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Issues - Budget/Dead Cat 10/22/90 [OA 8749]
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323154552
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Issues - Budget/Dead Cat 10/22/90 [OA 8749]
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13871-017
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Records of the White House Office of Speechwriting (George H. W. Bush Administration)
Mark Davis Subject Files
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Originally Processed With FOIA(s):
FOIA Number:
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:
Speechwriting, White House Office of
Series:
Davis, Mark, Files
Subseries:
Subject File, 1989-1991
OA/ID Number:
13871
Folder ID Number:
13871-017
Folder Title:
Issues-Budget/Dead Cat, 10/22/90
Stack:
Row:
Section:
Shelf:
Position:
G
19
2
6
4
Nation
TIME/OCTOBER 22, 1990
Read
My
Hips
EIK
Mountain
Kanch
Bush's flip-flops add
new confusion to the
Creek
-
1990
budget battle and
raise doubts about
his domestic
leadership
By DAN GOODGAME WASHINGTON
The question is perhaps best
left to psychiatrists, but last
week Congressmen, Sena-
tors, White House aides and
millions of Americans were
trying to answer it. How could George
Bush-the World War II bomber pilot, the
Commander in Chief who invaded Pana-
ma and ousted its dictator, the leader who
dispatched more than 200,000 U.S. troops
to the Persian Gulf and ably assembled an
international alliance to confront Saddam
Hussein-be so wishy-washy?
As Congress squabbled in search of a
budget, Bush during three dizzying days
switched his position at least four times on
the key question of what additional taxes
the most affluent citizens should pay to
help reduce the budget deficit. On Tuesday
morning he declared that he might accept
raising income taxes on the wealthy in ex-
change for his long-sought cut in taxes on
capital gains. That afternoon he backped-
aled under pressure from Senate Republi-
cans: White House aides announced that
Bush did not favor pursuing such a deal.
Two days later, facing countervailing pres-
sure from House Republicans, Bush re-
opened the possibility. Then about an hour
later he closed it again.
BOB DAUGHERTY - VP BOB
Asked to clarify his position as he
jogged in a St. Petersburg baseball park,
How could the man who confronted Saddam be so indecisive?
26
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Toyota Tercel Deluxe and Nissan Sentra XE.
*Not affiliated with the U.S. government.
Bush pointed to his backside and
a problem with the complexities
gibed, "Read my hips." Then,
Do you approve or disapprove of the way
that the Middle East has now,
literally and metaphorically, he
Bush is handling his job
and the gulf has now, I enjoy try-
abandoned the playing field. He
as President?
ing to put the coalition together
later said he would wait for Con-
Aug. 23
Oct. 3
Oct. 10
and keep it together
I can't
gress to clear up the confusion
Approve
74%
61%
59%
say I just rejoice every time I go
he had helped engender. Bush's
up and talk to [House Ways and
vacillation confounded his allies
Means chairman Dan] Rosten-
and delighted his opponents.
Is Bush doing a good job
kowski about what he's going to
Newspapers across the country
do on taxes."
bannered headlines studded
or a poor job:
Good job
Poor job
Any President faces fewer
with words like WAFFLE, RE-
constraints in foreign policy
TREAT, BLINK and ZIG-ZAG.
Handling foreign policy?
67%
26%
than at home, and many have
Bush's approval rating, which
Handling the economy?
34%
56%
been known to seek solace from
stood in the mid-70s only a
Working with Congress on
the slings and arrows of home-
month ago, plummeted 10 to 15
the budget deficit?
35%
56%
grown politics in its embrace.
points. It was, said a senior Ad-
But what particularly drags
ministration official, "the worst
Bush down in domestic policy is
week of his presidency." The
Is the U.S. in a recession now?
the limits of his leadership style
outpouring of criticism reflected
Yes
and the key lieutenants on
long-held doubts about Bush's
58%
whom he relies.
approach to domestic- affairs.
From a telephone poll of 500 adult Americans taken for TIME/CNN on Oct. 10 by Yankelovich
Bush's patrician approach-
G.O.P. strategists complained
Clancy Shulman. Sampling error is plus or minus 4.5%. "Not sures" omitted.
