Rove and Dole try to Talk Chafee Challenger out of Running

Sen. Lincoln Chafee, who opposes much of President Bush’s agenda, including the tax cuts that helped pulled the U.S. economy out of a slump, is currently the Senate’s most vulnerable Republican.

With good reason: Just the mention of Chafee’s name in the West Wing triggers scowls, according to my sources. To say this renegade Rhode Islander, who admits he didn’t vote for Bush, is not a GOP team player is putting it mildly. But in the battle to keep the Democrats from making gains in the Senate next year, Bush’s election strategist Karl Rove and the Senate’s Republican campaign chief Elizabeth Dole are clearly in Chafee’s corner.

The reason: Chafee’s leftist positions on social and economic matters seem to appeal to Democrats and independents in a state that is overwhelmingly Democratic (after all, they elected the Republican). Rove and Dole may not like his voting record, but they think he has the best chance of holding on to a seat that is one of the Democrats’ top targets in what could be a tough election year for the GOP.

Thus, when Cranston, R.I., Mayor Stephen Laffey, a former investment banker and Republican supply-sider, told them he intended to challenge Chafee in next September’s GOP primary, they tried to talk him out of it. To sweeten the deal, Dole and the state’s Republican governor, Don Carcieri, urged him to run for lieutenant governor, putting him in a strong position to seek the governorship.

But Laffey didn’t bite. He announced his Senate candidacy last week, triggering an unusual situation in which Rove, Dole and other top GOP officials are actively working to help defeat him in the coming primary fight.

Their fear is that while Laffey may well win the party primary because the state GOP’s rank-and-file is far more conservative than Chafee, he would surely lose in the general election.

Laffey was told the same thing in 2002 when he ran for mayor of Cranston, a city that had the lowest bond rating in the country, was facing bankruptcy, and was drowning in wasteful spending, questionable contracts and sweetheart deals. But he won handily in a city that was more overwhelmingly Democratic and became one of the state’s most popular Republicans.

However, while he is now attacking Chafee for his opposition to tax cuts, the National Republican Senatorial Committee (NRSC) that Dole chairs wants the state’s voters to know that Laffey’s hands are not clean on the tax issue, either.

An NRSC research memo that dug into Laffey’s record as mayor, titled "The Laffey Tax Machine," says that "One of (his) first official duties as mayor was to raise taxes 12.8 percent, approximately $490 for a home valued at $150,000."

The property tax hikes were implemented one month after Laffey was sworn in as mayor in January 2003. The city, he told taxpayers, needed to "bite the bullet" to put its fiscal house in order and re-establish its bond rating.

The currently unpublished NRSC report, which I obtained a copy of, said that the Laffey "tax hike was on top of an 11.5 percent increase property owners had already seen that year. Adding in Laffey’s supplemental tax, Cranston homeowners’ taxes were 25.8 percent higher than the year before."

Since then, he has proposed budgets requiring additional tax hikes, an effective increase of 3.5 percent in the property tax rate in fiscal 2004 and a 4.5 percent tax hike in fiscal 2005 (though the city council later approved a budget with a 3.7 tax rate), according to the report.

Laffey stoutly defended his actions when I interviewed him, saying that the city faced a fiscal disaster and its credit rating had fallen to junk-bond status. "We had 27 days before we defaulted on $18 million of debt. If Cranston had been a public company, we would have gone bankrupt, but you don’t do that in a city. We had to get the bond rating back up in order to pave the roads and do all the rest."

While his tax hikes were criticized by Chafee and the party’s leaders in Washington, voters have cheered Laffey’s actions, giving him a second term last year with a whopping 65 percent of the vote.

But even as he defends his tax increases, he says he is a committed federal income tax-cutter who backs Bush’s reforms and seeks a broad range of additional reductions — from abolishing the estate tax to cutting the capital gains tax.

And it would be premature to count Laffey out if he beats Chafee in the primary. He is running, not as a right-wing, supply-side tax-cutter, but as an articulate, populist foe of wasteful spending that has piled up a $7 trillion national debt "hurting the future of my children and yours."

His candidacy could draw strong support and financing from the Club for Growth, whose president, Pat Toomey, said, "I’m not convinced that Chafee is the only Republican alive who can hold that seat."

Meanwhile, while the party establishment here is sticking with Chafee, the GOP’s latest broadside against his challenger — violating a hands-off rule in party primary fights — is raising eyebrows among many rank-and-file conservatives who would welcome the liberal senator’s defeat.