TAX CUT: WASHINGTON LOSES, AMERICANS GAIN

Tax cuts are on the agenda in Washington, as well they should be. The story of how this came about over the last six months tells much about the new Republican leadership in the House of Representatives.

As often stated here before, Americans are today laboring under a tax burden that is, incredibly, at an historic high for peacetime. This is intolerable. Further, it must be stressed that the case for tax cuts doesn't rest on the existence or non-existence of anything Washington is calling, this week, a budget surplus.

It is a rather remarkable accomplishment that tax cuts are high on Washington's agenda at all. Credit goes to low-key, low-profile House speaker Dennis Hastert of Illinois. Back in January, when news of the so-called surpluses began to come in, the Clinton administration was determined to sequester all this money for new spending programs, and tax cuts seemed nowhere on the horizon. The Clinton strategy was clear enough: Use the alleged surplus as a permanent blocking mechanism to prevent real tax cuts of any size, while claiming to pay down the national debt, and hope the people didn't notice that a dozen or so new spending programs were being launched. The latter category included a huge, open-ended expansion of the Medicare entitlement to pay for seniors' prescription drugs. (If this especially ill-advised Clinton scheme is ever enacted, it will be a big step toward turning the pharmaceutical companies into regulated utilities, toward instituting price controls and stifling the marvelous innovative capacities of these leading-edge firms.)

Earlier this year, Hastert embarked on his own listening tour with members of his House GOP caucus. He learned that tax cuts were priority No. 1 for the vast majority. So Hastert set House Ways and Means chairman Bill Archer about the task of fashioning the nearly $800 billion tax cut bill the House narrowly approved last month.

This was a signal victory in itself and no small triumph of Hastert's leadership. (His main problem is that 15 or 20 GOPers opposed tax cuts, and his party's margin is only five votes.) For at the same time Hastert was with some difficulty pushing this package through the House, the Clinton administration had moved from a no-tax-cuts-at-all position to one that said the president would sign a $300 billion tax cut. House and Senate moderates were trying to advance a $500 billion tax cut. The point is there was consistent movement in the direction of larger tax cuts, because of the perseverance and leadership of the new speaker.

The House-approved bill contains not only the 10 percent across-the-board cut in personal income-tax rates, but also a cut in the capital-gains rate from 20 to 15 percent. It also begins phasing out the federal inheritance tax and eases the marriage penalty.

This past week it was the Senate's turn, and once again it is clear that Hastert's inspired leadership has stiffened spines and moved the ball down the field. Once again, persistence is paying off for the tax cut we need. As this was being written, it seemed clear that a tax cut totalling just under $800 billion would be enacted. The Senate version cuts income taxes less and expands IRAs more.

Throughout the debate, the most salient fact is the unrelenting hostility of the national news media to any tax cuts. On perhaps no other issue does the national media display its liberal bias so relentlessly. For if not all Americans always understand the essential fact of this debate, be assured the liberal media does. This debate is about who will gain power: Washington or ordinary taxpaying Americans. A tax cut means Washington loses while working Americans gain. So the liberal media mavens deem it worthy of distorting and not telling the truth. Proponents of tax cuts need to hammer home these facts. Meanwhile, kudos to Denny Hastert for holding fast when the going got tough.