White House officials and Republicans on Capitol Hill are so optimistic about winning control of both chambers of Congress in next month's elections that they have begun mapping how they would use their new power, including the possibility of speeding up tax cuts that were to take effect gradually.
With the elections 16 days away and polls showing many crucial races too close to call, Republicans are drawing up plans that would aid a broad array of industries, after hammering business during the corporate responsibility debate touched off by this year's accounting scandals.
Business lobbyists said their wish lists include substantial nationwide limits on the amount of damages that can be awarded in medical malpractice cases, plus a major overhaul of the tax code to reduce the burden on corporations. Both measures have been part of President Bush's agenda and would have a better chance of becoming law if the GOP retook control of the Senate and kept a House majority in the Nov. 5 elections.
Michael G. Franc, the Heritage Foundation's vice president of government relations, said the mood among business lobbyists and economic conservatives is "guarded optimism, bordering on giddiness." He said they are laying plans to take swift advantage if Republicans complete the triple crown of the White House, the House and the Senate. "It's the domestic equivalent of planning for postwar Iraq," Franc said.
White House officials said Republican control of Congress would help Bush win passage of an administration plan to subsidize prescription drugs for Medicare patients, which they said would rob Democrats of a potent issue and help the president in Florida in 2004. The Democratic-controlled Senate rejected Bush's previous plan because of objections that it was too stingy, relied too much on the insurance industry and might not work. One of the plans being worked up by the White House would be limited to low-income senior citizens and would send federal funds to the states for distribution.
Conspicuously absent from the administration's plans for next year is legislation to allow people to invest part of their Social Security taxes in private retirement accounts. That was one of Bush's core campaign promises, and he had indicated he was prepared to introduce it next year. But the stock market's nosedive has made it much harder to sell. Administration officials said Bush plans to promote a national conversation about the issue next year but is unlikely to push Congress to pass a plan until 2005, if he wins reelection.
The officials also said for the first time that Bush would consider alternatives to personal accounts as a way to preserve the long-term solvency of the retirement program. "There are different ways to accomplish the president's objectives," a senior administration official said.
In explaining their optimism about the elections, Republican officials point to polls showing that most voters do not blame Bush for the problems in the economy, and said Democrats have failed to find a winning theme. These officials said the continuing attention on national security is benefiting their candidates in enough races to restore Senate control to the GOP, which lost it in May when Sen. James M. Jeffords (Vt.) became an independent.
If Republicans regain the majority, they may begin passing Bush-backed bills even before the new Congress convenes in January. That's because a quirk of this year's elections might turn Republicans into the majority party for a lame-duck session. The contest between Sen. Jean Carnahan (D-Mo.) and former representative James M. Talent (R) is considered a special election because she was appointed to office for two years after voters elected her late husband, Mel Carnahan. If Talent wins, he could be seated as soon as the election results are certified.
Republican sources said planning is underway for such an opportunity. Sen. Trent Lott (R-Miss.), who was majority leader before the Democrats took over, would bring stalled bills to the floor, starting with one on a homeland security department. Republicans would also try to confirm many Bush-nominated federal judges, the sources said.
Administration officials said the president realizes that, regardless of the election outcome, he cannot depend on wartime popularity heading into his reelection race and needs to beef up his domestic record to avoid the fate of his father, who had high approval ratings during the Persian Gulf War but was viewed as neglecting the economy.
As the administration prepares initiatives for the new Congress, White House economic adviser Lawrence B. Lindsey recently met unannounced with 15 chief executives of major corporations at a home in Manhattan to solicit their suggestions. A White House official said Lindsey has also met with consumer, labor and nonprofit groups.
Even with GOP control, Bush would have trouble winning passage of a top priority of his corporate backers: restrictions on jury awards, beginning with medical malpractice cases. Bush has proposed limiting noneconomic damages, which compensate a victim for pain and suffering, to $250,000.
Such measures, known as tort reform, were successfully pushed by Bush when he was governor of Texas and are among the major goals of top GOP donors. One House leadership aide said tort reform "would go to the top of the list" if Republicans win control of both chambers. But trial lawyers, who benefit from big verdicts, are among the most powerful Democratic constituencies, and Republicans might not have a wide enough margin to overcome their opposition.
Indeed, Republicans said they realize that controlling two branches of government could turn out to be something of a mixed blessing. The most optimistic GOP scenarios would give the party a bare majority in the Senate -- perhaps resting only on Vice President Cheney's tie-breaking vote -- and opponents of a bill can invoke Senate rules requiring 60 votes to bring it to a final vote. So Republicans would labor under the public illusion that they had total control, when in fact they might be able to push through very few measures opposed by Democrats. "You would have a real expectation-management problem," said a Republican involved in the planning. "And who would we blame?"
Nevertheless, officials said that control of the Senate agenda would allow them to bring up their priorities and to win confirmation of a backlog of conservative federal judges.
A House leadership aide said one of the first measures to be passed by a Republican-controlled Congress would be a permanent version of last year's phased-in, $1.35 trillion tax cut, scheduled to expire in 2010. The aide said Republicans would try to build support by dividing the package into pieces, so Democrats would be forced to go on record for or against specific taxes, including the inheritance tax.
Some Democrats have talked about postponing future phases of the tax cut because of the nation's return to deficit spending. But the House leadership aide said a GOP-controlled Congress could be expected to try to speed up the various tax cuts that have been enacted. On top of that, the aide said, Republicans would be expected to push to cut other taxes, including the capital gains tax, paid on profits from investments when they are sold.
The administration and Hill Republicans also want to eliminate the double taxation of corporate dividends, which are taxed with the company's earnings and when they are paid to shareholders.
Grover Norquist, president of Americans for Tax Reform, said he is helping organize support for future tax cuts by forming "caucuses" of lawmakers who back specific reductions, including 108 in the House and Senate who want to abolish the capital gains tax and 100 who want to eliminate the inheritance tax.
Whether Republicans extend their power in Congress, Treasury Secretary Paul H. O'Neill plans to send the president late this year proposals for rewriting the tax code. "Fundamental tax reform, in our minds, means scrap it all," a senior administration official said.
Sources said the possibilities are likely to include a flat income tax -- which would have a single rate for most taxpayers and would eliminate most deductions -- and a value-added tax, a levy on goods at each stage of production and distribution. Bush is not expected to propose those.
One administration official said Bush is more likely to take a "rifle-shot" approach that might include simplifying the allowance for depreciation -- the yearly loss in value of machinery and equipment -- and reducing the incentives for corporations to move their headquarters overseas.
Sen. Patty Murray (Wash.), head of the Democratic Senatorial Campaign Committee, said Republicans' preelection hubris bolsters the argument she is making in key states that Democrats serve as a check on Republicans. "I tell people that a Democratic Senate is the only thing stopping a conservative, right-wing agenda from becoming law," Murray said.
Several Democrats said Republicans' optimistic talk suggests that if they win both chambers, they could be seen as overreaching, like the House Republicans under Speaker Newt Gingrich. "Republicans always come in with guns blazing," said a Senate Democratic leadership aide. "That would give us the best chance of winning back the White House in 2004."
© 2002 The Washington Post Company