Guessing Bush's Tax Game

Guessing Bush's Tax Game

Guessing Bush's Tax Game

Politics and policy.
March 7 2001 5:01 PM

Guessing Bush's Tax Game

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In recent weeks, George W. Bush has been sounding like a man who doesn't intend to negotiate. At Bush's behest, the House Republican leadership intends to pass the rate reduction part of his tax cut plan tomorrow, ignoring procedural and substantive objections from Democrats. In the Senate, where Bush operates under the constraints of a slimmer majority, he has thus far indicated no interest in compromise--either with Democrats, most of whom want a smaller tax cut, less tilted toward the wealthy, or with moderate Republicans who have expressed various qualms about his plan. Instead, Bush has been putting pressure on politically vulnerable Senate Democrats by visiting their home states to campaign for his plan.

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Watching Bush's behavior, many observers have drawn the conclusion that he doesn't think he has to make a deal. Many have predicted he'll ignore opponents and ram his plan through Congress with a narrow, partisan majority. Such an approach does square with some of the thinking evident around the White House. In keeping with the Rove Mandate Fallacy, Bush may think he can avoid negotiating a compromise by acting like he doesn't have to negotiate a compromise.

But the "my way or the highway," approach brings hazards too obvious for Bush's shrewd tacticians to miss. The first, most obvious danger is that Bush simply might not get the votes he needs. Though Bush has won the endorsement of one Senate Democrat, Zell Miller of Georgia, he has also apparently lost the votes of two liberal-leaning Northeastern Republicans, James Jeffords (Vt.) and Lincoln Chafee (R.I.), who have both said his proposal is too expensive. If the process grinds on for a while, natural causes could cost Bush the vote of Strom Thurmond of South Carolina. Five other, more moderate Republicans--Arlen Specter (Pa.), John McCain (Ariz.), George Voinovich (Ohio), Olympia Snowe (Maine), and Susan Collins (Maine)--have expressed reservations about Bush's plan as well.

In a pinch, Bush could probably ram his plan down the throats of these Republicans and get it passed, possibly with Vice President Dick Cheney breaking a tie. No Republican wants to cast the deciding vote against his own party in the make-or-break battle of a new presidency. But eschewing any compromise and then demanding party loyalty would hardly endear Bush to GOP moderates. Such a narrow, partisan victory hardly proved to be a mandate-generator for Bill Clinton after he passed his economic plan by a one-vote margin in both houses in 1993. Voting against their inclinations and for their president cost many Democrats their seats in 1994. Even if Bush can make the Senate's moderate Republicans knuckle under, he does so at his peril, and theirs.

The other possibility, which I find more plausible, is that Bush does expect to negotiate in the Senate but is being canny in the way he goes about it. In an Arab bazaar, you start haggling by saying you're not interested in haggling. There can be tactical advantages to feigning inflexibility at the outset. By sticking to his opening offer for a good long while, Bush makes himself look like a tough customer. He also impresses his conservative base that he's serious. Once it becomes clear that Bush lacks the votes for a purist victory, the zealots will more readily accept a compromise.

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Bush's current effort to rough up Democrats who hold marginal seats has been cast by most analysts as evidence that he's going the route of not negotiating. But this gambit could just as well indicate that he is negotiating. Going to South Carolina, Nebraska, and Louisiana might be an effort merely to bring some recalcitrant Democratic senators to the negotiating table. And Bush has made a few comments that suggest deal-making is what he ultimately has in mind. After a meeting with congressional leaders several weeks ago, a reporter asked whether he'd be willing to give ground on tax cuts. "I'm certainly not willing to negotiate with myself," Bush replied. He's right that it makes no tactical sense to concede anything unilaterally or sooner than he has to.

But if Bush does intend to compromise eventually, whom will he compromise with? Here it gets more interesting. His first option is to negotiate just with the seven skeptical Republicans. This is a slightly different strategy from the one of just demanding their support for his plan as is. By offering concessions on the substance, Bush reduces the danger that he'll find himself short of the 50 votes he needs. But the hazard is essentially the same. Passing his economic plan on a super narrow party line would send a message of weakness and division rather than one of strength and unity. Rovian psychology notwithstanding, a one-vote victory would do little to create either an atmosphere of comity in Congress or the perception of a popular mandate.

Another problem with this approach is that if you negotiate just enough to win by one vote, you end up rewarding the kind of behavior you want to discourage. Those who loyally support their president get nothing. Those who hold out until the 11th hour can demand something in exchange for their votes. Those who hold out longest can ask for anything they want. In 1993, Bob Kerrey of Nebraska put off his decision about whether to support Clinton's economic plan until it was clear the whole thing hinged on him. Kerrey didn't prove much of a blackmail artist; his price was a mere commission to study entitlement reform. This time, Olympia Snowe is the senator most likely to find herself with outsized leverage. A tax cut has to pass either the Budget Committee or the Finance Committee, and Snowe sits on both. Should Bush attempt to get it through with only GOP support, don't be surprised if NASA moves to Maine.

Another option for Bush is to negotiate with the Senate Democrats as a group through Minority Leader Tom Daschle. The appeal of this strategy would be Bush living up to his rhetoric about being a uniter. But there are dangers here, too. One is that if Bush compromises not just on the size but on the basic structure of his tax cut, credit for the resulting amalgam could be widely shared. Another is that the president's conservative base may see him as a sellout. Marshall Wittmann of the Hudson Institute says Bush flinches from "the specter of Andrews Air Force Base." Andrews is where Bush's pa cut his tax-raising deal with Democrats in 1990, blackening his name with conservatives.

One final possibility is for Bush to talk turkey with the centrist Democrats he is now trying to bludgeon. The leader of the group is John Breaux of Louisiana, a man who lives to split the difference. If Bush can peel off Breaux and few other moderate Dems, he'll endow his tax cut with both a comfortable margin and an aura of bipartisanship. The cost would be making genuine concessions. To get even a few Democrats on board, Bush would have to reduce the cost of his plan, probably by dropping his estate tax repeal and settling for a top rate above his hoped-for 33 percent. He'd also probably have to accept some sort of "trigger" mechanism that would make future tax reductions contingent on the budget surpluses actually materializing. But Bush could do all these things and still maintain the essential configuration of his plan.

A lot of annoyed Democrats have taken Bush's tough talk to mean no such concessions are in the offing. I wouldn't be so sure. At this stage of the game, bargaining brilliantly looks a lot like refusing to bargain at all.

Illustration by Mark Alan Stamaty.