Tax Plan a Reality Check for Democrats

WASHINGTON —  Less than a month into President Bush’s administration, congressional Democrats are engaged in a soul-searching hunt for an opposition strategy--one that not only would guide them through upcoming debates on tax and budget policy but also help redefine their party in the post-Clinton era.

All this is being hashed out by Democratic lawmakers in a frenzy of party retreats, brainstorming sessions, caucus meetings and late-night arguments among various factions about how best to deal with Bush from their new position of weakness. The process is unnerving to some Democrats, who are just beginning to come to terms with the fact that they no longer have a leader in the White House to unify the party, amplify its message and focus its attention.

“We’re making it up as we go along,” one Democratic strategist said.

The political juggernaut propelling the $1.6-trillion, 10-year tax cut plan that Bush formally unveiled last week poses a particularly tough challenge for Democrats. They are struggling to find a way to fight the proposal without seeming unalterably opposed to lessening the public’s tax bill.

“Democrats want an immediate, significant tax cut for all Americans, but we want to cut taxes responsibly,” Sen. Kent Conrad (D-N.D.) said Saturday in the Democrats’ weekly radio address. “America simply cannot afford the Bush tax plan.”

This debate is forcing Democrats to face the cold, hard reality that they have less legislative clout than at any time since the early 1950s. With Republicans in control of the House, the Senate and the White House, Democrats essentially have conceded that a big tax cut will pass this year.

“I do not believe there is a prayer of stopping this,” said Rep. David R. Obey (D-Wis.).

Democrats still hope to scale back the final cut, reshape it or at least keep it from growing, with arguments that the Bush proposal is too big, too risky, too skewed to the rich. That much is familiar party orthodoxy that most Democrats have quickly rallied around.

But party leaders have yet to find an alternative that can unite their rank and file. As a result, a thousand flowers have bloomed in the Democratic garden of tax cutting schemes. Some want to cut payroll taxes, others call for reducing rates in the lowest income tax bracket. Still others want to send a lump sum rebate to all taxpayers, while a few want to go along with Bush.

Party Still Stunned at Turn of Events

It adds up to a scattered Democratic response that some think has been too cautious.

“They are having difficulty recalibrating their strategy to the new situation,” said Ruy Teixeira, a liberal political analyst at the nonpartisan Century Foundation. “That’s making them substantially more timid than they need to be.”

The weeks following Bush’s inauguration have been a time of enormous tumult and transition for the entire capital--but especially so for the Democrats. Many remain shellshocked or resentful that Bush, rather than Al Gore, was sworn in as president. Some are seething over the messy, scandal-scarred way that President Clinton left office. House Democrats are still stewing over their failure to win control of the chamber. Senate Democrats are grappling with the novel dynamics of working in a chamber evenly divided between the parties.

“Everything’s changed,” said Rep. Dennis J. Kucinich (D-Ohio). “Clinton’s out. Democrats don’t have the House or Senate. Why are Democrats getting rolled? That’s the sense that’s out there right now.”

The party is struggling to adjust in ways large and small. Democrats on the House Ways and Means Committee, still accustomed to getting Clinton administration input, invited two former Treasury secretaries--Robert E. Rubin and Lawrence Summers--to a recent meeting to plot strategy for responding to Bush’s tax cut.

With no White House to spotlight party ideas, Democratic leaders are resorting to more gimmicks to get attention: They drove a luxury car onto a Senate plaza Thursday to illustrate their argument that the Bush tax cut would give rich people enough money to buy a Lexus and middle-class people only enough for a new muffler.

As the Democrats cast about, the larger questions raised by their predicament are who will lead the party and in what direction? Many assumed that they would look to Clinton for continued leadership, but he has been occupied with trying to defuse lingering controversies, most prominently his last-minute pardons.

Meanwhile, party members mull over whether their most promising political path would be to hew to the centrist course set by Clinton or veer back to the left. There is already evidence of jockeying between those poles.

