine is going up,
probably by 20 cents a bottle,
more you make, the bigger
Cary's anomalous House
splitting the House-Senate
the bite the taxman will take
break is probably doomed.
difference.
out of your earnings.
Cary will get off easy com-
That's sure to be true -
pared to Byron Bigbucks,
In the end, Byron Bigbucks
with one exception - no mat-
however.
will be the big loser under ei-
ter how House and Senate
Byron's going to get
ther plan. The House would
slammed. But he can afford
raise his tax rate to 33% and
negotiators split their differ-
it; he makes $250,000 a year.
boost his alternative mini-
ences as they close in on the
That puts him in a new tax
mum tax rate - which he
final version of the deficit-re-
category for everyone making
must pay if he takes big de-
duction bill.
$200,000 or more.
ductions - to 25% from the
Both versions have enough
current 21%.
common features that one
That'll be 10G
The Senate would clip his
can tell how bad much of the
If the House prevails. tax-
itemized deductions by $500
tax bite will be for most
payers in Byron's category
for every $10,000 he makes
Americans.
Steve Sixpack, for instance,
would have to fork over an
above $100,000. And both
makes $25,000 a year. The
extra $10,031, on average.
bills would make him pay a
However, the biggest part of
10% luxury tax for expensive
House bill would raise his
taxes on average by $50, the
that comes from raising his
furs. cars. boats, jewelry or
tax rate to 33% from its pre-
airplanes.
Senate's by $140, according to
data from the nonpartisan
sent 28%, and President Bush
So Byron's current average
Joint Taxation Committee of
won't stand for that.
tax rate of 25.2% can only rise
Congress.
By contrast, the Senate bill
- to 26.1% under the Senate
socks Byron and his class-
plan. or to 27.0% under the
It depends.
mates for only $5,118 on aver-
House's
Depending on how much
age. In the spirit of compro-
Yes. Byron. the '80s are
Steve smokes, drinks and
mise, Byron and his ilk prob-
over.
drives, he could raise or re-
ably will end up paying
duce his tax bite some.
somewhere between $5,000
Marilyn Middleclass and
and $10,000 each in new tax-
her husband both work; to-
es.
gether they pull in $65,000.
Byron may think that's out-
They would pay Uncle Sam
rageous, but even the House
an extra $220 next year if the
would raise his tax burden by
House prevails, or $282 un-
only 7.4%, on average. Over
der the Senate bill.
the previous decade, his tax
The one exception to the
burden was cut by 14.4%.
rule that the more you earn,
Some taxes in both bills are
the more you pay is for Cary
certain to remain unchanged
Comfortable, who earns
and would hit Steve, Marilyn,
$150,000. Thanks to some
Cary and Byron regardless of
complex provisions of the
their abilities to pay.
House bill, her taxes would
go up by only $280 - com-
Reason to quit?
pared with the $330 increase
For example, cigaret taxes
the House bill would impose
will go up 4 cents a pack in
on someone earning $90,000.
1991 and again in 1993, both
However, the Senate bill
for Steve's Marlboros and By-
would sock Cary for $1,259.
ron's French Gauloises. Simi-
larly, Steve will pay the same
16-cent tax increase for a six-
SATURDAY, OCTOBER 20, 1990
THE
POST
President Signs Bill
Averting Shutdown
Conferees Have Until Wednesday to Reach Deal
By John E. Yang
Washington Post Staff Writer
House and Senate negotiators
and Democrats supporting the bill.
probably will not meet until the end
yesterday embarked on the mission
Tuesday night in the House, on the
of the process, if at all. Instead,
of settling the details of a deficit-re-
other hand, only 10 Republicans
nearly two dozen groups are meet-
duction plan as President Bush ex-
joined 217 Democrats to narrowly
ing to work on various provisions of
tended the deadline through Wed-
pass, 227 to 203, the House ver-
the massive legislation, ranging
nesday by signing a stopgap spend-
from taxes and Medicare to farm
sion, which had been crafted by
ing bill.
subsidies and fees for weather fore-
Democrats.
Conferees planned to work
casts.
through the weekend to try to rec-
Three major issues face the law-
Lawmakers yesterday agreed on
oncile two widely divergent pack-
makers: how much savings to
many of the less controversial is-
ages of tax increases and benefit-
achieve from Medicare, how much
sues, including $1.7 billion in cuts in
program cuts into one measure ac-
to raise the federal gasoline tax and
student loan programs over five
ceptable to majorities of the House
how to target the wealthy for high-
years, half to come from putting a
and Senate, to Bush and, with Elec-
er taxes.
cap on schools with high default
tion Day barely two weeks away, to
Bargainers yesterday made little
rates. House negotiators agreed to
the American voters.
progress on these matters. One ad-
drop criminal penalties and floors
As bargainers met on Capitol
ministration aide said early yester-
Hill, the Senate gave final congres-
on fines for occupational safety vi-
day that reaching a compromise
olations.
sional approval to a stopgap, omni-
acceptable to both chambers and
bus spending bill that would keep
Other meetings lagged. At a ses-
the administration would be "nearly
the federal government running at
sion on the long-stalled issue of
full force through Wednesday. The
impossible."
child care, House Education and
House had approved the measure
Many Senate Democrats want to
Labor Committee Chairman Augus-
Thursday night, 379 to 37.
move toward the House package,
tus F. Hawkins (D-Calif.) objected
Earlier this week, Bush vowed
which targets tax increases at the
to a Senate package.
not to accept another short-term
wealthy, contains a smaller savings
BHe asked if the Senate member
funding bill if Congress had not en-
in the Medicare program than the
had come to negotiate or "is this
acted a deficit-cutting plan by last
Senate measure and would not raise
take it or leave it. If it is the latter,
night, when temporary spending
the 9-cents-a-gallon federal gasoline
then we're just wasting time. I'm
authority was set to expire. But
ready to leave." Sen. Orrin G.
yesterday, Bush signed the meas-
tax, as the Senate bill would. But
Hatch (R-Utah) urged Hawkins to
ure, averting the second govern-
doing that would threaten to lose
accept the measure, calling it "a
ment shutdown in three weeks.
Republican support in the Senate.
monumental achievement" to get
"What I'm trying to do in the last
"We haae very little wiggle
the administration this far. The
few hours of this Congress is
room," said Senate Minority Leader
meeting adjourned until today.
say, 'Look, let's put the people's
Robert J. Dole (R-Kan.), one of the
Much of the real negotiating is
business first,' Bush said yester-
tax negotiators. "If you move too
done by a handful of key lawmakers.
day at the White House. "Let's lay
far in one direction, you lose 10 Re-
For instance, 14 lawmakers are for-
aside this political rhetoric and get
publicans, and the bill is dead. If you
mally assigned the task of settling
a job done that should have been
move too far in the other direction,
the details of the tax component.
done long ago." Bush spent four
you lose 10 Democrats, and the bill
But the real decisions are likely to
days this week on the campaign
is dead."
be made by Bentsen and House
trail lashing out at congressional
But moving too far toward the
Democrats.
Ways and Means Committee Chair-
Senate package, which relies heavi-
Later, the president went to the
man Dan Rostenkowski (D-III.).
Capitol to get a progress report
ly on higher excise taxes, would
Although administration officials
from congressional leaders. "I'm
imperil the measure in the House.
have no formal role in the process,
here to discuss
what we can do
Given the current state of partisan
their views are being made known.
at the White House to help move
strife in that body, "We're going to
Yesterday, for instance, Treas-
the process forward," Bush told re-
have to come up with a package
ury Secretary Nicholas F. Brady
porters. "I'm really just here to say
that commands a large number of
and Office of Management and Bud-
we agree to finish the job."
Democratic votes," said House Ma-
get Director Richard G. Darman
During the meeting, Bush
jority Leader Richard A. Gephardt
were on the Hill for what Darman
pressed lawmakers to see if they
(D-Mo.).
said were "private meetings," which
could finish work on the five-year,
"This is all a balancing act," said
just happened to be in the anteroom
$500 billion deficit-reduction plan
Rep. Lawrence J. Smith (D-Fla.).
of the House Ways and Means Com-
by last night, participants said. Sen-
"Nobody knows where the lever is."
mittee hearing room as the tax ne-
ate Finance Committee Chairman
Finding the political and fiscal
gotiators held their first meeting
Lloyd Bentsen (D-Tex.) replied that
there.
