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Jamming the trigger

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Centrists say Bush's tax cut needs a safety mechanism. Should he compromise or hang tough?

For all of President Bush's promises to bring a new tone to the capital, it felt like the bad old days in Washington last week. Democrats railed about the "shameful subversion of the process" as Republican leaders muscled the largest chunk of Bush's tax cut through the House with virtually no Democratic influence or support. The education bill everyone says he or she wants limped out of a Senate committee, but only after Republicans blocked Democrats from adding money for school repair and Democrats blocked money for vouchers. As a favor to business interests, Republicans in both houses rolled back Clinton Administration regulations meant to curb repetitive-motion injuries in the workplace. And Bush continued his tough-love approach to bipartisanship, wooing vulnerable Democrats on taxes by flying to their home states and threatening their political survival. "Hostage taking!" fumed California Congresswoman Ellen Tauscher.

So it was a kind of poetic justice that when the first serious obstacle to Bush's tax cut emerged, it came from the year's first act of true bipartisanship. Five Senate Republicans and six Democrats--a potent bloc in the evenly divided Senate--announced they would support big tax cuts only if they include a "trigger" or "safety mechanism" that would prevent future rate reductions from kicking in if projected budget surpluses fail to materialize.

By peddling an idea first raised by Federal Reserve Chairman Alan Greenspan--whose seal of approval is to economic policy what Good Housekeeping's is to home appliances--the centrist bloc instantly seized the fiscal high ground. Bush insists that the surplus, projected to be $5.6 trillion over the next decade, can easily accommodate his $1.6 trillion tax cut. But while government number crunchers are fairly accurate when predicting revenues over the next year or two, they are notoriously unreliable six or more years down the line, when more than two-thirds of the Bush cuts would take effect. And if they were off by less than 2% of gdp five years from now, the surplus would be all but wiped out. "It is imperative that we protect the surpluses," says Maine Republican Olympia Snowe, a trigger proponent who sits on the Finance and Budget committees.

The White House rejects the idea, as it has rejected every challenge to the plan so far. Even before the Senators put forward their proposal, Bush adviser Karl Rove told allies that any trigger "is dead on arrival with this President." The Bushies argue that a tax cut without a guarantee would be useless in reviving the economy. "These tax cuts are important because people plan investment and savings on them," says Nebraska Republican Chuck Hagel. "If you're playing around with that, the uncertainty of that will withhold commitments of capital investments, which create productivity and jobs and tax revenues." Many Democrats aren't wild about triggers either--but for very different reasons. "My preference is to reduce the size of the tax cut so triggers aren't necessary," says Senate minority leader Tom Daschle. And both sides fear a centrist bill will provide political cover for pols too fainthearted to back Bush--or to stand with Daschle against the President.

The real problem with triggers, though, is that there is no guarantee they will work. When it's time for them to kick in, lawmakers sometimes use accounting gimmicks to get around them. The most famous example is the 1985 Gramm-Rudman-Hollings Act, which was passed at a time of surging deficits and required deep spending cuts to be enacted automatically if Congress failed to do the job. "The first time we pulled the Gramm-Rudman trigger, it went off. The second time we pulled it, it went off," former Senator Warren Rudman recalls ruefully. "The third time we pulled it, it misfired, and by the fourth time, they took away the gun."

At a minimum, the trigger proposal suggests the easy part is over for Bush. His tax plan is far less likely to get through the Senate intact. Democrats have begun to shake themselves out of their postelection Pardongate torpor; they're ready to rumble. "This is the President presenting his tax proposal," says Indiana's Evan Bayh. "This is not Moses coming down the mountain with tablets of stone." Even some Republican leaders aren't singing in unison with Bush. Finance Committee chairman Charles Grassley has predicted that the 10-year resolution his panel passes is likely to provide for tax cuts of "up to" Bush's $1.6 trillion, with smaller reductions in the estate tax and for the top income bracket than Bush proposes.

Democratic Senators seemed more annoyed than intimidated that Bush kept sweeping into their states to argue for his tax plan. Bush sees it as a variation on Ronald Reagan's strategy of going over the heads of Congress; Reagan's televised 1981 appeal for tax cuts flooded Capitol Hill with supportive phone calls and letters. But a week after Bush's visit to Nebraska, aides to Democratic Senator Ben Nelson say, the response to Bush was unremarkable--far fewer calls and e-mails, in fact, than the office got in January during the battle over John Ashcroft's Attorney General nomination. Daschle greeted Bush's arrival Thursday in South Dakota, Daschle's home state, with ads thanking him for the visit and urging him to work with Democrats for "real tax relief that's responsible and fair for everyone." And Daschle taunted Bush for refusing to debate the question with him on the state's largest TV station.

While Democrats were powerless to stop the tax bill in the House, Bush's unbending tactics there generated plenty of ill will. His tax cut got only 10 House Democratic votes, compared with 48 for Reagan's, and some of the loudest opposition came from the most conservative Democrats--the "Blue Dogs" whom Bush aides had once considered potential allies. By forcing the most fiscally conservative members of the party to accept a tax cut they consider too large and by doing it before he produced the details of his budget and spending cuts, Bush galvanized the Democrats "in a way Dick Gephardt could never do," says Democratic Senator John Breaux. "That could spell serious problems for them on Medicare reform, education reform and other issues. What they did certainly didn't change the culture. It was just a repeat."

As the going gets rough, Bush may be forced to make nice. So far, though, it looks as if Washington is playing the same old game, with the same old score. "Confrontation: 10," Daschle says. "Bipartisanship: zero."


Cover Date: March 19, 2001



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