GOP to reconsider plan alter tax break

By Art Pine and Richard Simon Los Angeles Times, 10/02/99

ASHINGTON - With a single utterance from 3,000 miles away, Republican presidential candidate George W. Bush has transformed a congressional debate over aid to the working poor, cowing GOP leaders and demonstrating the dramatic power shift within the party.

House Republican leaders were clearly on the defensive yesterday as they reacted to Bush's blunt statement Thursday denouncing a GOP-crafted plan to alter a tax break for low-income working families. The leaders said that the plan, an effort to save money in the new federal budget, would be reconsidered and they acknowledged that it is in jeopardy.

House Majority Leader Dick Armey, a Texas Republican, told reporters that adverse reaction to the proposal, highlighted by the Texas governor's comments, ''means you have to assess the situation.'' He conceded that the plan might not have the votes to pass.

More broadly, the reaction showed how Bush, as the clear front-runner for the Republican nomination, increasingly is able to influence the party's agenda.

''Austin [Texas, Bush's home] says jump and the Republican establishment - including its congressional leadership - asks how high,'' said GOP analyst William Kristol.

There was no question that House leaders were taken aback by Bush's remarks, delivered during a campaign stop in San Jose, Calif. House Speaker J. Dennis Hastert of Illinois took the unusual step of calling a special news conference to defend the GOP's proposal, under which those eligible for the earned income tax credit would receive monthly payments rather than the lump sum now paid once a year.

Hastert said his staff had floated the proposal earlier to Bush's staff and ''we didn't hear anything back.''

But opposition to the proposal grew yesterday among the House GOP rank and file and after meeting with these members, Hastert said: ''We need to assess, to see where we're at.''

And the plan's prospects suffered a second blow yesterday when GOP presidential contender, Senator John McCain of Arizona, joined Bush in opposing it.

''If our goal is to have lower-income Americans lifted up into the middle class, this is the wrong way to do it,'' McCain said.

Marshall Wittman, political analyst for the conservative-oriented Heritage Foundation, predicted that the proposal will end up ''deader than Elvis.''

Analysts also suggested that Bush's independent stance might embolden the GOP rank and file in Congress to rein in their leadership on other fiscal issues.

President Clinton commented on the issue, saying, ''I was delighted to see that [Bush] ... finally had joined our position on this,'' he said before leaving for a trip to California.

Under strain to keep their proposed 2000 budget from using money in the Social Security Trust Fund, House GOP leaders have resorted to several accounting gimmicks, from classifying some routine items as ''emergency spending,'' which is exempt from budget controls, to pushing some spending into the next fiscal year.

All have brought derision, not only from Democrats but from nonpartisan budget-watchers as well.

The proposal involving the earned income tax credit is essentially an accounting ploy that would save an estimated $8.7 billion in the current federal budget year, which began yesterday. Monthly payments would mean that checks sent to an estimated 20 million recipients for the last three months of 2000 would not be counted in this fiscal year.

The Republican House leaders asserted that the change would not cost recipients anything because they still would receive the same amount of money. But Democrats responded that converting to monthly installments would deny recipients the type of large payments they might need for expensive purchases, such as cars.