On taxes, even as Democratic leaders sought to build a consensus behind an alterative tax cut, the Congressional Progressive Caucus--a band of liberal Democrats chaired by Kucinich--came out with its own plan to provide a $300 rebate to every man, woman and child in America.

“Some progressives are concerned that a Democratic proposal may not be progressive enough,” said Paul Farrell, spokesman for Sen. Paul Wellstone (D-Minn.), a leading liberal.

Centrist Democrats, meanwhile, are more receptive to Bush’s tax cut. Sen. Zell Miller of Georgia is a co-sponsor. Rep. James P. Moran of Virginia, co-chairman of the New Democratic Coalition, backs a bill that would provide the full Bush tax cut but allow it to be fully implemented only if projected budget surpluses actually become reality.

Without a Democrat in the White House, the job of building party consensus has fallen to congressional leaders. Senate Minority Leader Tom Daschle of South Dakota is arguably Washington’s most powerful Democrat, given the Senate’s 50-50 split. But Daschle is an unassuming, low-key lawmaker who is considered more skilled behind the scenes than in front of a microphone. House Minority Leader Richard A. Gephardt (D-Mo.) has a higher national profile and a more assertive public style. But he has less legislative power because House rules more strictly limit the role of the minority party.

Taxes a Major Part of Forging New Identity

On the policy front, every issue presents Democrats with a core question: how confrontational or cooperative to be with Bush. When the president sent his Cabinet nominations to the Senate, Democrats launched a spirited fight against attorney general nominee John Ashcroft. But when Bush unveiled his education initiative, even liberal Democrats struck a conciliatory pose. Sen. Edward M. Kennedy of Massachusetts personified the party’s split personality: He led the charge against Ashcroft but effusively praised Bush’s education plan.

The tax issue looms as the major opportunity and challenge for Democrats in defining a new identity. The Democrats’ first line of attack has been to try to shift the focus to a broader budget debate--to ask how much surplus will be left for other priorities, such as reforming Medicare and Social Security, if Bush’s proposal is enacted.

But the strategy for Democrats is complicated by their bid to counter impressions that they simply oppose cutting taxes--an image many within the party believe has cost them politically. Indeed, many Democrats take pains to insist that they support cutting taxes, that they just want a lesser reduction than Bush seeks.

Exactly where they will draw the line is not yet clear. Democratic leaders are trying to build support for a plan that would devote one-third of the projected surplus to tax cuts, one-third to spending and one-third to reducing the national debt. That would mean a tax cut of about $750 billion over 10 years.

Even that is too big for some Democrats. A group of conservative House Democrats called Blue Dogs wants to use only one-quarter of the surplus for tax cuts, allowing more emphasis on debt reduction. Other Democrats have warned that the surplus projections are so shaky that even the smaller tax cut pushed by party leaders may be too much.

Another aim of the leadership’s plan is to target more tax relief for middle-income taxpayers than would result from Bush’s measure. Democrats say the most likely alternative would be to cut the income tax rate on only the lowest income bracket. Others are arguing for some relief in payroll taxes--but that has the political disadvantage of doing nothing for seniors and the unemployed.

Either way, these proposals mark a striking departure from the party’s position on taxes last year, when the Democrats backed Clinton in insisting that cuts be narrowly targeted to accomplish specific goals, such as subsidizing education savings.

For Democrats, Power Loss Is ‘Liberating’

Gephardt said the new support among Democrats for broad-based tax cuts has been prompted by the flagging economy and growing estimates of budget surpluses.

But the shift also is driven, in part, by Clinton’s departure. He and Gore built their tax agenda around targeted tax cuts, and congressional Democrats followed. In retrospect, some believe the strategy hurt the party among voters--and they don’t want that to happen again. At the least, a Republican in the White House gives them clearance to pursue new strategies.

“It’s liberating,” said Laura Nichols, Gephardt’s spokeswoman. “We’re free now to come up with new ideas.”