GOP Moderates Defy Bush On Taxes

By David Paul Kuhn,
CBSNews.com Chief Political Writer

"It does show the traditional split in the party between the Reagan and Eisenhower Republicans," says Stephen Moore, president of the influential tax-cutting advocacy group Club for Growth. "In the '50s and '60s and '70s, Republicans worshiped a balanced budget and put that ahead of tax cuts."

Now, Moore adds, "They understand that tax cuts help the economy."

But at what expense, asks Sen. Lincoln Chafee, R-R.I., one of four GOP senators defying Republican policy that says tax cuts should proceed despite large wartime spending increases.

"How about the whole Contract with America, balanced budget, constitutional amendment crowd?" an exasperated Chafee says. "They have just fallen in line with the president."

The cost of making the tax cuts permanent would be nearly $2 billion over the next ten years, according to the Congressional Budget Office. By the nonpartisan governmental body' same calculations, the federal deficit will total $477 billion in fiscal year 2004. President Bush came into office four years ago with a budget surplus.

The 2004 deficit represents a new high, yet is a smaller share of the economy than in the record deficits of the mid-1980s and early 1990s. It took two presidents to begrudgingly increase taxes – at high personal political cost – in order to balance those budgets.

"Well, it seems to me, that the average American remembers the fight of the late-'80s and '90s to balance the budget," Chafee says. "The first President Bush had to break his 'read my lips' pledge. It might have cost him his reelection. And then President Clinton came in with a Democratic House and Senate and raised taxes and lost the Senate in 94.

"And why did these two presidents raise taxes?" Chafee adds rhetorically. "Nobody, whether you are a city councilman or a state representative or a president, wants to raise taxes. They did it to address the deficits."

The Republican Party has changed. It was once dominated by a strict adherence to cutting revenues only if spending was decreased proportionally. Since President Ronald Reagan, however, it has become a party that believes tax cuts benefit the economy even at the cost of a ballooning deficit.

President Bush's dedication to cutting taxes is so fervent, that even with the drastic spending increases of wartime he refused to compromise in the slightest on tax cuts.

"These four Republicans are the last dying gasp of dinosaur northeastern Republicans," Moore says. "This is their last stand at the Alamo."

He certainly hopes so. And Moore thinks, like the Alamo, Chafee's stand is futile.

"It is a traditional fight that has been going on for 30 years in our party," Moore asserts proudly. "The tax cutters are winning."

But they haven't won yet, Chafee argues. He believes there is a danger of the Republican Party appearing to be dedicated to the wealthy.

"I think there are a lot of Republicans that are concerned about these rising deficits but it is an attitude of 'support the president,'" says Chafee. He adds that "it couldn't be a more glaring example" of the influence a president can have on his own party.

Besides Chafee, the other three Republican senators opposed to the Bush tax cuts are Maine's Susan Collins and Olympia J. Snowe, and John McCain of Arizona.

In March, these four centrist Republicans joined with Senate Democrats in attaching a pay-as-you-go provision to the federal budget. It passed by a two-vote majority. Eleven Republican representatives also supported a less-stringent measure. It did not pass in the House.

As Congress reconvenes this week, there are no indications the current budget impasse will be surmounted. Hence, there could be no federal budget. But it wouldn't be the first time. Budgets are largely symbolic, setting goals but not rigid guidelines.

But not passing a budget under a Republican House and Senate – and White House – could be politically embarrassing for Republicans heading into a presidential election year. When Democrats controlled the Senate in 2002, Republicans lambasted them for their inability to pass a federal budget.

"It would be a lot better to pass no budget than a bad budget," Moore asserts.

"After the November election we will be in the stronger position," says Grover Norquist, president of Americans for Tax Reform. "These four Republicans should know that as long as they remain pro-choice they will be seen as centrists ... their policies are problematic."

In the Senate, four senators can hold great political weight when an issue is largely divided along party lines, as with tax cuts.

The Bush administration adheres to the theory that cutting taxes boosts private spending and increases tax revenues. Some economists have credited Mr. Bush's previous tax cuts for contributing to the improved economy. But federal spending has also increased.

President Bush's challenger, Sen. John Kerry, supports cutting taxes for the middle class but reversing the cuts on the richest Americans in order to help balance the budget.

The concern is that large deficits cause large interest rates. As with much economic theory, the causation is debated.

Chafee says during wartime it is "absolutely" irresponsible to increase spending while cutting taxes. "Where's the revenue?" he asks, raising his tone. "We can't afford this. At some point, some generation is going to address the deficit."

One thing is for certain: it is not the generation that is deciding who controls the Congress and White House in 2004.

By David Paul Kuhn