Sunday was more likely. But even
balance between the two measures
that target is optimistic, observers
is up to 53 senators and 51 mem-
Staff writers Dan Balz and Steven
said.
bers of the House who are mem-
Mufson contributed to this report.
The difficulty of the task facing
bers of the House-Senate confer-
the congressional bargainers is re-
ence committee. It is a formidable
flected by the differing natures of
task. The Senate bill alone is hun-
the House and Senate votes nar-
dreds of pages long, stands six
rowly approving their significantly
inches high and weighs 13 pounds.
different deficit-cutting packages.
The full 104-member conference
Early yesterday morning, the
Senate passed its compromise
measure on a 54 to 46 vote with a
slim majority of both Republicans
Bush Caught Between Conflicting Constituencies
pends far more than Reagan's on
By E.J. Dionne Jr. and Thomas B. Edsall
the national political agenda to is-
Washington Post Staff Writers
suburban upper middle-class voters
sues more favorable to the GOP-
who are offended by attacks on civil
issues such as racial quotas.
Bitter disputes over new civil rights leg-
rights. Bush's political persona,
Republican strategists were well
islation and the federal budget are forcing a
moreover, has been that of a "kind-
aware even before David Duke's
reluctant White House and the Republican
er, gentler" healer who wanted to
strong showing in the Louisiana
Party to confront the tensions between
President Bush's election tactics and his
take the rough edges off the Rea-
Senate contest that racial tensions
governing strategy.
gan years.
in the United States are high. Linda
Those tensions help explain why the last
The kinder, gentler approach
DiVall, a Republican pollster, said
two weeks have been so miserable for Bush.
runs headlong into the much less
that in focus groups, white voters
He has discovered that constituencies that
gentle reality of Republican strat-
have been "pretty visceral" in their
got along famously when Ronald Reagan
egy for the past generation. Central
reactions to blacks.
was president and during his first 18 months
to GOP presidential triumphs, in-
"There are a lot of middle-class
in office have some irrepressible conflicts
cluding Bush's, has been the Repub-
whites who think that blacks are
with each other.
licans' ability to polarize the elec-
getting too many preferences and
The Republicans find themselves caught
torate along lines guaranteeing
'handouts,' she said. "They feel
between socially conservative working-class
them a majority: Taxpayers against
that they're not getting any help in
whites who are showing growing resent-
public employees and the recipients
terms of tuition assistance or other
ment of blacks and a more affluent consti-
of government help; crime victims
government programs."
tuency that looks kindly on civil rights and
and those worried about crime
DiVall, who is quick to note that
other forms of social liberalism.
against civil libertarians; and, ulti-
her clients have not been using ra-
For more than decades, Republicans
mately, whites against blacks and
cial issues in their campaigns, added
have held this unlikely alliance together by
other minorities seeking state pro-
that such views are being expressed
NEWS
mixing
anti-government
tection.
ANALYSIS
themes with opposition to
Opposition to taxes was the linch-
taxes and enough social con-
servatism to keep the working-class wing of
pin of this approach. It maintained
the party happy. Bush's 1988 campaign
the Republicans' fragile alliance
"There are a lot of
neatly embodied this mix of messages in the
between white working-class voters
middle-class whites
slogan "no new taxes" and in the person of
on the one side and business and
Willie Horton.
the affluent on the other.
who think that
The Republicans' problems began last
The wealthy, whether socially
June when Bush abandoned the no-new-
liberal or not, have almost always
blacks are getting
taxes pledge. Once the president accepted
welcomed low tax rates. But in the
the need for new taxes, the debate shifted to
1970s, lower middle-class and
too many
ground congenial to the Democrats-not
working-class whites joined the
whether taxes should rise, but who should
anti-tax coalition as inflation drove
preferences and
pay them.
up their tax bills and as they came
'handouts.
"
Now, faced with the prospect of losing
to see government as primarily
control of the national budget debate to
helping those at the bottom of the
-GOP pollster Linda DiVall
Democrats using a "tax-the-rich" theme,
economic ladder.
some Republicans believe it is more impor-
When he dropped his tax pledge,
quite openly. "There are no code
tant than ever to revive the old social con-
Bush fractured that alliance, and
words," she said. "They're talking
servatism in a new form. They are trying to
struck it another blow when he en-
about 'too much aid going to them,
highlight Democratic vulnerabilities ranging
dorsed taxes that would fall heavily
too much aid going to people who
from the decay of crime-ridden New York
on people of modest income. This
don't work hard.'
City to the prospect of court-imposed racial
provided an opening for Democrats
A veto of the civil rights bill could
quotas and what House Minority Whip Newt
to portray Bush and the Republi-
play right into these feelings and
Gingrich (R-Ga.) refers to as "the
cans as friends of the wealthy and
might thus benefit Republicans, at
corrupt liberal welfare state."
enemies of the middle class.
least in the short term. But that
These Republicans would wel-
Republicans as diverse as Reps.
worries Republicans like Leach, an
come a Bush veto of the civil rights
Gerald B. H. Solomon, a conserva-
early Bush supporter who epito-
bill, since a veto would highlight a
tive from New York, and Jim Leach,
mizes the moderate-liberal wing of
key social issue-quotas-and help
a liberal from Iowa, expressed
the president's electoral alliance.
to undermine the Democrats' ef-
alarm that their party was once
Leach and like-minded Republicans
forts to develop a biracial, class-
again being tagged as a haven for
think that the last thing a belea-
based appeal to the lower and mid-
millionaires:Even Gingrich is wor-
guered president needs now is a
dle-income groups.
ried. "If you go anywhere in Amer-
The president's political problem
ica and say to people, 'If we have to
is that his electoral coalition de-
raise taxes, would you rather raise
taxes on the rich?' they always say
yes," Gingrich said.
For Republicans, one way out of
the political morass could involve
vetoing the civil-rights bill to shift
fight with black Americans and the
civil rights leadership.
For his part, Gingrich has tried to
shift the discussion by emphasizing
the failures of "welfare-state liber-
alism," especially in big cities like
New York that have long been bas-
tions of Democratic control.
Appearing earlier this week on
the CNN program "Crossfire," Gin-
grich argued that the Democrats'
position made sense only "if you
believe in the welfare state, if you
believe in the bureaucracy of New
York City and if you're clever
enough to convince the Democratic
Party nationally to raise taxes on
everybody in America to prop up
Mayor Dinkins and his bureaucra-
cy."
New York's Mayor David Dinkins
is black and Gingrich's comment
drew a sharp retort from Rep.
Charles E. Schumer (D-N.Y.).
"They often run to the race card
when they don't have anything
else," Schumer said of the Repub-
licans. "Newt was losing on the tax
issue, so he brought up David Dink-
ins."
Gingrich, who has called on the
Republicans to recruit black canida-
tes and appeal more aggressively to
black voters, replied that the issue
was not Dinkins' race but the "col-
lapse of the welfare-state system"
in New York City:
In the meantime, Republican
strategists believe they have work-
able approaches well short of "play-
ing the race card." Gingrich pre-
dicted that once Congress had
passed a budget and left town, Bush
would renew his attacks on the
Democrats' free-spending ways and
argue that he had agreed to new
taxes only because the Democrats
had insisted on them as the price of
reaching a budget agreement.
But even this argument carries
dangers for Bush. It implies that
Congress, not the president, is in
control of national policy. And as
Jimmy Carter learned, presidents
who do not appear in control of the
government are rarely appealing to
the American electorate.
The Dallas Morning Nelus
Saturday, October 20, 1990
Bush OKs funding
to keep U.S. going
By Robert Dodge
differences between the versions.