TIME Charts
gradually building trust among
that the President's flip-flops
other members of an élite and
had weakened the widespread
cutting private deals with
perception that Congress is more responsi-
lems have little effect on his conduct of for-
them-has often worked effectively on the
ble for the budget fiasco than the White
eign policy. Bush's advisers insist that there
foreign front. But it does not deliver as well
House. Complained a top adviser to the
is a "fire wall" between domestic and for-
in domestic policy, where myriad officials,
President: "We've managed to change the
eign policy, not only in the President's
interest groups and ordinary citizens de-
subject from 'Can the Congress pass a
thinking but also in that of the Congress and
mand to have their say, both before any
budget?' to 'Why isn't the President
the public.
proposed solution is made public and af-
leading?"
So why has Bush inflicted so much un-
terward. When Bush tries to communicate
necessary damage on himself? Part of the
with a TV audience, he often lacks confi-
oreover, by concentrating on
answer is that he has never had firm con-
dence. More important, except when he is
M
cutting the capital-gains tax,
victions on domestic issues; over the years
campaigning for himself, Bush shrinks
which would benefit mainly
he has altered his stance on abortion, civil
from framing options in a stark and per-
the few Americans who earn
rights and even supply-side economics
suasive manner that can force people to
more than $200,000 a year, the President
when it was politically expedient to do so.
make a choice. He often speaks of using
strengthened the impression that his high-
Bush has always regarded domestic policy
the "bully pulpit" to get his way, but to him
est domestic priority is taking care of the
as "deep doo-doo," not to be stepped in if
it means little more than "telling people
rich. Harrison Hickman, a Democratic poll-
at all possible. Foreign affairs, on the other
how deeply you feel" instead of knocking
ster, gleefully observed that "George Bush
hand, he regards as his strongest suit. As
heads together to get things done.
has two Achilles' heels-'rich' and 'wimp'-
Bush acknowledged at a White House
For more than a year Rostenkowski,
and managed to expose both of them on the
press conference last week, "When you get
one of Bush's closest friends in Congress,
same day."
has pleaded with the Presi-
The President and his
dent to "tell the American
men naturally downplayed
the political damage. Bush
told reporters that "these
TERRY ASHE FOR TIME
people that if we don't bal-
ance our budget, we're go-
ing to be No. 2 in the world,
things come and go. The
and the American people
best thing, we get a budget
will say "The hell we are!' If
deal, we get a good deal,
you challenge them, they
and people will forget the
will accept whatever sacri-
name calling." But when a
fice you say is necessary."
budget deal is passed, Bush
Bush was unmoved by
may have little influence
Rostenkowski's appeal, as
over it, and will have trou-
he was last month when
ble dispelling his image of
some advisers urged him to
weakness.
forcefully exploit the crisis
Another danger was that
in the gulf as an opportuni-
Bush's performance would
ty to make progress on the
rattle the confidence of al-
budget. Bush did give a
lies in the anti-Saddam co-
televised speech linking the
alition and strengthen the
two problems, but rather
Iraqi leader's resolve against
than call on all Americans
an enemy he perceived as
to sacrifice, he proposed
wounded. So far the Euro-
nearly $30 billion in new
pean and Arab leaders in
tax breaks and left the
the U.S.-led coalition
tough choices to Congress.
against Iraq believe that the
Outside the Capitol, Democrat Richard Gephardt took heat from angry voters
After reaching a budget
President's domestic prob-
Inside, Congress struggled to devise its own deficit-cutting plan.
agreement with congres-
TIME, OCTOBER 22, 1990
27
Nation
sional leaders, Bush delivered a tepid
prime-time address on Oct. 2 asking Amer-
Blowing Off the "Bubble"
icans to call their lawmakers in support of
the deal. Instead, the overwhelming major-
ity of calls and letters opposed it, with
A
t the heart of all the congressional squabbling over the budget is a bizarre
many complaining that its regressive ap-
quirk in the income tax code known as the "bubble."
proach-with increased taxes on liquor, to-
The bubble was created in 1986. To simplify the tax code, the old graduated sys-
bacco and gasoline, not to mention higher
tem (in which there were as many as 15 brackets, each subject to a differing marginal
Medicare premiums-would hurt the poor
rate) was replaced by a new scheme with only two rates: 15% for low-income taxpay-
more than the rich.
ers and 28% for everyone else. But achieving that goal required some juggling. For
Thus when Bush last week conceded
most joint filers, for instance, income below $32,450 is taxed at the 15% rate. To en-
that he might be willing to raise tax rates on
sure that those who make more kick in 28% on all their income, the government puts
the wealthiest Americans, many Republi-
a larger bite on the high end of their earnings. So for the same joint filers, the margin-
cans were flabbergasted that he had done it
al tax rate jumps from 28% to 33% on taxable income between $78,400 and $162,770.
