Tax raises and the fate of GOP "moderates"

Uh oh, how is this going to play with DeLay and his fundamentalist GOP caucus?

Under White House pressure to include at least a bare-bones version of Bush's bid to eliminate the tax on corporate dividends, Finance Committee Chairman Charles E. Grassley (Iowa) and fellow committee Republicans broke from their no-new-taxes orthodoxy to propose tax increases on Americans living abroad, companies sheltering income overseas and others. All told, committee members approved more than 30 tax increases or other revenue raisers to help fund their tax cuts in other areas, including dividends.

Tax increases? Lovely! Of course we're not talking 1-1 offsets of Bush's cherished sop for the rich (dividend tax elimination), but it's an effort to keep the cost of the entire package at $350 billion.

While no quotes from DeLay yet, other House GOPers are already fuming:

Some House Republicans reacted angrily to the idea of raising any taxes. "Any kind of tax increases now are wrong, and they wouldn't make it through the House," said House Rules Committee Chairman David Dreier (R-Calif.).

The Senate plan now looks near passage, as one Dem holdout, Blanche Lincoln of Arkansas, voted in committee for the new proposal. She will apparently join Zell Miller to give the GOP two of the three Dem votes it needs (I believe the third is NE's Nelson). Cheney can then cast the tie breaker. But chances are that since the plan's passage is assured, other Dems will defect as well to be on the "right" side of the issue.

But that's no longer the frontlines of this battle -- it will shift over to the conference committee, where the House will hold the line fiercely against the tax increases. The House and Senate versions of the plan will remain $200 billion apart, and someone will have to blink.

The House, backed by the president, will not back down, leaving it up to the Senate to decide whether it will buckle under intense pressure.

So grab a seat, because this will a watershed moment for the Senate's GOP "moderates". They are being villified, mocked, and attacked by their fellow pro-tax cut colleagues. Jeffords is already warning against the same tactics that forced him to bolt the GOP.

So it will bear watching how Maine's Snowe and Collins will react, as well as Rhode Island's Chaffee and Arizona's McCain.

And there could also be electoral repercussions. PA's Specter is already facing a challenge to his Right from Rep. Toomey, quoted in the story bashing the Senate's plan (to the obvious detriment of Specter). High-profile holdout Voinovich of Ohio, targeted by Club for Growth commercials (a GOP front group) may also spur a primary challenge. This issue could spur GOP partisans in those states to oust the incumbents in favor of more conservative candidates (hence improving the Dems chances in the general).

This is about more than whether Bush gets his tax cuts. This is about the viability of a "moderate" wing in the GOP.

Posted May 09, 2003 08:29 AM | Comments (51)