Business Toes the Line on President's Proposal
by Dan Morgan
WASHINGTON President George W. Bush has pressured
leading business groups to put off seeking to attach a long list of
tax breaks to his $1.6 trillion tax cut proposal and instead plan to
press Congress to pass it without amendments.
The change of strategy among dozens of trade associations and
corporations - which a few weeks ago were eyeing the tax
legislation as a golden opportunity - is due in large part to
aggressive arm-twisting by Mr. Bush; Vice President Dick
Cheney; the president's chief of staff, Andrew Card Jr., and the
presidential adviser Karl Rove.
"The message has been 'Get with the program,'" a business
lobbyist said. "They're saying if you don't fit into what the president
wants, we won't help you and we may even fight you."
The turnaround is a significant victory for the administration, which
has warned that a rash of add-ons would undermine congressional
support for the bill. With business supporting the legislation as
proposed, the Bush lobbying effort will be much easier. The
change also reflects hard-boiled realism on the part of veteran
business representatives, who say the message from the White
House has been clear: If they give Mr. Bush political aid by helping
to pass his tax plan now, they will have the chance to add their
proposals to subsequent legislation.
One trade association representative said that the White House
had told business groups that "anyone who wants to talk to this
administration must first help establish Bush's presidency and do it
in a way that keeps this bill slick and clean."
The House Ways and Means Committee on Thursday approved
the main component of the president's proposal - the reduction in
personal income taxes. The panel plans to take up other elements
later, such as elimination of the estate tax, marriage penalty relief
and expansion of the child tax credit.
Mr. Bush has vowed repeatedly - most recently in his address to
Congress last week - to fight attempts to add to the plan, which
the White House says will cost $1.6 trillion over the next decade.
Representatives of business groups, which contributed tens of
millions of dollars to Mr. Bush's campaign, say the message has
gotten through. Scores of them have signed on to a newly formed
Tax Relief Coalition to lobby for passage of Mr. Bush's bill.
"Lots of folks have come on board where there's no dollar
incentive to them of a direct nature," said Dirk Van Dongen,
president of the National Association of Wholesaler-Distributors in
Washington. "Why are they there? In my judgment they recognize
this president is either going to make his bones on this or we find
out we have an administration that cannot easily advance its
agenda in this city."
Nonetheless, postponing the battle for corporate tax breaks entails
risks, lobbyists said. The president's proposal does contain
provisions that directly benefit business owners, such as elimination
of the estate tax and lower rates for smaller businesses or
partnerships. More broadly, a cut in tax rates "puts more income
in the hands of workers when we badly need a restoration of
consumer and business confidence," said Jerry Jasinowski,
president of the National Association of Manufacturers.
But the package leaves out most of the business community's wish
list, including a cut in the corporate tax rate, accelerated
depreciation of equipment, permanent extension of the research
and development tax credit, changes in the corporate alternative
minimum tax and sweeping revision of tax-haven rules.
So far discipline is holding. After a breakfast pep talk from Mr.
Cheney on Wednesday, dozens of visiting manufacturing
executives fanned out on Capitol Hill to lobby home-state
members of Congress on behalf of the package. So far, nearly
100 trade associations and companies have joined the Tax Relief
Coalition. The coalition is led by four groups representing
thousands of companies with tens of millions of employees: the
National Association of Wholesaler-Distributors, the National
Association of Manufacturers, the National Federation of
Independent Business and the U.S. Chamber of Commerce.
When President Ronald Reagan advanced his tax cut in 1981,
there was so much clawing and elbowing for a piece of the pie that
the initiative nearly collapsed under the weight of special
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