ENPR: Week of March 28, 2007

• Democrats sharpen their knives in U.S. attorney dust-up
• Senate Republicans end blockade of Iraq supplemental containing withdrawal date
• D.C. voting rights bill pulled after GOP parliamentary move
• Tax hikes become focus of debate over Democratic budgets

Outlook

1. The attitude of Capitol Hill Republicans toward President George W. Bush has reached a new low with Atty. Gen. Alberto Gonzales's incompetent handling of the U.S. attorneys matter. It is not just that there is so little GOP support for Gonzales, but that there is considerable distancing from the President. There is a consensus among congressional Republicans that Bush's policies - starting with Iraq - are at the heart of the party's problems.
2. While congressional Republicans are furious that a Gonzales aide is invoking the 5th Amendment before Congress, the Democratic leaders are interested in much more than embarrassing the GOP. Rep. Rahm Emmanuel (D-Ill.), chairman of the House Democratic Caucus, is targeting the case of three deposed U.S. attorneys who were investigating major cases of public corruption (see below). Emmanuel is after what he thinks is a major story.
3. Meanwhile, the disagreement over Iraq between the President and the congressional Democratic leadership may be reaching the point of confrontation about who is holding up the money for U.S. troops in Iraq. Only the extreme anti-war resisters want a total cut-off, and the question now is who will get the blame if Bush vetoes the supplemental appropriations bill because it contains a date certain for a troop withdrawal from Iraq.
4. The debate cuts across normal ideological lines over whether former Sen. John Edwards (D-N.C.) did the right thing by staying in the presidential race despite his wife's illness. Some of the severe criticism of Edwards, however, comes from supporters of Sen. Hillary Rodham Clinton (D-N.Y.), who would like to eliminate Edwards as an obstacle on her road to the presidential nomination.
5. Without his doing much of anything, interest in and chatter about former Sen. Fred Thomson's (R-Tenn.) becoming a presidential candidate continues to rise quickly. What is clear is that it is certainly not too late to start a campaign now.

Bush Administration

U.S. Attorney Scandal: The revelation that Atty. Gen. Gonzales may have given misleading information as to his level of involvement in the firing of eight U.S. attorneys heightens the attention being paid to what should have been a non-scandal.

1. The decision by one Justice Department employee, White House liaison Monica Goodling, to invoke the 5th Amendment protection against self-incrimination during the hearings, gives a whiff of the improbable. No one contends that a crime was committed, yet at the same time, it adds to the fury surrounding the whole affair. Was some still unknown crime committed?

2. As they question Justice Department officials, Democrats will focus on three of the fired U.S. attorneys in particular, all of them involved in the investigations of Republican congressmen.

   • The first is Carol Lam of San Diego, who had investigated the case of disgraced former Rep. Duke Cunningham (R-Calif.) and was looking into the dealings of former Appropriations Chairman Jerry Lewis (R-Calif.). The Republican corruption angle is particularly acute in Lam's case, and to date, she has been the fired U.S. attorney to earn the most ink. Lam had subpoenaed a Lewis staffer from the powerful committee. Her investigation into a potential earmarks-for-favors scheme, Democrats will claim, led to her being forced out by the White House.

   • The second targeted attorney is Paul Charlton of the Arizona district, who was reportedly looking into a land deal by Rep. Rick Renzi (R-Ariz.). Democrats may even bring up the involvement of Rep. Jim Kolbe (R-Ariz.) in the Mark Foley (R-Fla.) page scandal.

   • The third target is former U.S. Attorney Daniel Bodgen of Nevada, who was reportedly investigating Nevada Gov. Jim Gibbons (R) on accusations that he took gifts and payments in exchange for official acts when he was a congressman

3. Put together, these reports will make matters lively, particularly since two of the supposed targets of investigations, Lewis and Renzi, are still in the U.S. House. Democrats here get a chance to revisit the "Culture of Corruption" theme that they abandoned last summer during the 2006 campaign.
4. Ironically, the most improbable thing about the Democrats' accusations is that the Bush White House, which has been largely deaf toward and unheeding of the concerns of congressional Republicans, would suddenly engage in such robust cooperation with them in a conspiracy to suppress corruption investigations. The total alienation of Bush from his fellow Republicans in Congress can be best seen in their unwillingness to express a kind word on his behalf.

