Tax-cut plan may keep growing, and growing

President Bush's tax plan is hitting Capitol Hill with so much momentum that - if it were a train - it would overshoot the station.

Some Republican lawmakers, almost giddy at the prospect of a large, across-the-board cut after years of denial, are hoping to return to taxpayers even more than the $1.6 trillion Mr. Bush has proposed. Many are talking about making a cut in income-tax rates retroactive, to give the public more immediate relief. Others want to add a cut in the capital-gains tax. And business groups - who get very little from Bush's plan - are pressing GOP lawmakers for tax relief of their own.

Even Democrats, who have traditionally wanted to keep money in Washington, are saying a sizable cut is affordable.

As a result, say analysts, Bush's $1.6 trillion plan may balloon to $2 trillion or more.

"We're headed full tilt into an imprudently large tax cut, unfairly distributed, unless Congress can persuade the administration to change its ways," says Henry Aaron, senior fellow at the Brookings Institution, a liberal think tank.

Hewing closely to the plan he outlined during the campaign, Bush sent to the Hill yesterday a plan that lowers marginal tax rates, doubles the child tax credit, reduces the marriage penalty, and eliminates the estate tax. "We need tax relief now. In fact, we need tax relief yesterday," said Bush in his first Rose Garden event yesterday.

Meanwhile, Democrats are searching for a response they can all rally round. So far, their message is mixed: Progressives on the left argue that big tax cuts will starve needed new investment in education and healthcare. New Democrats and other moderates say the key issue is fiscal responsibility, and surpluses should be used to pay down the national debt.

"We are going to have to work very hard to build consensus around a set of ideals that we can share," says Sen. Thomas Carper (D) of Delaware, a moderate.

Already, Democrats have boosted their estimates of how much tax relief the nation can afford to the $700 billion to $900 billion range. Senate minority leader Thomas Daschle (D) of South Dakota says Democrats are still working out an exact number.

At the same time, the Republican leadership is facing new pressure within its own ranks to increase the tax cut. Some House conservatives are urging cuts amounting to at least $2 trillion over 10 years. They call it "Bush-plus."

"It is morally wrong for the government to become rich as some of the people become poor," says Rep. Mike Pence (R) of Indiana, citing layoffs in the auto industry as evidence of the need for a higher tax cut.

Freshmen moderates, already looking ahead to their next campaign, are also leaning toward a bigger cut. "It could help head off a recession, and give parents in my district help dealing with education costs," says Rep. Eric Cantor (R) of Virginia.

Business and tax-cut groups would ratchet the cut even higher. The National Taxpayers Union called for a $2.2 trillion tax cut this week, including reductions in investment taxes. Business groups are calling for cuts in corporate tax rates and making depreciation provisions in the tax code more favorable to business. And the conservative Club for Growth has pledged to target television ads against Republicans who do not commit to a big tax cut.

"We are creating a new right flank on the tax-cut issue. It makes the Bush plan seem like the centrist plan," says Stephen Moore, president of the Club for Growth.

So far, the White House is resisting calls for increasing the size of the cut or adding a business wish list to the plan. But GOP leaders say there is momentum in the House to advance these issues.

"The huge boost in the projected federal budget surplus reaffirms that taxes can be cut without fear of eroding budget resources needed for other priorities," says Rep. John Shadegg (R) of Arizona, the chairman of a House committee that calls for more "aggressive" tax relief than does the White House.

The Republican leadership plans to introduce the Bush tax cuts one at a time - a strategy that allowed them to win over moderate Democrats in last year's vote to repeal the marriage penalty and the estate tax.

"The president wants a package that adds up to his numbers. He doesn't care if it comes in the form of five or six bills," says Rep. Michael Castle (R) of Delaware.

Democrats worry that this strategy could sweep the nation back into the big budget deficits of the Reagan era. Having to beat back each cut one at a time "makes our job harder," says Sen. Evan Bayh (D) of Indiana, new chairman of the Democratic Leadership Council.

House minority leader Richard Gephardt agrees: "We've had a 20-year experiment. We know whether or not it worked - frankly, it didn't. It created the biggest deficits in the history of the country, in large part because of the misplaced, unwise economic and tax policies we adopted in 1981."

Staff writer Francine Kiefer contributed to this report.

(c) Copyright 2001. The Christian Science Publishing Society