Washington Bureau of The Dallas Morning News
"We do not have much flexibil-
WASHINGTON - President Bush, pleased
ity on the Senate side," said Minor-
with progress by Congress in writing a budget,
ity. Leader Bob Dole of Kansas, not-
signed a short-term funding measure Friday to
ing the narrow, eight-vote spread in
keep the government running for five more
that chamber. "I felt like I had
days.
taken a cold shower when I took a
The president also visited Capitol Hill and
look at that final vote tally and saw
thanked congressional leaders and 23 Senate Re-
there was only an eight-vote differ-
publicans for passing two deficit-reduction
ence."
plans, which they must now merge to get a
The most difficult tax issues will
budget. Earlier this week, Mr. Bush had said he
be resolved by a joint House and
would not renew the government's spending
Senate conference committee led by
power without a completed budget.
Rep. Dan Rostenkowski, D-III.,
"I sense the determination to get the nation's
chairman of the House Ways and
business completed, and that's good," the presi-
Means Committee. Its co-chairman
dent told reporters after m' eting with leaders of
is Texas Sen. Lloyd Bentsen, chair-
both parties.
man of the Senate Finance Commit-
The stopgap spending measure gives congres-
tee.
sional negotiators some breathing room as they
Another Texan serving on the
try to compromise on two widely different ap-
panel is Rep. Bill Archer of Hous--
proaches to cutting the deficit that were adopted
ton, the ranking Republican on the
by the House and Senate. But leaders acknowl-
Ways and Means Committee. Rep.
edged that they have little room to maneuver as
Jake Pickle, D-Austin, has been
they confront partisan differences on taxes and
asked by Mr. Rostenkowski to con-
spending.
sult with the committee on Social
"I think that people recognize that more im-
Security issues.
portant than any individual getting it exactly his
The conference committee,
way, including the president, is to get the na-
which also will consult with senior
tion's business going forward," Mr. Bush told
administration officials, held its
lawmakers, appai-
first meeting Friday. But negotia-
ently showing some flexibility to
tors met only long enough to hear a
get the five-year plan completed.
list of issues to be considered - and
He signed the stopgap spending
to pose for television cameras.
measure after the Senate voted 54-46
Indeed, Friday was more a day
to approve its version of the $500
for photo opportunities than deci-
billion deficit-reduction package
sions. It was a time for lawmakers,
about 1:30 a.m. Friday. The House
who are worried about the Nov. 6
approved its version Tuesday.
election, to take some credit for
Without the interim funding,
their work after weathering public
the government would have run
outrage over their inability to tend
out of money at midnight Friday,
to fiscal matters.
prompting a government shutdown
Conferees were unwilling to tip
like the one two weeks ago.
their hands by outlining negotiat-
Even with the shutdown
ing positions.
averted, lawmakers said they
Even so, Mr. Bentsen said he
planned to work through the week-
wanted to see the final package
end. Some said they hoped to finish
move closer to the one approved by
work by late Sunday so the full
the House. That means shifting
House and Senate could ratify
more of the new tax burden to the
changes and send the budget to the
wealthy than is called for in the
president by Wednesday, when the
current Senate version.
new emergency funding measure
"The Senate bill is a compro-
expires.
mise," said Mr. Bentsen, a key au-
Approval by the Senate of the
thor of the package. It "is not what
tax-and-spending package came af-
any one of would have drafted." He
ter party leaders flexed political
noted that his first proposal would
muscle during 29 hours of debate
have raised income taxes on the
Wednesday and Thursday. They
wealthy.
managed to fight off a plethora of
Aides said Mr. Bentsen and Mr.
amendments that they said would
Rostenkowski have been meeting
destroy fragile bipartisan support
regularly as the House and Senate
for the package.
considered the budget and have a
After close votes in both the
good idea what each would like to
House and Senate, leaders acknowl-
see in the final package. But before
edged Friday that they face a diffi-
they can hammer out the particu-
cult weekend task in ironing out
lars, other negotiators must be con-
sulted SO that they can begin build-
ing the bipartisan support needed
for approval in both chambers.
Democrats would like to cut the
Senate version's 9½-cent-a-gallon
gasoline tax, which would reduce
some of the burden on the middle
THE BUDGET CONFEREES
Eleven members of the Senate
man of California to join the ne-
Finance Committee and five
gotiations.
members of the House Ways
Mr. Rostenkowski, chairman of
and Means Committee are
the House Ways and Means
meeting as a joint conference
Committee, and Mr. Bentsen,
committee to reconcile conflict-
chairman of the Senate Finance
ing House and Senate budget
Committee, are central figures
plans.
in the conference.
As chairman of the Ways and
Senators: Democrats Lloyd
Means panel, Mr. Rosten-
Bentsen of Texas, David Boren
kowski, 62, largely shaped the
of Oklahoma, David Pryor of Ar-
budget plan the House adopted
kansas, George Mitchell of
this week, calling for higher
Maine, Daniel Patrick Moynihan
taxes on the wealthy. Mr. Ros-
of New York and John D. Rock-
tenkowski, bred in the Chicago
efeller IV of West Virginia; and
ward politics of Mayor Richard
Republicans John Danforth of
Daley, is a powerful, hard-nosed
Missouri, Bob Dole of Kansas,
John Chafee of Rhode Island,
politician.
Mr. Bentsen, 69, shares Mr.
Bob Packwood of Oregon and
Rostenkowski's desire for an in-
William Roth of Delaware.
come tax increase on the
Representatives:
Democrats
wealthy. However, he had to
Dan Rostenkowski of Illinois,
compromise on that point to win
Thomas Downey of New York,
Republican support in the more
Sam Gibbons of Florida, Fort-
closely divided Senate, and will
ney "Pete" Stark of California;
most likely have to compromise
and Republican Bill Archer of
with the White House. Mr.
Houston. Mr. Rostenkowski also
Bentsen was raised among the
asked Democrats Andrew
gentry of the Rio Grande Valley
Jacobs of Indiana, J.J. "Jake"
of Texas and became an insur-
Pickle of Austin and Henry Wax-
ance millionaire.
The Dallas Morning News
adopted by the Senate.
"I think that people
In crafting a compromise, negoti-
recognize that more
ators will be walking a delicate line
between strongly held Democratic
important than any
and Republican beliefs about taxes
individual getting it
and spending. They are doing so in
a crisis atmosphere and with less
exactly his way,
than three weeks remaining before
the election.
including the president,
If the package moves too far
is to get the nation's
from the current House version, the
Democratic majority that approved
business going forward."
the budget is likely to defect. And if
- President Bush
negotiators push too much to raise
income taxes, they will lose the Re-
class.
publican support that is critical in
They also would like to eliminate
the Senate and for Mr. Bush's ap-
the House version's one-year delay
proval.
in raising income tax brackets,
"The fight is about how much we
which also hits middle-income
can move the package our way,"
earners.
said Rep. David Obey, D-Wis.
That lost tax revenue would be
Rep. Charles Rangel, D-N.Y.,
replaced by raising the 28 percent
added: "If a package is going to pass
tax rate on the wealthy closer to the
in this House, it's going to involve
33 percent paid by the middle class.
the rich. What we're saying is,
Or conferees could increase reve-
'We're not going to have a package
nue through a surtax on earnings
unless the free ride for the rich is
above $1 million, adopted by the
over.'"
House, or a limit on itemized deduc-
Staff writer Susan Feeney (con-
tions on income above $100,000,
tributed to this report.
The bottom line
is about to shift
Higher taxes to be common complaint
By Robert A. Rankin
Knight-Ridder Newspapers
boros and Byron's French Gauloises.
WASHINGTON - Your federal
Sam an extra $220 next year if the
Similarly, Steve will pay the same 16-
taxes are going to go up next year
House prevails, or $282 under the
cent tax increase for a sixpacknof
unless you make less than $20,000.
Senate bill.
Budweiser that Byron will for his
And the more you make, the bigger
Cary Comfortable, who earns
Heineken. And whether it's Galloler
the bite the tax man will take out of
$150,000, is the one exception to the
chateau-bottled Pouilly Fuisse? the
your earnings.
rule that the more you earn, the
tax on table wine is going up, proba-
That's sure to be true - with one
more you pay. Thanks to a complex
bly by 20 cents a bottle, splitting the
exception - no matter how House
anomaly in the House bill, her taxes
House-Senate difference.
itsm
and Senate negotiators split their dif-
would go up by only $280 - com-
Marilyn Middleclass' payrollitax
ferences as they close in on the final
pared with the $330 increase the
will rise by 1.45 percent for Medi-
version of the deficit-reduction bill.