5. Gradually, more Republicans are jumping on the anti-Gonzales bandwagon, and even those who haven't done so yet are hesitant to offer him any support. Rep. Adam Putnam (R-Fla.) learned the hard way that the President doesn't communicate his intentions to mere congressional mortals. Putnam praised Donald Rumsfeld last November as Bush stuck with the former Defense secretary, only to be left hanging when Rumsfeld was sacked shortly thereafter. But not many Republican lawmakers would speak up for Gonzales even if they were sure Bush would stick with him. He is the least popular Cabinet member on Capitol Hill. The word most often used by Republicans in describing the management of the Justice Department under Gonzales is "incompetent."

6. The contrast between the political fallout of the Gonzales case and that of former Cheney aide Scooter Libby could not be more dramatic. There has been a groundswell among Republicans on Capitol Hill for President Bush to pardon Libby. Gonzales, meanwhile, is on his own. The irony is that Bush is almost certain not to pardon Libby, and almost equally certain not to force Gonzales out. This demonstrates the total disconnect between the White House and the Hill GOP.

7. Still, the expectation now is that Gonzales has a month or two left in office before he steps aside on his own accord.

8. The addition of competent public servants such as Josh Bolten, Tony Snow and Rob Portman to the Bush Administration has not changed the image of incompetence the President has cultivated.

9. The saving grace that some Republicans find in the dispute over U.S. attorneys is that, at least temporarily, it blurs debate over an unpopular war. But the overriding feeling in the Republican cloakroom is that the Justice Department and the White House could not have been more inept in dealing with the President's unquestioned right to appoint - and replace - federal prosecutors.

Congress

Iraq: Senate Minority Leader Mitch McConnell's (R-Ky.) decision not to block a vote on the Iraq supplemental bill containing an Iraq withdrawal date made sense on several levels.

1. For one thing, McConnell is aware of public polling that shows a large and growing majority of the American public wants U.S. troops out of Iraq. A new Pew poll puts the number at 59 percent.

2. But there is another motivation as well: a growing feeling among congressional Republicans that there is no reason for them to keep taking the hits to defend a White House they describe as "ungrateful." President Bush showed such a shocking lack of concern for congressional Republicans' political standing or re-election prospects that they don't care much for their unpopular, lame-duck President. The attitude is that it's his war, let him veto the timetable.

3. Republicans in Congress do not trust Bush to protect them. This has dictated Republicans' lack of support for Atty. Gen. Gonzales and, to some degree, affects the Republicans' attitude toward Iraq.

4. Republicans lost a Senate vote to strip out the timetable, 48 to 50. This came on the heels of the narrow House vote in favor of withdrawal. Senate Republicans had the vote-strength to filibuster, but no desire to subject themselves again to the political pain that surrounds the war. The President will now be forced to feel some of that pain and to confront the issue directly with a veto that could prove very unpopular.

5. The vote on stripping the timetable came down to Senators Ben Nelson (D-Neb.) and Chuck Hagel (R-Neb.), who both voted to keep the timetable. The two Nebraskans have switched sides since this vote was last taken (on a similar but non-binding Senate resolution). Sen. Mike Enzi (R-Wyo.) was out of town due to his mother's illness. Sen. Gordon Smith (R-Ore.) was the other Republican to side with the Democrats, but his position has now been consistent for nearly two months. Senators Mark Pryor (D-Ark.) and Joe Lieberman (ID-Conn.) sided with the GOP, and Sen. Tim Johnson (D-S.D.) once again did not vote.

