GOP Tax Plan Trips Congress As Recess Nears

JUST as the 1991 legislative season was coming to a head this week, something got in the way: 1992.When the week dawned, three major pieces of legislation remained to be completed before Congress could recess for the holidays - the crime bill, the highway bill, and replenishment of the nation's bank insurance fund. Enter Newt Gingrich. The House minority whip led an 11th-hour charge of House conservatives to force the issue of tax cuts to the top of the agenda in answer to a president they perceive as slow off the mark in spurring economic recovery. Suddenly, the economic growth plan that President Bush said he would offer in his State of the Union address in January was on Congress's screen and demanding immediate attention. "This isn't the last act of 1991, but the first act of 1992," a presidential election year, says Stephen Hess, a senior fellow at the Brookings Institution. "Each party is circling and positioning [to show] who loves the middle class more." Representative Gingrich's maneuver angered congressional Democrats, annoyed some Senate Republicans, and forced the White House to scramble to get its position straight on a plan that would cut the capital-gains tax to boost investment and help pull the nation out of recession. House Speaker Tom Foley (D) of Washington was seething. Gingrich's plan, he said, "accomplished absolutely nothing but to put the president in the embarrassing situation" of supporting a proposal that would violate last year's budget agreement. Mr. Foley said the plan would raise the nation's budget deficit, already heading for a record $350 billion this year, by an additional $23 billion over five years. Proponents say it would pay for itself through the enhanced economic activity it would spur. Senate minority leader Robert Dole (R) of Kansas was less than enthusiastic about the plan, or at least the manner in which it was handled. He stressed the need for careful consideration and debate and predicted it was too late to pass tax legislation this year. The White House moved from a lukewarm reception Monday evening when Gingrich presented the plan to the president to endorsement on Tuesday. Bush insisted he did not want Congress to come back after Thanksgiving, and urged instead that Congress vote on the package Tuesday. No vote was held, but Foley held out the possibility of recalling Congress in December to work out a tax-cut package. The Democrats' plan is to cut the taxes of the middle class and boost the taxes of the rich. The House Ways and Means Committee will hold hearings next week on the various tax proposals. As this first half of the 102nd Congress was drawing to a close, House Republicans felt particularly hemmed in. They were eager, like other members, to begin their holidays, but worried about facing their constituents in light of the recession, embarrassing episodes such as the House check-bouncing scandal, and Bush's image as a veto-happy president rather than an initiator of legislation. (Bush's approval rating has dropped to 51 percent, down 16 points from a month ago, according to the latest New York Times-CBS News poll.) Minority leader Robert Michel (R) of Illinois, who joined Gingrich in meeting Bush on Monday, describes a disconnect between House Republicans and the administration. "The administration was saying, 'Get out of town,' and our guys were saying, 'I don't have all that much to talk about when I go home, he said at a Monitor breakfast Monday. Even as the Gingrich tax proposal dominated headlines, the usual end-of-season crush of legislative activity continued: * The crime bill. Bush threatened a veto, saying it did not do enough to limit the number of appeals by death-row inmates. He also wanted the bill to allow police freer reign in seizing evidence without search warrants. Ultimately, the bill - which narrowly passed in the House on Wednesday - is more symbolic than substantive and allows all who vote for it to show in the '92 elections that they are tough on crime. For example, the measure expands the death penalty to 52 federal crimes, but they are offenses that are extremely rare, such as killing a federal egg-products inspector. * The highway bill. The $151- billion, six-year measure lingered late in Congress because of the complexity of slicing the pie equitably among the 50 states. "The tragedy is if Congress had been more efficient, it could have put a lot of people to work sooner," says Mr. Hess. On Tuesday, Transportation Secretary Samuel Skinner said the bill could create 4 million jobs over six years. * Bailouts for the Bank Insurance Fund (BIF) and the savings and loan fund. It's not difficult to understand why Congress has saved this one for last: The administration has asked Congress to authorize a Treasury loan of $70 billion for the BIF and a doubling of the federal payment for the S&L bailout to $160 billion. On Tuesday, Treasury Secretary Nicholas Brady sent a letter to Senate Banking Committee Chairman Donald Riegle (D) of Michigan, saying Congress is risking losing the loan of taxpayer money by not carrying out a broad reform of the banking system that would allow it to become more competitive.