House bill would impose on someone
care; so, for that matter, would Cary's
Both versions have enough com-
earning $90,000.
and Byron's, up to a new incomeceil-
mon features that one can tell al-
The Senate bill would sock Cary
ing. Currently, that tax rate applies
ready how bad much of the tax bite
for $1,259, however. And because
only to their first $51,300 of income.
will be for most Americans.
Democratic negotiators from both
The Senate would apply it upito
Steve Sixpack, for instance, makes
sides intend to improve the progres-
$89,000; the House, up to $100,000
$25,000 a year. The House bill would
sivity of tax rates in whatever final
If Marilyn or Steve has theikids
raise his taxes on average by $50, the
compromise they strike, Cary's
flown to Disney World after Decide,
Senate by $140, according to data
anomalous House break is probably
each of them will have to paysthe
from the non-partisan Joint Taxation
doomed.
same 10 percent airline ticket Tax:-
Committee of Congress.
Cary will get off easy compared to
up from 8 percent - that Byron Big-
Depending on how much Steve
Byron Bigbucks, however.
bucks pays for his winter jaunt to
smokes, drinks and drives, he could
Byron's going to get slammed. But
Acapulco.
"-gen
raise or reduce his tax- hike some-
he can afford it; he makes $250,000 a
How the House and Senate split
what. But unless he's a teetotaling
year. That puts him in a new tax cat-
the difference on one key trade-off
pedestrian, he'll pay more.
egory for everyone making $200,000
could make a big difference to them
Marilyn Middleclass and her hus-
or more.
all, however.
band both work; together they pull
If the House prevails, taxpayers in
Everyone who drives would pay
in $65,000. They would pay Uncle
Byron's category would have to fork
more under the Senate's gasoline tax
over an extra $10,031, on average.
increase of 9.5 cents per gallon by
But the biggest part of that comes
1992, though the amount would vary
from raising his tax rate to 33 per-
by car and distance.
cent from its present 28 percent, and
But the House didn't include
President Bush won't stand for that.
gasoline tax increase; it preferred in-
By contrast, the Senate bill socks
stead to delay for one year a sched-
Byron and his classmates for only
uled adjustment of tax brackets and
$5,118 on average. But in the spirit of
personal exemptions to compensate
compromise, Byron and his well-
for inflation.
NE
heeled brethren probably will end
In the end, Byron Bigbucks will
up paying somewhere between $5,000
be the big loser under either plan.
and $10,000 each in new taxes.
The House would raise his tax rate to
Byron may think that's outra-
33 percent and boost his alternative
geous, but even the House would
minimum tax rate - which he must
raise his tax burden by only 7.4 per-
pay if he takes massive deductions
cent, on average. Over the previous
to 25 percent from the current 21
decade, his tax burden was cut by
percent.
14.4 percent.
The Senate would clip his item-
Some taxes in both bills are cer-
ized deductions by $500 for every
tain to remain unchanged and would
$10,000 he makes in excess of
hit Steve, Marilyn, Cary and Byron
$100,000.
regardless of their varying abilities
So Byron's current average tax
to pay.
rate of 25.2 percent can only rise +
For example, cigarette taxes will
to 26.1 percent under the Senate
go up 4 cents a pack in 1991 and
plan, or to 27 under the House's.
again in 1993, both for Steve's Marl-
Yes, Byron, the '80s are over.
The Philadelphia Inquirer
Saturday, Oct. 20, 1990
Stopgap bill signed; officials
say any deal faces a fight
By R.A. Zaldivar
and Charles Green
Inquirer Washington Burcau
WASHINGTON - With a possible
single budget bill had not been
government shutdown averted, con-
passed by today. But later in the
gressional negotiators said yesterday
week the White House said the Presi-
that they expected to strike a budget
dent would sign the stopgap measure
deal this weekend, but admitted that
they would have a far harder time
if "satisfactory progess" was being
made.
getting the votes to pass it in the
House and Senate in the two weeks
Congressional negotiators face a
before the election.
double-edged problem as they try to
reach a compromise.
"The closer we get to completion,
the more difficult it is to get a major-
To begin with, the House and Sen-
ity in either house for anything,"
ate bills take different paths to re-
said Rep. Bill Frenzel (R., Minn.).
duce the deficit. The House bill, for
Senate Republican Leader Bob
example, raises income tax rates on
Dole of Kansas said, "We have very
the wealthy. The Senate bill avoids
little wiggle room."
changing rates and raises taxes on
"If you move too far in one direc-
the rich by reducing their deduc-
tions.
tion," Dole said, "you lose 10 Republi-
cans and the bill is dead. If you move
But the policy differences, like
too far in the other direction, you
that one and the gasoline tax, might
lose 10 Democrats and the bill is
be lesser obstacles than the political
dead."
divide between the two bills.
Rank-and-file members echoed
The House bill is a partisan Demo-
Dole's observation. "An agreement
cratic statement described by its
that can pass the Senate can't pass
principal author, Rep. Dan Rosten-
the House, or vice (versa," said Rep.
kowski (D., III.), chairman of the
Pat Williams (D., Mont.). "That's our
Ways and Means Committee, as "our
dilemma."
platform." It passed by a vote of 238-
The House, on a largely party-line
192, with only 10 Republicans voting
vote, passed a bill with higher taxes
in favor.
for the wealthy and no gasoline tax
The Senate bill does not please
increase; the Senate version doubles
activists in either party, but it
the gasoline tax and spreads the tax
passed, 54-46, with a slim majority of
load over a wider range of income
groups. Negotiators from both cham-
Democrats and a one-vote majority of
Republicans.
bers began work yesterday behind
With Republicans in the House em-
closed doors to forge a compromise
bracing a no-new-taxes strategy,
that can win congressional approval
House Democratic leaders believe
and President Bush's signature.
their members will ultimately, have
The two sides are seeking a combi-
to provide the 218-vote majority
nation of spending cuts and tax in-
needed to pass the budget compro-
creases that will reduce the deficit
mise.
by $40 billion in the 1991 fiscal year,
"I think if we're going to get. 218
which began Oct. 1, and total $500
votes, we're going to have to come up
billion over five years.
with a package that can command a
With the five-month-old budget ne-
large number of Democratic votes,"
gotiations at a crucial passage, Bush
said House Majority Leader Richard
abandoned his partisan attacks on
A. Gephardt (D., Mo.).
congressional Democrats yesterday.
That would mean cutting the 9.5
Paying a visit to congressional lead-
cent gasoline tax increase in the Sen-
ers at the Capitol, he urged all in-
ate bill and raising taxes on upper-
volved to "regroup and try to build."
middle-class and wealthy Americans.
To take some of the pressure off
"We want the burden to be soft-
negotiators, the White House an-
ened on the middle-class folks, and
nounced that Bush had signed a stop-
we want upper-income people to pay
gap spending bill to keep the govern-
more," said Rep. Byron L. Dorgan
ment operating until 12:01 a.m.
(D., N.D.), who helped defeat the
Thursday. Without it, the govern-
original budget-summit agreement
ment's authority to spend money
on the House floor.
would have expired at 12:01 a.m. to-
But Republicans warn that the bi-
day.
partisan Senate coalition will not
Earlier this week Bush threatened
stand any sudden turns to the left.
that he would veto any stopgap bill
And Bush has vowed to veto any-
and shut down the government for
thing that resembles the House Dem-
the second time in a month if a
ocratic plan.
The Philadelphia Inquirer
Saturday, Oct. 20, 1990
Comparing the costs
of 2 budget bills
By Robert A. Rankin
Inquirer Washington Bureau
but even the House would raise their
WASHINGTON - Federal taxes are
More taxes for most
going to go up next year for all
tax burden by only 7.4 percent, on
taxpayers, except those who earn
average. Over the previous decade,
Average annual change in total tax
less than $20,000. And the greater the
their tax burden was cut by 14:4
liability per taxpayer, under the House
income, the bigger the bite the tax-
percent.
and Senate plans.
man will take.
