House GOP Intensifies Push for Tax Cut

Posted March 7, 2003 at 6:14pm

Rather than backing down from Democratic charges that the White House has tried to intimidate critics of President Bush’s economic plan, key House Republicans have intensified efforts to work with the business community to pass the most controversial element of the administration’s proposal.

A group of House Republican lawmakers led by House GOP Policy Committee Chairman Christopher Cox (Calif.), Chief Deputy Whip Eric Cantor (Va.) and Rep. Jim McCrery (La.) has spent the past three weeks working behind the scenes to form the Tax Dividend Working Group. House GOP Conference Chairwoman Deborah Pryce (Ohio) is coordinating the effort.

The brain child of Speaker Dennis Hastert (Ill.), the group is working with several K Street giants to coordinate support for cutting taxes on corporate dividends and communicate that message to lawmakers and the general public. The working group is also consulting with Treasury Secretary John Snow and Commerce Secretary Don Evans, who plan a major push on Capitol Hill this week.

“What we’re doing is working with the House, Senate and White House and with coalition groups to try to communicate what the package does, to try to bring it home and show how it will impact everyday life in America and boost the stock market by an estimated 10 percent,” Cantor said.

The effort comes just days after Democratic Congressional Campaign Committee Chairman Robert Matsui (Calif.), a senior members of the Ways and Means Committee, accused the White House of trying to intimidate business lobbyists and executives who had expressed some concerns about the dividend proposal to silence their concerns and join the lobbying effort.

Matsui said the groups, which he would not mention by name, had complained about “heavy-handed tactics” by the White House and the Treasury Department.

“They told me they wished they could remain neutral on this, but they said the White House is putting a lot of pressure on us,” Matsui said.

A senior Democratic aide echoed the charges, noting that a half-dozen business and outside groups told him they had received calls from the White House and Treasury telling them not to say anything critical again.

The White House has repeatedly denied the charges.

Jade West, a top lobbyist for the National Association of Wholesalers-Distributors, rejects any claims that Republicans are pressuring business groups. Instead, she argues Republicans and the business community efforts have not been aggressive enough so far.

“The Hill hasn’t heard enough from the business community,” said West, whose association is working closely with the Congressional dividend working group. “This is going to be a very focused lobbying effort, and it needs to be because the bills are moving on a fast track.”

In conjunction with the working group’s efforts, in the past two weeks the corporate community has also intensified their lobbying campaign to sell the dividend tax cut to stockholders across the country. In late February Citigroup and Salomon Smith Barney sent out a combined total of nearly 5 million letters to stockholders touting the virtues of the dividend cut and exhorting them to call their Congressmen to support it, according to sources familiar with the activities. General Motors also recently sent letters to stockholders, and Verizon sent 1 million letters along with dividend payments.

The letters supplement a massive business campaign by the Tax Relief Coalition, a group of 1,000 companies and associations led by the NAW. The Coalition has also formed the Dividend and Benefits Working Committee, which has met every Thursday for the past month.

As Chief Deputy Whip, Cantor will regularly work with the business community on key issues throughout the year. His role in this working group, spearheading an effort to sustain Bush’s pet provision of the tax package, however, demonstrates just how quickly Cantor’s stock is soaring among the leadership team. (The Richmond, Va., Republican also recently played a role in convincing tobacco giant Phillip Morris to move its corporate office, with its 600 jobs, from New York to his heavily Republican district.)

Cox, a senior Republican who is also helping lead the effort, said Republicans are simply trying to correct misunderstandings among the public that the dividend component will primarily benefit the rich. The dividend tax proposal is just one piece of Bush’s $695 billion economic growth package, which would also accelerate the personal income tax cuts enacted in 2001.

“Over 60 percent of voters receive dividends and depending on how it’s described, some people don’t realize we’re talking about them,” Cox said, claiming that only 14 GOP lawmakers have “problems” with the dividend provision.