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Published: Thursday, 2/10/2005

Voinovich opposes Bush effort to make tax cuts permanent

BY ANN McFEATTERS
BLADE WASHINGTON BUREAU CHIEF

WASHINGTON - President Bush's demand that Congress make his 2001 and 2003 tax cuts permanent is meeting with stiff resistance among some Republicans, including Sen. George Voinovich (R., Ohio), who yesterday became the first Republican to announce he will vote against the President's budget if necessary.

Mr. Bush made his strongest pitch yet for more tax cuts in a speech to the Detroit Economic Club on Tuesday. To a solid round of applause, he said, "The tax relief we passed lowered all tax rates on people who pay taxes. Yet, in 2011, those tax rates are scheduled to go back up. If Congress fails to act, taxes on dividends and capital gains will also go up, and the child credit will be reduced, and the death tax will come back to life.

"Allowing these scheduled tax increases to take effect - allowing taxes to go back up would only discourage growth and cost this country jobs and reduce paychecks. The United States Congress needs to make the tax relief permanent."

Less than 24 hours later, Mr. Voinovich said he has told the White House he will do whatever he can to block the President on tax cuts, include voting against the entire budget. He also delivered a shot across the White House bow by saying the President is wrong to push for Social Security changes this year and denounced some of the President's spending cuts as ill-advised.

Mr. Voinovich and Sen. Olympia Snowe (R., Maine) nearly derailed the President's tax cut in 2003 by demanding that Mr. Bush's $726 billion package of tax cuts over 10 years not exceed $350 billion while House Republicans wanted a much larger package.

Mr. Bush almost failed to get any tax cuts, succeeding only after Vice President Dick Cheney brokered a deal to move the expiration date of the capital gains and dividend tax cuts to 2008 from 2009, saving $29 billion.

Mr. Cheney then cast the vote breaking the 50-50 tie to pass $350 billion worth of tax cuts.

Mr. Voinovich said yesterday that because of the cost of the war in Iraq, the $1.8 trillion in deficits Mr. Bush projects to 2010 (including a record $427 billion this year), and the costly expansion of the prescription drug package under Medicare next year, the economic picture is too uncertain to make the tax cuts permanent. The cost of the tax cuts would total $1.1 trillion but is not included in the President's budgeting that extends to 2010.

Mr. Voinovich said he told presidential adviser Karl Rove and White House budget director Joshua Bolten he would bolt from the President's budget to keep out the expansion of tax cuts.

Democrats in general oppose making the tax cuts permanent but have only 45 votes in the Senate this year. Even though Republicans now have 55 votes, Mr. Voinovich said he thinks enough other Republicans would join him that they could block the tax cuts. Those could include Sens. Snowe, Bob Bennett (R., Utah), Susan Collins of Maine, and others in the so-called Centrist Coalition, which emphasizes bipartisanship.

Mr. Voinovich said he thinks the White House will back away from demanding the tax cuts be permanent.

"It won't write," he said. "I don't think they'll do it."

Mr. Bolten disagrees, saying that the President's budget is built on the assumption that the tax cuts will be made permanent and that they will help boost the economy, providing investors and businesses with certainty.

Mr. Bolten conceded the Centrist Coalition's point that the cost of extending tax cuts "does grow over time" to at least $1.1 trillion over 10 years. But, Mr. Bolten added, "So does the economy. One of the things you need to keep in mind in looking at our evaluation of tax cuts is that we tend to use static models; that is, our growth forecasts and our revenue forecasts often do not adequately take account of the effect of those tax cuts on the economy."

He added, "And one of the things I think most economists will agree on at this point is that the reason we have growth back in the economy or the kind of growth that we've seen in the last couple of years and project in the months going forward is because the tax cuts are in place. They have contributed substantially to that restored growth."

Mr. Bolten, Treasury Secretary John Snow, and the President's most stalwart supporters began fanning out on Capitol Hill this week to try to boost support among wavering Republicans for Mr. Bush's spending cuts, making tax cuts permanent, and overhauling Social Security.

Pat Toomey, a former Republican congressman from Pennsylvania and now president of the conservative Club for Growth, said yesterday that his organization is considering running ads against centrists such as Mr. Voinovich who oppose acting to extend the tax cuts to try to bring the lawmakers back into the fold. Mr. Toomey said his group also is spending $10 million to push Congress to make changes to Social Security this year.

Mr. Voinovich, who approves the idea of partially privatizing Social Security through personal savings accounts, nonetheless also parts from the administration when he says it is too soon to act and that the American people first need a year of education.

Mr. Voinovich said he also thinks Mr. Bush is wrong in trying to eliminate most Community Development Block Grants, which he called a "terrific" program to help cities reclaim dilapidated urban centers.

With many influential Republicans such as Sens. Arlen Specter of Pennsylvania, Norman Coleman of Minnesota, Thad Cochran of Mississippi, Saxby Chambliss of Georgia, and Jon Kyl of Arizona saying they will fight specific budget cuts, Senate Budget Committee Chairman Judd Gregg (R., N.H.) admitted the President's budget is creating "some significant angst among my colleagues." But he still praised it as a thoroughly "Republican" budget for its "fiscal responsibility."

Contact Ann McFeatters at:

amcfeatters@nationalpress.com

or 202-662-7071.



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