Some taxes in both bills are certain
Income
to remain unchanged and would hit
House Senate
That's sure to be true no matter
how House and Senate negotiators
all taxpayers regardless of their
Under $10,000
$ 48
$ 0
split their differences. They began
varying abilities to pay.
$10,000-19,999
-56
-84
work yesterday on a final version of
For example, cigarette taxes will
$20,000-29,999
+50
+140
the budget bill at the same time
go up 4 cents a pack in 1991 and again
President Bush signed a stopgap
in 1993, both for Marlboros and
$30,000-39,999
+69
+200
measure that averted a government
French Gauloises. Similarly, the
$40,000-49,999
+78
+278
shutdown early today.
same 16-cent tax increase will go on a
$50,000-74,999
+220
+282
Both versions have enough com-
six-pack of Budweiser and a six-pack
of Heineken. And whether it's Gallo
$75,000-99,999
+330
+562
non features that one can tell al-
ready how bad much of the tax bite
or chateau-bottled Pouilly Fuisse, the
$100,000-199,999 +280 +1,259
will be for most Americans.
tax on table wine is going up, proba-
$200,000-plus
+10,031
+5,118
For the taxpayer who brings home
bly by 20 cents a bottle, splitting the
$25,000 a year, the House bill would
House-Senate difference.
SOURCES: House Democratic Study Group. Joint Tax
Committee. Knight-Ridder Tribune News
raise taxes on average by $50, the
The payroll tax for Medicare will
Senate by $140, according to data
rise by 1.45 percent for Medicare for
from the nonpartisan Joint Taxation
everyone, up to a new income ceil-
Committee of Congress.
ing. Currently, that tax rate applies
Depending on how much such a
only to the first $51,300 of income.
taxpayer smokes, drinks and drives,
"The' Senate" would apply it up to
he or she could raise or reduce the
$89,000; the House, up to $100,000.
impact some.
Both the House and Senate ver-
A couple who earn together $65,000
sions of the budget bill call for a 10
will see their tax bill jump $220 next
percent airline ticket tax up from
year if the House prevails, or $282
8 percent.
under the Senate bill.
Everyone who drives would pay
A taxpayer who earns $150,000,
more under the Senate's gasoline tax
would see a tax increase of only $280
increase of 9.5 cents per gallon by
if the House version prevails com-
1992.
pared with the $330 increase the
House bill would impose on someone
The House did not include a gaso-
earning $90,000.
line tax increase; it preferred instead
However, the Senate bill would
to delay for one year a scheduled
sock the $150,000-bracket taxpayer
adjustment of tax brackets and per-
for $1,259. And because Democratic
sonal exemptions to compensate for
negotiators from both sides intend to
inflation.
improve the progressivity of tax
That would raise everyone's taxes.
rates in whatever final compromise
But it would cost a $25,000-year tax-
they strike, the House break is proba-
payer much less than a higher gas
blv doomed.
tax and cost a high-income tax-
If the House prevails, a taxpayer
payer much more, according to
who earns $250,000 a year, would
House documents.
have to fork over an extra $10,031, on
In the end, someone who earns
average. However, the biggest part of
$250,000 or more will be the big loser
that comes from raising the tax rate
under either plan. The House would
to 33 percent from its present 28
raise his or her tax rate to 33 percent
percent, and President Bush will not
and boost the alternative minimum
stand for that.
tax rate which must be paid if
By contrast, the Senate bill socks
massive deductions are taken to 25
the $250,000 wage-earner for only
percent from 21 percent currently.
$5,118 on average. But in the spirit of
The Senate would clip itemized de-
compromise, big-bucks taxpayers will
ductions by $500 for every $10,000 a
end up paying somewhere between
taxpayer makes above:$100,000. And
$5,000 and $10,000 in new taxes.
both bills would levy a 10 percent
They may think that's outrageous,
luxury tax for expensive furs, cars,
boats, jewelry or airplanes.
So that taxpayer's current average
tax rate of 25.2 percent can only rise
- to 26.1 percent under the Senate
plan, or to 27.0 under the House's.
Fort Worth Star-Telegram
Saturday, October 20, 1990 1
President
backtracks
on threats
Bush signs measure
to keep U.S. spending
BY MARIA RECIO
Fort Worth Star-Telegram Washington Bureau
WASHINGTON - President Bush
yesterday backed off earlier threats to
"You'll-see a more progressive tax
shut down the government if Congress
system and the burden on the average
did not approve a deficit-reduction
family in America lessened," he said.
plan to his liking, and he signed a short-
Rep. Dan Rostenkowski, D-III.,
term spending bill that will keep Uncle
chairman of the House Ways and
Sam in business until Wednesday.
will insist that the wealthy pay more.
Means Committee, said: "I am opti-
The action smoothed the way for
Senate Majority Leader George Mitch-
mistic that we can reduce spending in a
House and Senate members who began
ell, D-Maine, said Democrats believe
rational and fair fashion. The Ameri-
meeting in a conference committee to
that "taxes should be related to the
can people are not rejecting govern-
work out differences between the budg-
ability to pay."
ment, but they are sick and tired of
et bills passed by each chamber. Al-
Ironically, because of the threat of a
irresponsible bickering."
though both bills would reduce the
veto by Bush, Mitchell fought back ef-
The House negotiators on taxes are
budget deficit by $500 billion over five
forts by senators to increase tax rates.
Rostenkowski; Rep. Bill Archer, R-
years, they would do it in very different
But Mitchell's comments were con-
Houston; and Rep. Sam Gibbons, D-
ways.
sidered a way of serving notice on the
Fla.
In an unscheduled stop at the Capitol
Republicans that the Democrats will
The Senate tax team consists of
to meet with congressional leaders,
press for a package that includes tax
Bentsen; Mitchell; Dole; Patrick Moy-
Bush was conciliatory.
increases that do not touch rates but
nihan, D-N.Y.; David Boren, D-Okla.;
"I think people recognize that more
still hit the wealthy, such as the surtax
David Pryor, D-Ark.; Jay Rockefeller,
important than any individual getting
on those earning over $1 million and a
D-W.Va.; Bob Packwood, R-Ore.; Wil-
it exactly his way, including the presi-
limitation on deductions for those
liam Roth, R-Del.; John Danforth, R-
dent, is to get the nation's business
making more than $100,000.
Mo.; and John Chafee, R-R.I.
completed; and that means we' gotto
Democrats also want to reduce the
The Senate bill raises taxes on the
get a deal through," he said.
cuts in Medicare, which the Senate and
wealthy by limiting deductions; in-
A compromise was not expected un-
House bills already. have scaled back
creases the gasoline tax by 9.5 cents a
til Sunday, said Sen. Lloyd Bentsen, D-
from the $60 billion over five years in
gallon; and reduces Medicare cuts from
the failed budget agreement to $48.9
Texas, the chief Senate negotiator on
the budget agreement that failed two
taxes. Lawmakers yesterday were spec-
weeks ago.
billion over five years.
Both bills increases "sin" taxes on
ulating over the shape it might take.
During his visit to the Capitol, Bush
The House bill, rammed through by
beer, wine, liquor and cigarettes and
met with 23 Republican senators who
the majority Democrats, raises revenue
impose a new 10-percent tax on such
voted for the package in a close 54-46
by targeting the wealthy through a high-
luxury goods as furs, jewelry, expensive
vote early yesterday morning.
er marginal income tax rate and a sur-
cars, boats and planes.
"Those who really walked the plank
tax on millionaires.
deserve thanks," quipped Senate Mi-
The House-passed bill does not in-
The Senate bill, held together by
nority Leader Robert Dole, R-Kan.,
clude a tax increase on gasoline but
Democrats and Republicans. limits de-
who worked closely with Democrats to
raises taxes on the wealthy in a variety
ductions for Americans earning more
eke out the victory margin.
of ways that the White House adamant-
than $100,000 but does not tamper
noted that the Senate vote made it
ly opposes, notably an increase in the
with rates. It raises the gasoline tax by
difficult to work out a more liberal or
top marginal tax rate to 33 percent, an
9.5 cents a gallon while the House bill
more conservative package.
increase in the alternative minimum
does not increase the tax.
