Two key members of Congress said Friday they see little or no chance of Congress passing a second tax bill or an economic stimulus package this year.
"No way," said Rep. Charles Rangel, D-N.Y., when asked whether the House Ways and Means Committee will report out a second tax bill this year, as was recently suggested by committee chairman Dan Rostenkowski, D-Ill. Rangel, who made his remarks at a conference sponsored by the Public Securities Association in New York City, is a senior committee Democrat who has been mentioned as a possible successor should Rostenkowski leave Congress.
The news that Congress probably will not consider another tax bill comes as a particular blow to municipal bond dealers, since nearly a quarter of the 100 items that House committee members have suggested should be included in such a bill would enhance the use of tax-exempt bonds in some way, according to Micah Green, the association's executive vice president.
Green said committee members recently provided Rostenkowski, upon the chairman's request, with 23 municipal bond proposals to be included in the bill, most of which were "pretty good" and would "expand the use of municipal bonds."
Rangel said he would support a proposal to liberalize the state private-activity volume cap restrictions on some small-issue industrial development bonds, but "you need a tax bill to do that, and we won't have another tax bill this year."
He suggested that the reason Congress would not consider another tax bill is because of the political fallout many members are still experiencing from enactment last month of President Bill Clinton's $500 billion deficit reduction bill, which included $250 billion of unpopular tax increases.
"What you're trying to do would have to be pretty popular. The President can't take another hit like that," Rangel said.
Sen. Thomas Daschle, D-S.D., a Senate Finance Committee member and the chairman of the Senate's Democratic Policy Committee, also told the dealer association that he sees little chance for a second tax bill even though the House committee just held a hearing on the possibility.
"[Rostenkowski] has been less than clear as to his intention, though he has some interest" in the idea, Daschle said.
The fate of such a bill would be even "less clear than that on the Senate side," he said, because the Senate committee chairman, Sen. Daniel Patrick Moynihan, D-N.Y., "has not indicated an interest."
Because other members of the Senate committee would like to develop a second tax bill, Daschle put the odds of passing one at "50-50," but said "the chance may not be any better than that."
"We certainly have a full plate" on the Finance Committee, Daschle said, explaining that the committee is charged with taking action on the President's comprehensive health-care reform legislation, as well as the North American Free Trade Agreement legislation, both due out this month.
After dealing with health care and the North American Free Trade Agreement, which Daschle said could take much of the next year, the committee might turn its attention to welfare reform before taking up another tax bill, he said.
Other participants at the conference also expressed pessimism on the chances of a second tax bill.
Lindy Paull, deputy minority staff director for the Senate Finance Committee, said one reason Democrats would be reluctant to revisit the tax issue is because it could open an opportunity for Republicans to repeal provisions of the recently enacted measure.
Retroactivity of income tax increases and repeal of Social Security tax increases are two such items Republicans might target. "It would be unlikely that we would do any tax legislation for the rest of this year," Paull said. "It's just way too risky and too controversial."
Daschle said the chances of passing an economic stimulus package this year are even less than passing a tax bill because of the spectacular defeat of Clinton's $16 billion infrastructure and job stimulus package at the hands of Senate Republicans this spring.
"I don't see the support there," Daschle said, noting that the budget package "had a number of stimulus elements" and Congress will "wait and see" whether anything else is needed.
Recent news reports have suggested that the White House is considering proposing another stimulus initiative because of signs that the economic recovery is not picking up speed this year, as expected.
But Daschle said that within the administration, Treasury Secretary Lloyd Bentsen has been cautioning against another effort, arguing that the recent big drop in long-term interest rates will do far more to stimulate the economy than any small fiscal measure could. According to Daschle, Bentsen expects the recent rate drop to generate another $100 billion in economic activity.
Rangel also said he was "disappointed" with the enterprise and empowerment zone provisions included in the budget package because they did not include powerful enough tax incentives to help lift the residents of the nation's many blighted urban areas out of poverty.
The exempt-facility bond provision and other tax incentives in the enterprise zone provision were cut back substantially from the House's original proposal, which Rangel said he had largely drafted, when the bill went to conference with the Senate because of a need to save revenues.
As a result, "we came up with a package worse than we ever had during the Bush administration," when Congress passed much more generous enterprise zone provisions as part of tax bills that were vetoed by President George Bush for unrelated reasons, Rangel said.
The biggest problems with the enterprise zone provision, Rangel said, is "there's no money in it" and there are too few empowerment zones.
"Why so few zones?" he asked. "I am now in the uncomfortable position of having the Rangel bill with no money in it being touted as the solution to urban problems," he said.