Here’s an easy way to understand the difference between the GOP bills that passed Congress last month and the craftily constructed Clinton plan announced last week. According to the Center on Budget and Policy Priorities (whose figures have proven reliable so far), the Republicans give as much or more tax relief to the top one percent of taxpayers as to the bottom 60 percent combined. The president’s proposal, while plenty generous to the upper middle class with targeted long-term capital gains relief, gives one tenth as much to the top one percent as to the bottom 60 percent. The Republicans can throw up as much sand as they want; Clinton’s plan is much fairer and taxpayers will soon agree - if he doesn’t fold first.
Oh those poor one-percenters! Let’s review their plight. The Dow has more than doubled since 1993, without the benefit of the magical capital-gains cuts we were told were absolutely necessary for growth. (In fact, Clinton raised taxes on the wealthy that year.) Now, with their intellectual argument about capital gains in tatters, the Republicans insist that their absolute top priority - the single issue on which their party is united - is to give the one-percenters billions more by slashing that particular rate.
Out on the open highway of American politics, this argument is roadkill. A Clinton veto on the ground of fairness could mean yet another GOP nightmare like the disaster-relief debacle. The party that controls the White House has suffered losses in every midterm election since 1934. But give the Democrats the tax issue, and that could change in 1998. A new CNN/USA Today poll shows 61 percent believing the GOP Congress is out of touch. And that’s before middle-class voters even learn that the GOP wants to give a big chunk of their tax cut to Donald Trump.
But they may never find out about that. Even the threat of a Clinton veto now seems unlikely. Instead, the president will protect the $500-per-child credit (which the GOP wants to deny to the working poor), defend the most generous version of the community-college tax credit and defuse the tax-cut time bombs in the GOP bills that threaten to explode the deficit again when the baby boomers retire. If he gets this much, the president is likely to cave on the rich-get-richer provisions. He thinks the GOP needs a face-saving win on capital-gains rates and estate-tax relief (Clinton’s plan, which targets the estate relief on family farms and small business, is more sensible) to keep the bipartisan process going. He worries that a veto would allow the GOP to argue that he took $500-a-kid out of your pocket.
But Clinton could just as easily say that he wanted to give more money to the middle class, only Newt Gingrich wouldn’t let him. Not a bad argument. And tactically, the GOP gave the president an opening last week by saying his plan ““endorses our approach to tax relief.’’ Instead of just splitting the difference, Clinton could now say: ““As the Republicans acknowledged, I came a long way in their direction by including capital-gains cuts at all. Now they must come a long way toward me, or face a veto.''
Class war? If it comes to that. Americans aren’t levelers; they want to be wealthy themselves. But when they hear how the pie got divvied up, the class resentments could suddenly start to roll. The Republicans can already glimpse the distant semi approaching. That’s why they want to keep the whole thing polite and private. If Clinton hangs tough, the public will back him and the GOP will have to capitulate (while pretending not to). But that’s not as bad for the Republicans as it sounds. Then there’s no veto, no ‘98 issue for the Democrats and no loss of the Congress. After that, all the GOP will have to do is find an issue besides capital gains with which to unite the party of Lincoln.
Congress’s tax and White House proposals bith cut up to $135 billion over five years, but they do it in different ways:
The President: Excludes 30% of profits on long-term investments; lowers top tax form 28% to 27.7%
The Republicans: Cuts top bracket from 28% to 20%; House plan would index for inflation
The President: Up to $500-per-child credit for familes earning less than $75,000 by the year 2000
The Republicans: Up to $500-per-child credit for families earning up to #110,000
The President: Exempts $2.1 million on family farms and businesses
The Republicans: Raises standard exemption from $600,000 to $1 million
The President: Credit for 100% of first $1,000 of tuition, 50 % of second $1,000; a student paying $1,200 would receive a $1,100 credit
The Republicans: Credit for 50% of first $3,000 of tuition; the same student, paying $1,200, would receive a $600 credit.