Tax Cut:
Senate Majority Leader Bill Frist (R.-Tenn.) committed the first major gaffe of his leadership tenure by keeping House Republicans in the dark about a deal with moderates eviscerating President Bush’s tax cut.
1) Frist approved of a deal cut by Finance Committee Chairman Charles Grassley (Iowa) with Republicans George Voinovich (Ohio) and Olympia Snowe (Me.) in which Grassley pledged that the Senate would not accept a final version of a tax cut larger than $350 billion over ten years.
2) Frist kept word of this deal from House Republicans, knowing that such a limit was unacceptably small to them. House Republicans and even other Senate GOP leaders learned of the deal only when Grassley took to the Senate floor to announce it. This infuriated Majority Leader Tom DeLay (R.-Tex.) and Majority Whip Roy Blunt (R.-Mo.) as well as Senate GOP Conference Chairman Rick Santorum (Pa.) and Majority Whip Mitch McConnell (R.-Ky.).
3) Besides eroding Hill Republicans’ trust of Frist, the deal also further mars the GOP conference’s perception of Budget Chairman Don Nickles (R.-Okla.), who acquiesced to the deal in desperate hope to pass any budget he could. Nickles is increasingly seen on the Hill as self-serving. Some House leaders put the blame more on Nickles’s and Grassley’s experienced shoulders rather than the green shoulders of Frist.
4) Frist made the deal with Voinovich and Snowe moments after telling House Speaker Dennis Hastert (R.-Ill.) he would fight for the largest tax cut he could. He compounded his image problems by skipping a bicameral leadership meeting April 12.
5) Blunt and DeLay believe the damage can be undone. However, this deal could lead to inability to pass any sort of tax cut when conservatives refuse to back a package that will have little to no effect on economic growth or jobs.
6) The White House is scrambling to save as much of the tax cut as possible. One strategy would involve cutting the tax on dividends in half right away, and accelerating the reductions in lower income-tax rates while putting off reductions in the top rates and leaving complete elimination of dividend taxation for another day.
7) Also, Republicans may try to pass a second tax package this year, without the protection of Budget Reconciliation. Such a package would be subject to filibuster and 60-vote thresholds, so it would contain only the most popular tax-cut provisions-such as speeding up cuts in the marriage penalty and increases in the child tax credit.
North Korea:
As trilateral talks involving China, U.S. and North Korea approach, officials in Washington continue to be confused by the erratic behavior of North Korea’s Kim Jong Il.
1) President Bush publicly expresses confidence that North Korea can be convinced to drop its plans to develop a nuclear arsenal. National Security Advisor Condoleezza Rice has long maintained that involving China in negotiations with North Korea was critical to influencing the nation. Now that China is involved, Bush sees the chances improved for successful negotiations.
2) North Korean claims that they were approaching completion on efforts to turn spent nuclear fuel rods into weapons-grade nuclear material, and the subsequent reversal of those claims strikes the White House as intentional equivocation by Pyongyang. Washington officials see the North Korean government as intentionally erratic and inexplicable, perhaps as a strategy to make the U.S. more fearful of the Kim regime.
3) The agreement to hold trilateral negotiations also represents improved relationships between the U.S. and China. The administration, however, detects in many of Kim’s actions an effort to widen the growing rift between South Korea and the U.S.
Outlook:
Democrats have no realistic hope of taking the majority of the House in 2004, barring an unexpected and improbable economic disaster. Even a Democratic White House victory would not sweep in a takeover of the House. There are simply not enough solid opportunities.
Incumbent-protection redistricting maps in most states cut the number of contested elections in 2002 to 30 at the most. The playing field looks even smaller for 2004. There are hardly enough vulnerable Republican seats to give Democrats a chance even before considering potential GOP takeovers.
Those Democrats who are not resigned to a permanent minority status are looking long-term. They will target liberal or moderate Republicans in Democrat-leaning districts with the hope of weakening them for 2006 or 2008 (as they did with Connie Morella in Maryland last year) or driving them to retirement.
Republicans, however, see a similar batch of seats they hope to pick up eventually.