"If you go too far in either direction,
tax and a 10-percent surtax on income
House Speaker Thomas Foley. D-
you lose 10 Democrats or 10 Republi-
over $1 million. It also provides a capi-
Wash., acknowledged that the gasoline
cans and you kill the bill. We don't have
tal gains tax break for middle-income
tax probably would be increased in the
much wiggle room," Dole said.
taxpayers.
For example, despite his support for
Summing up the frustration with the
final package, although the House
would insist that it be less than the 9.5
the failed bipartisan agreement that he
lengthy budget process, Rep. Charles
helped fashion, Sen. Phil Gramm, R-
Stenholm, D-Stamford, likened it to
cents a gallon in the Senate bill. Sources
said conference committee members
Texas, voted against the Senate bill.
the Clint Eastwood film The Good. the
Bentsen, who is heading up the Sen-
Bad and the Ugly.
began discussing a variable tax that
would increase only if the price of oil
ate negotiating team on the controver-
"The [budget] summit was the bad.
fell below $35 a barrel.
sial tax portion of the package, said
The House budget reconciliation bill
Senate Democrats yesterday sound-
yesterday that he would "try to get the
was the good. Now the ugly is going to
best" of the Senate bill in the final deal.
ed the theme of 'fairness" and said they
be the compromise."
(More on BUDGET on Page 2)
The Miami Herald
SATURDAY, OCTOBER 20, 1990
Bush grants more
time for budget
House, Senate try for a deal
By R.A. ZALDIVAR
And CHARLES GREEN
Herald Washington Bureau
WASHINGTON - President
BUDGET, FROM 1A
Bush signed a stopgap spending bill
on Friday to keep the government
involved to "regroup and try to
Republicans voting in favor.
going through midnight Wednesday
build."
The Senate bill does not please
while House and Senate negotiators
The two sides are seeking a com-
activists in either party, but it
began the daunting task of forging a
bination of spending cuts and tax
passed, 54-46, with a slim majority
new budget compromise.
increases that will reduce the deficit
of Democrats and a one-vote major-
The White House announced the
by $40 billion in 1991 and $500 bil-
ity of Republicans.
stopgap measure to take some of
lion over five years.
the pressure off budget negotiators,
Without the stopgap bill that Bush
With Republicans in the House
who said they expect to strike a bud-
signed at 6 p.m., the government's
embracing a no-new-taxes strategy,
get deal this weekend.
authority to spend money would
House Democratic leaders believe
But negotiators acknowledged
have expired at midnight Friday.
their troops will ultimately have to
they may not have the votes to pass
Earlier this week, Bush had
provide the 218-vote majority
that deal in the House and Senate
threatened that he would veto any
needed to pass the budget compro-
stopgap bill and shut down the gov-
mise.
two weeks before an election. Lead-
ers of both parties said Friday that it
ernment for the second time in a
month. But the Senate's passage of
Herald Washington Bureau cor-
will be exceedingly difficult to get a
a bipartisan deficit-reduction bill at
respondent Owen Ullmann contrib-
deal that can satisfy both the fragile
bipartisan coalition in the Senate
1:26 a.m. Friday opened the way for
uted to this report.
and a badly divided House.
a change in presidential thinking.
"We have very little wiggle
Bush had worked behind the
room," said Senate Republican
scenes to win approval of the Senate
Leader Bob Dole of Kansas.
bill. Senate aides said the president
"If you move too far in one direc-
had an understanding with two
tion, you lose 10 Republicans and
Republican senators, Orrin Hatch
the bill is dead," Dole said. "If you
and Jake Garn of Utah, that they
move too far in the other direction,
would not let the bill fail if they could
you lose 10 Democrats and the bill is
help it. The two switched their
dead."
votes from "no" to "aye" when it
Rank-and-file members echoed
appeared that the measure was in
Dole's observation. "An agreement
trouble.
that can pass the Senate can't pass
More clutch plays like that one
the House or vice versa," said Rep.
will surely be needed to get the
Pat Williams, D-Mont. "That's our
eventual compromise bill through
dilemma."
both houses of Congress, for negoti-
With the long march out of the
ators face a double-edged problem.
budget swamp at a crucial passage,
The House and Senate bills take
Bush abandoned his partisan attacks
genuinely different paths to cut the
on congressional Democrats on Fri-
budget. The House bill, for example,
day. Paying a visit to congressional
raises income tax rates on the
leaders at the Capitol, he urged all
wealthy. The Senate bill avoids
changing rates and raises taxes on
PLEASE SEE BUDGET, 15A
the rich by limiting their deductions.
But the policy differences may be
lesser obstacles than the political
divide between the two bills.
The House bill is a partisan Dem-
ocratic statement described by its
principal author, Ways and Means
chairman Dan Rostenkowski, D-Ill.,
as "our platform." It passed by a
vote of 238-192, with only 10
The Miami Herald
SATURDAY, OCTOBER 20, 1990
Comparing plans:
How big a tax bite?
By ROBERT A. RANKIN
Herald Washington Bureau
WASHINGTON - Your federal taxes are going
Byron may think that's outra-
But the House didn't include a
to go up next year unless you make under $20,000.
geous, but even the House would
gasoline tax hike; it preferred
And the more you make, the bigger the bite the tax
raise his tax burden by only 7.4 per-
instead to delay for one year a
man will take out of your earnings.
cent, on average. Over the previous
scheduled adjustment of tax brack-
That's sure to be true - with one exception -
decade, his tax burden was cut by
ets and personal exemptions to com-
no matter how House and Senate negotiators split
14.4 percent.
pensate for inflation.
their differences as they close in on the final version
Some taxes in both bills are cer-
That would raise everyone's
of the deficit reduction bill.
tain to remain unchanged and would
taxes. But it would cost Steve much
Both versions have enough common features that
hit Steve, Marilyn, Cary and Byron
less than a higher gas tax - and
one can tell already how bad much of the tax bite will
regardless of their varying abilities
cost Byron much more, according to
be for most Americans.
to pay.
House documents.
Steve Sixpack, for instance, makes $25,000 a
For example, cigarette taxes will
In the end, Byron Bigbucks will be
year. The current House bill would raise his taxes on
go up 4 cents a pack in 1991 and
the big loser under either plan. The
average by $50, the Senate by $140, according to
again in 1993, both for Steve's
House would raise his tax rate to 33
data from the nonpartisan Joint Taxation Committee
Marlboros and Byron's French Gau-
percent and boost his alternative
of Congress.
loises. Similarly, Steve will pay the
minimum tax rate - which he must
Depending on how much Steve smokes, drinks
same 16-cent tax hike for a six-pack
pay if he takes massive deductions
and drives, he could raise or reduce his tax hike
of Budweiser that Byron will for his
- to 25 percent from 21 percent
some. But unless he's a teetotaling pedestrian, he'll
Heineken. And whether it's Gallo or
currently.
chateau-bottled Pouilly Fuisse, the
The Senate would clip his item-
PLEASE SEE TAXES, 15A
tax on table wine is going up, proba-
ized deductions by $500 for every
bly by 20 cents a bottle, splitting the
$10,000 he makes above $100,000.
House-Senate difference.
And both bills would make him pay a
Marilyn Middleclass's payroll tax
10 percent luxury tax for expensive
TAXES, FROM 1A
will rise by 1.45 percent for Medi-
furs, cars, boats, jewelry or air-
pay more.
care; so, for that matter, would
planes.
Marilyn Middleclass and her hus-
Cary's and Byron's, up to a new
So Byron's current average tax
band both work; together they pull
income ceiling. Currently, that tax
rate of 25.2 percent can only rise -
in $65,000. They would pay Uncle
rate applies only to their first
to 26.1 percent under the Senate
Sam an extra $220 next year if the
$51,300 of income. The Senate
plan, or to 27 under the House's.
present House plan prevails, or
would apply it up to $89,000; the.
