WASHINGTON -- House Ways and Means Committee members said yesterday that they do not want to draft a tax reduction bill this year, but several senators indicated they would keep their tax cut proposals alive by attaching them to the unemployment benefits bill.
Ways and Means Chairman Dan Rostenkowski, D-Ill., said in a joint press conference yesterday with Senate Finance Committee Chairman Lloyd Bentsen, D-Tex., that he opposes drafting a tax bill before Congress' expected adjournment at Thanksgiving because it would invite a tax-cut "bidding war" between Democracts and Republicans, with possibly disastrous consequences.
Such a war would do nothing to help to economy and could actually hurt it by greatly increasing the deficit, inflation and interest rates, he said.
Rep. Rostenkowski said other members of his committee are no more eager than he to draft a tax bill in the waning weeks of the 1991 session. Emerging from a 90-minute meeting with Democractic committee members yesterday afternoon, he said, "I don't know one person who is enthusiastic about doing something this year."
Another reason Rep. Rostenkowski said he was opposed to drafting a tax bill is that it would most likely become a vehicle for a capital gains tax cut, tax extensions, and other extraneous tax proposals that have been waiting in the wings.
"When you start down the road of tax equity and fairness, a lot of ideas come up. Committee members will bring up capital gains, and extenders will come up," he said. Housing industry lobbyists were not discouraged by his remarks, however, saying they still expect to see a tax bill this year with extensions of expiring provisions.
The Ways and Means committee's stand will not prevent Senate and House leaders, in any case, from pushing a tax cut package in the coming weeks. Sen. Bentsen said he was prepared to use the extended unemployment benefits bill now moving through Congress as a vehicle for enacting his proposed middle-class tax cuts.
"I would prefer not to see it" on the unemployment bill, he said as he stood next to Rep. Rostenkowski yesterday, but he did not rule out such a move. The $5.3 billion unemployment bill already contains tax proposals, including an increase in unemployment taxes to partly pay for the extended benefits.
Other senators, both Republicans and Democrats, also indicated yesterday that they would attach their tax proposals to the unemployment bill. Sen Bill Roth, R-Del., introduced a bill that would, in fact, combine the jobless benefits with a 3% across-the-board cut in personal income tax rates and expanded Individual Retirement Account benefits.
"The strength of this package is that many of these proposals have wide, bipartisan support," Sen. Roth said. "Senators on both sides of the aisle agree we must begin to cut taxes."
Senate Republican leaders also say they have been working with the White House on a tax cut package which they are likely to offer in debate on the unemployment bill. President Bush has said he would be more likely to sign an unemployment bill if it included a tax-cut package to stimulate the economy.
While White House officials have said any tax-cut package they back will comply with the "pay-as-you-go" rules and other components of last year's budget agreement, Senate Democrats have proposed tax cut plans that would require major revisions of the agreement.
Sen Bentsen's $70 billion tax cut plan, for example, would be "paid for" with 5%-a-year cuts in defense spending over the next five years -- a move currently prohibited under the agreement.
Sen. Pete Domenici, R-N.M., ranking minority member of the Senate Budget Committee, blamed the Democrats' willingness to depart from the agreement for the bad reaction of the tax cut news in the bond market in recent days.
"Since the Democrats first indicated their willingness to give up the agreement's fiscal discipline and spending restraints, long-term interest rates have risen, costing the economy an additional $4 billion in interest costs," he said. "The markets are fearful of reopening the agreement, as well they should be," he said.
Rep. Rostenkowski also said yesterday that he was "not enamored" of Sen. Bentsen's idea of revising the agreement, and he joined House Budget Committee Chairman Leon Panetta, D-Calif., in opposing such a move. "To break the discipline of the budget constraints would be a catastrophe," he said.
In fact, after meeting with Democrats on his panel, Rep. Rostenkowski said the main reason they are leery of drafting a tax-cut bill is the revenue loss that would occur.
"They want to keep the discipline of the budget agreement" Rep. Rostenkowski said.
When asked where the process would go from here, Rep. Rostenkowski said he was going to wait for the White House to come forward with its own package. "I want to see what the President wants to do," he said.
He also denied press reports that House Speaker Thomas Foley, D-Wash., had told him to come up with a tax-cut bill.