BUDGET RESOLUTION: It doesn’t look like much on the surface, but the GOP leadership in the House and Senate seems extremely optimistic about putting together a resolution in conference committee that will produce legislation cutting the capital gains tax before the year is out. Alas, as the debate has unfolded thus far, such legislation would almost certainly be vetoed by the President. The extremely poor showing of Sen. Phil Gramm’s amendment, which would have replicated the House $350 billion tax cut over five years -- he got only 31 votes -- indicates the conferees can not get much more than $170 billion for tax cuts. As The Wall Street Journal editorialized yesterday, Senate Majority Leader Bob Dole clearly wanted Gramm to lose badly, but at the same time wants to produce a tax cut bill at the end of the process. From here, it appears Dole doesn’t think he has to produce a bill that will actually become law in order to remain the frontrunner for the GOP presidential nomination. With Dole unwilling to take the lead in making the growth arguments and with Senate Finance Chairman Bob Packwood hammered into depression over the ethics charges against him, doom and gloom have dominated the debate. This leaves President Clinton with an easy re-election decision to demagogue on the fairness issue and veto a capgains cut if it does make it through the long gauntlet it will face on Capitol Hill. There are still a dozen ways to make it happen, though, but this means Dole must badly want the tax cut enacted, which means cutting a deal with the President.
GINGRICH: The Speaker is planning a 36-city tour to promote his forthcoming book, although plenty of political friends are advising him against it -- on the grounds that it will appear unseemly. He says he doesn’t care that it might look unseemly, and he shouldn’t. There’s nothing wrong with him promoting his book. He’s already gone further than I would have in forgoing royalties beyond a specified amount. I only hope he keeps his health on such a tour, which will involve him signing books for a few thousand people. At the same time, we hear Gingrich is now assuring friends that he has no intention of running for President, although that kind of assurance is only good on a day-to-day basis. Force majeure.
JAPAN TRADE SANCTIONS: Nothing new to report, although I’m still expecting a move in the Senate to shift gears before the June 28 deadline. A growing number of Senators are alarmed at having been boxed into support of an untenable position, which has isolated the U.S. in the world trading community.