Yes, Byron, the '80s are over.
$282 under the Senate bill.
House, up to $100,000.
The one exception to the rule that
If Marilyn or Steve fly the kids to
the more you earn, the more you
Disney World after Dec. 1, each of
pay is for Cary Comfortable, who
them will have to pay the same 10
earns $150,000. Thanks to a com-
percent airline ticket tax - up from
plex anomaly in the House bill, her
8 percent - that Byron Bigbucks
taxes would go up by only $280 -
will for his winter iaunt to Acapulco.
compared to the $330 increase the
How the House and Senate split
House bill would impose on some-
the difference on one key trade-off
one earning $90,000.
could make a big difference to them
However, the Senate bill would
all, however.
sock Cary for $1,259. And because
Everyone who drives would pay
Democratic negotiators from both
more under the Senate's gasoline
sides intend to improve the progres-
tax hike of 9.5 cents per gallon by
sivity of tax rates in whatever final
1992, though the amount would
compromise they strike, Cary's
vary by car and distance.
anomalous House break is probably
If Steve Sixpack's Honda gets 25
doomed.
miles per gallon, for example, and
Cary will get off easy compared to
he drives 100 miles a week, he'd be
Byron Bigbucks, however.
nicked for $19.76 a year. Byron's
Byron's going to get slammed.
Lincoln Town Car gets only 15 mpg;
But he can afford it; he makes
if he cruises around in it 150 miles a
$250,000 a year. That puts him in a
week, he'd pay an extra $49.40 a
new tax category for everyone mak-
year.
ing $200,000 or over.
If the House prevails, taxpayers in
Byron's category would have to fork
over an extra $10,031, on average.
However, the biggest part of that
SOME SAMPLE TAX INCREASES
comes from raising his tax rate to 33
percent from its present 28 percent,
and President Bush won't stand for
Income
House
Senate
that.
$25,000
$50 a year
$140 a year
By contrast, the Senate bill socks
Byron and his classmates for only
$65,000
$220 a year
$282 a year
$5,118 on average. But in the spirit
$150,000
$280 a year
$1,259 a year
of compromise, Byron and his ilk
probably will end up paying some-
$250,000
$10,031 a year
$5,118 a year
where between $5,000 and $10,000
Data from Joint Taxation Committee of Congress
each in new taxes.
The Miami Herald
SATURDAY, OCTOBER 20, 1990
House members send
home some bacon
By DAVID HESS
science as in an exercise in political
Herald Washington Bureau
Among the most popular ways of
science."
bringing home the bacon is in the
WASHINGTON - It was a happy
Walker got minimal support from
day in the House on Friday.
form of new construction or expan-
his colleagues, most of whom had a
After weeks of bitter contention
sion of national guard and military
piece of the action in one or another
over how to slash $500 billion from
reserve facilities. Indeed, they are
of the bills. His effort to strip the
so popular that House and Senate
the federal budget over the next five
research projects from the bill was
conferees on the military construc-
years, members lined up to do what
buried 308 to 108.
tion bill actually approved more
they most savor - hand out federal
The bill was adopted 362 to 51.
money for armories than either
money for hometown projects,
The facility Myers slipped into
house alone had authorized.
including some in Florida.
the bill was an "advanced technol-
For example, the conferees
Three major money bills - for
ogy center" for Indiana State Uni-
highways and airports, for energy
versity in Terre Haute. When
directed that $690 million be
and water, and for military con-
Myers' subcommittee initially
devoted to construction of armories
struction - were all on the floor in
accepted his project, Indiana State
nationwide - even though the
the same day, containing billions in
officials could not readily describe
House had OK'd only $506 million
hometown spending.
what the money was for.
and the Senate, $573 million. Seven
of the approximately 100 armories
Party distinctions were blurred as
In many cases, the projects wound
Republicans and Democrats rose in
up in the money bills as a result of
and other training facilities went to
support of each other's projects in
their sponsors' membership on the
West Virginia, home state of Senate
the time-hallowed practice of log-
appropriations committees or
Appropriations Committee Chair-
access to influential committee
man Robert C. Byrd.
rolling.
members.
For instance, Rep. John Myers of
Indiana, a senior Republican on the
In the highway and airways bill,
Appropriations Committee, stood
for instance, there was $1.5 million
shoulder-to-shoulder with Rep.
for aviation research at Wichita
Lindy Boggs, D-La., in defending
State University in Kansas, home
several university medical research
state of Senate Minority Leader Bob
projects they and others had
Dole.
inserted in the energy and water
There was also money for Florida
bill.
projects: $5.95 million for a "high-
Rep. Bob Walker, R-Pa., an irre-
way demonstration" project on U.S.
pressible critic of pork-barrel
27 in Palm Beach County, $12 mil-
spending, questioned the propriety
lion for a Miami mass transit project
of Appropriations Committee mem-
and $3.7 million for a causeway tun-
bers slipping hometown goodies into
nel in Fort Lauderdale, thanks in
spending bills without weighing
part to Rep. William Lehman,
them against possibly more worthy
D-North Miami Beach, chairman of
projects.
the transportation appropriations
Rep. Don Ritter, R-Pa., quipped
subcommittee.
that the House was "engaged not so
The transportation measure
much in the advancement of pure
passed by a 394-17 vote.
Richmond Times-Dispatch
Friday, October 19, 1990
William Safire
A Referendum on Taxing VS. Spending
WASHINGTON - These are glory days for
American democracy. Congress is in an up-
'The game's name is political purpose. Compromise should be
roar, the wavering White House is acquiring a
struck after the will of the people has been expressed.'
new sense of direction, and the American
voter may soon be treated to a real cam-
closer to being rich than to being poor, and
creep" - using inflation to automatically
paign.
consider it unfair to carry all those unproduc-
increase tax rates.
The Democrats are acting like old-fash-
tive others on their backs.
That's $36 billion out of middle-class pock-
ioned Democrats. "Soak the rich" - a phrase
When these more-rich-than-poor Ameri-
ets for one year's creep; prevent indexing for
born in 1934 to blast FDR's embrace of Huey
cans utter such sentiments, old-fashioned lib-
five years, as would surely follow, and you
Long populism - is the new battle cry of
erals deride them not only for being selfish
achieve the liberal dream of "fairness" -
suddenly unabashed liberals.
but racist to boot. This swells the ranks of
redistributing income on a grand scale.
Having suckered President Bush into aban-
conservatives, because most voters are not so
The Republican president, chastened by a
doning his no-tax firewall, Democrats have
motivated and resent politicians who make
whopping drop in support after waffling on
shifted the focus of the budget debate away
them feel guilty.
the central promise of his campaign, says he
from spending and onto the source of more
Therefore, Republicans should not fear
would veto that bill. That fat and easy target
taxes.
class warfare; the almost-rich far outnumber
will never reach his desk; Senate Democrats
They call this "the fairness issue." A cen-
the almost-poor, and most of the people in the
are taking a slightly more sober route of
tral tenet of liberalism is government's guar-
middle tend to identify with the almost-rich,
taxing booze and gas.
antee that everyone, working or not, needy or
whom they want to become.
not, is entitled to what politicians decide is a
Moreover, most people now know that the
But whatever budget the Democratic Con-
fair share of what the nation produces.
target of taxers has to be the middle-class
gress passes, its philosophical approach to the
Republicans traditionally grumble that
pocket; squeezing the richies may be egalitar-
deficit will be new taxes in this "in" year and
this classic, straightforward demagoguery
ian fun but is not where the big money is.
pious promises of reduced rates of spending
encourages "class warfare," turning rich
What happens if you surtax millionaire
in the "out" years. Tax now, cut spending
incomes by 10 percent and add a 10 percent
later.
against poor. They get defensive when
charged with standing for vested property
tax on furs, boats and jewelry, as the House
This liberal approach will pass over the
interests by opponents who claim to belong to
liberals suggested? The budget deficit might
objections of most of the Republican minority
"the party of the people."
be reduced by 2 percent, not counting the
in Congress. Such dissent is healthy; if it
But these self-conscious conservatives
losses to the Treasury of taxes from people
means that the government shuts non-essen-
miss the point of politics in an age of afflu-
prevented from selling luxury items.
tial services for a while, that will dramatize
ence. The fairness issue has been turned on its
The hidden tax increase in that liberal
the depth of disagreement and bring the vot-
head. Most people think of themselves as
budget proposal is to reinstate "tax bracket
ers to the polls.