so casually, in the course of a 40-minute
Then comes the odd part: it drops back down to 28% on income above that level.
press conference. If he had issued a ringing
Is that a break for the rich? Not really, most G.O.P. lawmakers insist. Unlike
proclamation that higher taxes on the rich
low- and middle-income earners, joint filers with incomes above $162,770 cannot
were needed, says a senior Republican,
claim personal exemptions. They are also taxed at the full 28% rate even on their
"he could have explained that he felt it was
income below $32,450. With those considerations factored in, both middle-income
necessary to make the package fair, and we
and wealthy earners are supposed to wind up paying the same marginal rate of 28%
would have got political credit for it. In-
on their earnings over $32,450.
stead, now we look like we're being
dragged into raising the top rates and the
1990 rates on joint returns, four exemptions
Democrats are beating us to death as the
32%
party of the rich."
"The bubble"
28%
Marginal tax rate
he President's effectiveness in do-
24%
tax paid rate in taxes)
T
mestic policy has been further
hampered by the ham-handed-
(percent Effective of
ness of White House chief of staff
20%
John Sununu. The former New Hampshire
Governor, complains an official, "got
ahead of the boss" when he sought to kill
16%
the deal combining a capital-gains tax cut
with a higher income tax rate-a mistake
12%
that did not go unnoticed by Bush. By fail-
ing to disguise his contempt for Congress,
8%
Sununu has managed to alienate even the
Republicans whose support Bush desper-
4%
ately needs. Two weeks ago, Sununu dis-
missed Mississippi Senator Trent Lott's
0%
complaints about the original budget pact
$0
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
$220
$240
as "insignificant." In response Lott or-
Source: Tax Foundation
and Arthur Andersen
Taxable income before exemptions in thousands
TIME Chart by Joe Lertola
dered up buttons with the words I'M INSIG-
NIFICANT, TOO. Sununu's remark was
But try to explain that to people subject to the 33% marginal rate. Capitaliz-
especially damaging because Lott has pro-
ing on the widespread impression that the bubble gives a bonanza to the man-
vided crucial votes to uphold three of the
sion-and-limousine set, House Democrats led by Ways and Means Committee
President's least popular vetoes. Says Lott:
chairman Dan Rostenkowski have proposed to puncture it. They would tax all in-
"They're going to need me again, real bad
come over $200,000 at the 33% rate and levy an additional 10% surcharge on in-
and real soon."
come over $1,000,000. Though such hikes would apply to only about 740,000 tax-
The White House budget strategy, such
payers, the congressional joint tax committee reckons the change would bring in
as it is, assumes that none of the factions
$4.2 billion in additional revenue in the current fiscal year and $44.3 billion by
that rejected the bipartisan budget accord
1995. It also has the political appeal of imposing a higher rate on the rich than on
will manage to put together a plan they like
the less affluent.
better and get it through the House and the
Most Republicans find the idea of raising income taxes anathema-unless
Senate. After they fail, a senior White
they can get a capital-gains tax cut in exchange. That swap was contemplated dur-
House official predicts, "everybody's got to
ing the long-running budget summit, but discarded as politically unfeasible. It re-
be forced back to the middle"-that is,
surfaced briefly last week, when Republican Congressman William Archer of
back to an outline not very different from
Texas claimed that Bush had said "without equivocation" that he supported Ar-
the defeated proposal. That could happen.
cher's plan for lifting the top income tax rate to 31% while slashing the tax on cap-
But many members of both parties say they
ital gains to 15%. Once again the trade-off was shot down. The main reason: Ar-
would not be pushed back to the regressive
cher's plan would lower taxes on incomes over $200,000 by 6.6%. Given
approach that was so resoundingly turned
Democratic opposition to any formula that appears to favor the rich, Bush de-
down two weeks ago. They would rather
clared that pursuing such a compromise would be "a waste of time." Maybe so,
pass a budget that is both more equitable
but eventually Washington will have to find a plan that inflicts the pain of tax-
and practical-if the President would only
paying on everyone-including the rich.
assume his responsibilities and lead them
to it.
-With reporting by Michael Duffy/
Washington
28
TIME, OCTOBER 22, 1990