D.C. Representation: The House erupted into chaos while debating a bill to give Washington, D.C., a voting representative because of Republicans' clever motion to recommit. The parliamentary explanation is very complex, but this motion became germane because of a pay-go issue in the bill. Republicans took the Democrats completely by surprise when they proposed their motion to send the bill back to committee and add language repealing the ban on firearms in the District of Columbia. This motion would probably have carried on the strength of the gun lobby.

This caused sudden panic on the floor, forcing the Chair to halt proceedings on the bill. Numerous parliamentary inquiries followed, and Democrats had to drop it and bring up the Iraq-funding bill. The future of the D.C. voting rights bill in this Congress remains a question mark, but it will likely be brought up again in April.

Budget: The Senate approved a new budget outline as the House was wheeling its own version to the floor. Both have in common that they raise taxes, but with different approaches that could lead to friction during the reconciliation and appropriations processes.

1. The Senate budget resolution offers an instructive example of how the political parties exaggerate and use rhetoric to obscure reality. Republicans, on the one side, insisted that the Democratic budget would result in a tax increase of more than $900 billion. This oratorical number was revised downward to $700 billion after a tax relief amendment was adopted on the floor (see below), but in fact, both numbers are misleading.

2. Democrats were equally misleading in maintaining that they were not raising taxes. They are raising taxes, by a number we pin at $300 billion over five years (mostly over the last two years of the five-year period). The 10-year number is much greater.

3. As the accompanying chart shows, the Democrats plan to sunset the most important Bush tax cuts when they expire in 2010. This includes President Bush's reduction in individual tax rates, the reduction of the capital gains tax to its current rates of 15 percent and zero (for lower-income earners), the current treatment of dividends as capital gains, and a higher small-business expensing threshold. All of these would be eliminated on Dec. 31, 2010, under the Democratic budget. Democrats denied that there was any tax hike, which is clearly false. The chart below shows the cost to taxpayers when each of the relevant tax cuts expires at the end of 2010 under the Senate plan.

4. The full amount of the tax increase over five years, however, is much smaller than $900 or $700 billion. This is because the Democrats are not so politically deaf as to let their newly adopted, sacrosanct "pay-go" rules interfere with political reality. The Baucus amendment, which was adopted on the Senate floor, essentially sets aside a handful of popular tax cuts to be made permanent. It does this with the full expectation that these tax cuts will receive the 60 votes they need on the Senate floor to overcome any pay-go objections.

5. The taxes thus "exempted" or set aside for extension in spite of pay-go include a partial repeal of the estate tax, a two-year patch of the Alternative Minimum Tax (AMT), an extension of the $1,000 child tax credit, an extension of the 10 percent bracket for the first $3,000 of taxable income, and elimination of the marriage penalty. Democrats are banking on breaking their own rules by overcoming a point of order.

6. The AMT is a special case - even though it is patched for only two years, no one seriously expects that either party will let its floor strike the middle class due to inflation after that. That could well result in a tax rebellion. Therefore, we do not take seriously the possibility of a projected AMT increase after 2008, which results in the $700 billion number Republicans were offering.

7. The House, on the other hand, produced a budget that does not protect any of the tax cuts the Senate expects to extend. Their tax hike is approximately $400 billion over five years - again, with nearly all of it coming in the last two years, when most of the tax cuts expire under current law.

8. Rep. Paul Ryan (R-Wis.), the 37-year-old fifth-termer who is the new ranking Republican on the Budget Committee, has proposed an alternative budget resolution. It not only retains the Bush tax cuts but also proposes deep cuts in entitlement and discretionary spending, protects Social Security payments and pays down the national debt. Why was no such budget resolution proposed during the 12 years that the GOP was in the majority? Would the party's leadership support the Ryan resolution if the GOP were in control now? That such questions must be asked undermines Republican credibility and explains why Democrats have dared return to their old ways of "tax, spend and elect."

Sincerely,

Robert D. Novak