The only way the minority will become a
majority is to draw an issue of principle.
Within the administration, Bush's Stolypin,
Jack Kemp, soldiers on in loyal silence, but in
Congress, the Republican minority must hold
the Bob Packwood line on tax rates and align
itself with the majority opinion in the nation.
Where will it all end? Isn't compromise the
name of the game?
The game's name is political purpose.
Compromise should be struck after the will of
the people has been expressed. Let Bush veto
the taxation budget, let the Republicans up-
hold the veto, and let us use this election as a
referendum on taxing VS. spending.
The current impasse is no cause for nation-
al embarrassment; on the contrary, it is the
overdue surfacing of basic political differ-
ence.
A closed-down government on Election
Day would bring out anti-incumbent voters in
force. Candidates, take your positions: tax
and service reductions VS. tax and service
increases. Duck that in your spots and feel the
voter heat.
c.1990 NY. Times News Service
Saturday, October 20, 1990
DAILY NEWS
Dem VOW: Soak rich
or at least damp 'em
By SUSAN MILLIGAN
possibility of accepting a
at the eight-vote margin,"
News Washington Bureau
lesser increase.
Dole said, remembering that
WASHINGTON - Congressional Democrats
The Senate version, passed
the Senate plan had only
vowed yesterday to fight for a tax hike on the
early yesterday, includes no
passed by a 54-to-46 vote.
rate increases.
rich as negotiators entered the final stretch of
Negotiators also said they
Increasing the tax rate on
expected the final budget
marathon talks on a deficit-cutting package.
the wealthy is expected to be
plan would include some gas-
The possibility the end was
the biggest sticking point in
oline tax increase. The
finally in sight after weeks of
through Wednesday, averting
final negotiations on the
House plan has no increase,
budget chaos prompted a vis-
a shutdown like the one that
package, which would cut
while the Senate package
it to Capitol Hill by President
followed the defeat of a defi-
$500 billion from the deficit
would hike the tax by 9.5
Bush, who urged lawmakers
cit package earlier this
over five years.
cents.
to quickly resolve the sharp
month.
House Speaker Thomas Fo-
Congressional sources indi-
differences between House
Though Bush has vowed to
ley (D-Wash.) called the tax
cated the negotiators would
and Senate budget packages.
veto the House plan that
rate increase "one of the key
probably kill a House provi-
The White House also said
would hike the tax rate from
elements of fairness," and
sion which delays for one
Bush would sign a stopgap
28% to 33% on wealthy Amer-
said the House would fight
year inflation adjustments to
bill to fund the government
icans, he did not rule out the
for it during negotiations.
the income tax brackets and
Senate Majority Leader
personal exemptions.
Robert Dole (R-Kan.) indicat-
Bush has attacked that
ed that some tax hike on rich
House Democratic idea as a
Americans - although per-
-
shot at middle-class Ameri-
haps not 33% - would proba-
cans, since the adjustment -
bly be adopted. But he
called "indexing" - prevents
warned that if the plan went
all taxpayers from being
too far in the direction of the
pushed into a higher bracket
House proposal, it would not
when inflation swells their
be approved when it went
income.
back to the Senate.
The two sides must also
"It's like taking a cold
agree how much to cut Medi-
shower when you take a look - care.
The Boston Blobe
SATURDAY, OCTOBER 20. 1990
House, Senate seek budget compromise
By Peter G. Gosselin
GLOBE STAFF
WASHINGTON - Congressional
For example, the final deal will
something on rates," said Rep. Brian
leaders yesterday began picking
almost certainly omit a provision in
Donnelly, the Massachusetts Demo-
among House and Senate versions of
the Democratic-designed House plan
crat, and a member of the tax-writ-
the largest deficit reduction plan in
that would delay for one year infla-
ing House Ways and Means Com-
US history, S rching for a compro-
tion adjustments of income tax
mittee.
mise that car vin approval from a
brackets and personal exemptions.
But Bush and congressional Re-
politically shellshocked Congress
Bush and congressional Republicans
and president.
publicans have repeatedly said that
have hammered away at the provi-
they cannot accept any substantial
The final version of the five-year,
sion - which would raise $36 billion
$500 billion plan will almost certainly
rate change. "If you move too far in
over five years largely from lower-
raise taxes on wealthy Americans.
one direction, you're going to kill the
and middle-income taypayers - as
But which taxes and by how much
evidence that Democrats are not liv-
bill. We don't have much wiggle
room," said Sen. Bob Dole of Kan-
remained uncertain yesterday. No fi-
ing up to their claims of protecting
nal plan is expected before tomorrow
sas, the Senate Republican leader.
the middle class.
at the earliest.
The deal is widely expected to in-
The issue is not as easily settled
President Bush sought to boost
clude some increase in the 9-cent
as it might at first appear. The
chances for a deal by agreeing to
federal gasoline tax, but not any-
House plan calls for boosting the top
legislation that keeps the govern-
thing like the 9.5-cent boost now in
rate on the wealthy from 28 percent
ment running through midnight
the Senate plan. Key players in the
to 33 percent. White House officials
Wednesday. Earlier this week, he
budget talks say they can accept a
have said that they might accept a
had said he would refuse to sign a
gas tax increase, despite its unpopu-
31-percent rate.
stopgap spending measure, which
larity in the auto-dependent West
But because of the current tax
would have caused the second shut-
and the fact that it would come on
system - which for families with
down of the government in three
top of gasoline price increases
joint returns now taxes income be-
weeks and almost certain congres-
caused by the Persian Gulf crisis.
tween about $75,000 and $200,000 at
sional outrage.
The Senate plan would raise
a 33-percent rate and that over
Bush also tried to mend some of
$42.6 billion with a gas tax increase.
$200,000 at a lower 28 percent rate -
the political damage of the budget
The House plan does not include
the White House proposal would re-
battle by making an unusual trip to
one.
sult in a tax cut for many well-off
Capitol Hill to chat with congres-
Almost everyone in the talks
Americans even as it raised the tax-
BUDGET, Page 4
would also like to reduce proposed
es of the wealthiest. As a result,
Medicare cuts, which have sparked
many Democrats reject it.
outrage among the elderly. But bar-
gainers have yet to come up with
BUDGET
other savings to replace those that
Continued from Page 1
had been expected from the
sional leaders and lawmakers who
program. The Senate plan calls for
have supported him. With only two
$52 billion in cuts in the medical in-
weeks to go before Election Day,
surance programs for the elderly
polls show that both he and Con-
and disabled; the House plan calls
gress have suffered tremendously
for $43 billion.
with voters because of the budget
Bargainers have still less maneu-
mess.
vering room when it comes to taxes
At issue in this final round of bar-
on the wealthy. The issue has sud-
gaining among congressional leaders
denly emerged as the principal
and the White House is how to fit
battleground between Republicans
together a House-backed budget
seeking to retain a grip on the na-
plan that sharply raises taxes on the
tional political agenda and resurgent
wealthy with a Senate plan that,
Democrats, who believe their oppo-
while also raising the taxes of the
nents are open to blame for the ex-
rich, depends more heavily on gaso-
cesses of the 1980s.
line tax increases and Medicare cuts,
which hurt middle-income taxpayers
House Democrats asserted yes-
and the elderly the most.
terday that any budget compromise
The two plans would take care of
must include a higher top income tax
about half of the $500 billion deficit
rate for the rich. "We've got to get
reduction goal agreed to by the
White House and Congress. The re-
mainder would come from defense
cuts and reduced interest payments
on a smaller federal debt.
While some elements of the final
budget deal were apparent yester-
day, the fates of others - especially
those involving taxes - remained as
murky as they been since the start
of the budget season.