Saturday, May 17, 2003

Voinovich feeling heat for tax vote

By Carl Weiser
Enquirer Washington Bureau

WASHINGTON - Since he voted for President Bush's tax cut late Thursday, Sen. George Voinovich has been labeled a hypocrite, a liar and a sucker.

No wonder he left the country.

Voinovich, who is in Ottawa, Ontario, this weekend for a previously scheduled meeting of fellow NATO nation legislators, cast a decisive vote for the Senate's tax cut.

It met his pledge not to vote for any tax cut that added more than $350 billion to the nation's worsening deficit. But to meet that requirement it resorted to what even a fellow Republican senator labeled a "gimmick": The bill would let some of the tax cuts expire in 2007, although almost no one believes Congress would let that happen. If the tax cuts are extended the full 10 years of the legislation, its real cost is closer to $660 billion.

"I'm afraid that he's been had," said Voinovich friend Robert Bixby, executive director of the Concord Coalition. The group pushes the federal government to be fiscally responsible.

Voinovich said he knew exactly what he was doing: voting for a bill he thought would give the economy an immediate jolt. He said he liked that the tax cuts suddenly ended because Congress would have a chance to gauge whether they actually worked to stimulate the economy. Plus, he got a pledge to create a commission to study the entire tax code and recommend ways to make it simpler and fairer.

The final version of the tax cut - and Voinovich's final position on it - are still anyone's guess.

The House passed a $550 billion tax cut that President Bush preferred. Leaders of the Senate and House, probably including GOP Rep. Rob Portman of Terrace Park, now will negotiate a compromise version. They hope to pass it by Memorial Day.

But several contentious issues are of special interest to the Tristate:

• Overseas workers. To pay for the part of the tax cut, a way to satisfy Voinovich, senators agreed to raise taxes on American workers overseas.

Procter & Gamble, as well as most other business groups, oppose this. The company has 102,000 employees in 80 countries, though it wouldn't say how many are American citizens. Now Americans working abroad can exclude $80,000 of income from taxes. In the Senate version that would end.

Ending that provision would make Americans more reluctant to work overseas or force companies to pay them far more.

And it means the government would be paying for a tax cut by raising taxes.

"Robbing Peter to pay Paul is a poor tax strategy," said Thomas Donohue, president of the U.S. Chamber of Commerce. "The tax exclusion for overseas income should be expanded, not scrapped."

Portman, a member of the committee writing tax laws, said he spoke to P&G officials about the provision and hopes to scrap it. It is not in the House version.

• State aid. To win votes, the Senate added $20 billion in aid to state governments, which are fighting off deficits not seen since World War II.

In the Senate plan, Ohio would get $616 million, Kentucky $220 million and Indiana $292 million.

No one will be more central to the final fate of the tax cut than Voinovich himself. He has said that he will not support any tax cut that adds more than $350 billion to the deficit.

Any tax cuts of more than $350 billion must be paid for by closing what he calls tax "loopholes" such as the tax break for Americans overseas or by cutting spending.

If negotiators come up with a tax cut that does not meet those requirements, "then there's going to be a problem," Voinovich spokesman Scott Milburn said Friday.

"There is still the opportunity for people to engage in more mischief," Milburn said.

Voinovich will face pressure from conservatives, who want a bigger tax cut. Liberals accuse him of selling out.

"Sen. Voinovich gave his word to the people of Ohio, but now he supports massive tax breaks for millionaires that violate the spirit of his very public, very adamant pledge," said Marge Baker, co-chairwoman of the liberal Fair Taxes for All coalition.

The Washington Post even reserved an entire editorial Friday for denouncing Voinovich.

"So the deficit hawk of Ohio has clipped his wings for a plan that delivers the worst of all worlds: It costs more than he claimed was affordable and delivers less stimulus than he claims is needed," the paper opined.

Even Voinovich's friend from the Concord Coalition, Bixby, accused Voinovich of duplicity.

"I think he's acquiesced in a huge gimmick that in effect allows him to have it both ways," said Bixby, who joined Voinovich for a press conference last year in which they unveiled a report showing how the deficit was much worse than thought.

"He can vote for the $350 billion but at the same time be accommodating to the White House. I can see the attraction for that. At the same time it makes it hard to figure out where the principle is."

Ironically, Voinovich earned praise from a group that has been flogging him, the Club for Growth. The antitax group ran ads in Ohio likening Voinovich to the French for being disloyal to Bush, and accusing Voinovich of costing Ohio jobs. But Friday they called Voinovich "courageous."

Voinovich said his vote had nothing to do with Republican pressure, nothing to do with the president's trip to Ohio last month to whip up support for the tax cuts, nothing to do with anything but the numbers: The Senate bill struck the best balance between creating jobs and fiscal responsibility.

Voinovich told reporters Thursday that he believes the White House won't try to exceed the $350 billion limit unless it finds ways to pay for it.

"The White House gets it," he said. "I think there are going to be some difficult days ahead, but I really believe we're going to prevail. If we don't prevail, it's not going to happen."


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