Congress May Not Rush Bush Tax Cut

Friday, January 5th 2001, 12:00 am

By: News On 6

WASHINGTON (AP) â€” There is no rush in Congress to embrace President-elect Bush's package of tax cuts, even as a tonic to the ailing economy. Republican chairmen of the tax-writing committees have their own priorities, and even GOP freshmen prefer to focus on eliminating the income tax marriage penalty.

Moments after he was chosen chairman of the House Ways and Means Committee, Rep. Bill Thomas took a wait-and-see approach when asked about Bush's 10-year, $1.3 trillion tax relief proposal that includes gradual across-the-board income tax cuts.

``President-elect Bush ran on some particular ideas about the tax code. We're going to share our ideas,'' said Thomas, R-Calif.

His Republican Senate counterpart, incoming Finance Committee Chairman Charles Grassley of Iowa, expressed doubts this week about the political viability of Bush's package and mentioned priorities of his own such as continued tax preferences for corn-based ethanol fuel and pension reforms.

``I don't think it would fly right today,'' Grassley said of the Bush package.

Instead of lining up behind Bush's plan Friday, the 28 House Republican freshmen announced that their top issue as a group this year would be one piece of that plan: erasing the marriage tax penalty paid by millions of married couples.

``It sends the message that the 28 of us are coming in totally dedicated to passing tax relief,'' said Rep. Ed Schrock of Virginia, president of the freshman class. ``I think it adds to and supports'' Bush's plan.

House leaders have counseled Bush that moving his tax cuts as separate bills â€” starting with the marriage penalty measure and one eliminating estate taxes â€” would translate into smashing bipartisan victories of immense importance to the public, setting the stage for more tax relief later. But the Bush camp insists that doesn't undermine support for the whole package.

``They should have their own ideas. That is healthy governing,'' said Bush press secretary Ari Fleischer. ``But we're very encouraged by the support that we are receiving from members of Congress.''

Bush recently has shifted from arguing that tax relief is a fair return of surplus revenue to taxpayers, as he did during the campaign. With evidence mounting of a slowing economy, the president-elect is now stressing tax relief as a possible stimulus.

Both arguments could run into trouble in the Senate, which is evenly divided between Republicans and Democrats. While Democrats have sent signals that they could support larger tax cuts than in recent years, they remain insistent that relief focus on middle-class people â€” and they contend that tax cuts would be phased in too slowly to help the economy now.

``I don't close the door to a tax cut. I think there should be a tax cut bill,'' said Sen. Max Baucus of Montana, the top Democrat on the Finance Committee. ``Any tax legislation has got to be fair...Tax cuts designed to stimulate the economy are of concern to me.''

There are also business lobbyists and interest groups who want specialized tax cuts and are likely to push hard to get their items attached to any tax legislation, knowing that Bush is likely to sign it into law. With the exception of a making a research and development tax credit permanent, Bush has included scant business tax relief in his proposal.

``In a large tax bill, a portion â€” maybe a third â€” should be dedicated to business tax relief,'' said Dorothy Coleman, tax policy vice president at the National Association of Manufacturers. ``To get the most bang for your buck growth-wise, relief should be targeted to the business community.''

To some extent, the cautious Republican approach on Capitol Hill to Bush's tax plan is an outgrowth of the overtime presidential race and new rules in the House. Bush is only now getting his Cabinet and legislative team together; the House GOP just this week selected Thomas and other committee chairmen because of term limits on their predecessors.