Texas Gov. George W. Bush today sought to blunt criticism of his $483 billion tax cut proposal by accusing Arizona Sen. John McCain of calling for a $40 billion tax increase on working men and women.
The charge caught McCain by surprise, and he did not dispute Bush. But McCain argued that his tax plan does more for working Americans by protecting Social Security and Medicare. He accused the Republican presidential front-runner of doing a "Texas two-step" on voters by maintaining he has a plan to save Social Security. "The first thing I'd say to a single mom is that I've got a tax cut for you, and Governor Bush doesn't."
"That's not true," Bush replied.
"Yes it is," McCain shot back.
As Bush and McCain focused on each other, a separate debate took place among the three conservatives competing most intensely for the support of the religious and right-to-life wing of the GOP. Steve Forbes, Gary Bauer and Alan Keyes fought to trump one another on abortion, prayer in schools and school vouchers in a series of pointed exchanges.
Forbes, who hopes to finish a strong second in Iowa with the help of religious conservatives, went out of his way to display his conservative credentials, taking a question about health care and using it to talk about abortion. "I hope we will talk about the need to keep the pro-life plank in the platform. . . . It also brings up the issue of euthanasia and assisted suicide. We must fight both; they go hand in hand."
Bauer tried to undercut Forbes's conservative support by charging that the Forbes tax plan would hurt churches by eliminating the charitable deduction.
Utah Sen. Orrin G. Hatch used much of the debate to promote a 30-minute campaign ad running on Iowa television and to present himself as the one GOP candidate who has the experience to implement conservative policies in Washington. "That's what I offer to the people here in Iowa and the people throughout the country: experience."
During the debate, Bush sought to extricate himself from a controversy over a South Carolina state senator's description of the NAACP as "the National Association for Retarded People." Arthur Ravenel later apologized to the retarded for lumping them together with the NAACP but stood by his characterization of the civil rights group.
Until today, Bush refused to condemn Ravenel's comments. But challenged directly by Keyes to disassociate himself "from that kind of racial slur," Bush said, "Yes, I agree with you Alan. His comments are out of line and we should repudiate them."
The debate, the final one here before the Jan. 24 caucuses, was sponsored by the Des Moines Register and was moderated by Register editor Dennis Ryerson.
The exchanges between Bush and McCain represent the most significant dispute to emerge during the Republican presidential contest, a dispute certain to influence the outcome here and, even more so, in the New Hampshire primary Feb. 1. The two men have staked out very different stands on taxes, spending and programs for the elderly.
Bush's plan, which calls for a $483 billion cut over five years, contains substantial reductions in income tax rates and is heavily weighted to the top 1 percent of taxpayers, who get almost 37 percent of the benefits. McCain, in contrast, calls for tax cuts of $240 billion over five years. His plan would give only a fraction of the benefits to the top 1 percent, while the lion's share would go to those making $65,000 to $130,000, according to Citizens for Tax Justice.
McCain has attacked the Bush plan as fiscally irresponsible, because it would devote virtually the entire projected surplus to the tax cut. McCain said his plan sets aside three-fifths of the non-Social Security surplus to shore up retirement programs, while Bush would leave nothing for these programs of crucial importance in Iowa, which has a disproportionately large percentage of elderly voters.
McCain's tax proposal runs counter to GOP orthodoxy by giving almost nothing to the very wealthy and by not cutting tax rates. Until today, Bush had criticized the McCain tax initiative as too small, saying that it would allow elected officials in Washington to spend the surplus, and suggesting McCain's stand is more appropriate for a Democrat than a Republican. Today, Bush opened up a new front, charging that McCain would in fact impose a $40 billion tax increase on working Americans in the guise of closing corporate tax loopholes.
The issue Bush raised today involves the taxation of certain employee fringe benefits, including education, transportation, moving expenses and parking. McCain never directly answered Bush's charge but sought to switch the debate to the question of who does the most to save Social Security. "Governor Bush's plan has not one penny for Social Security, not one penny for Medicare, and not one penny for paying down the national debt," McCain said. "And when you run ads saying you are going to take care of Social Security, my friend, that's all hat and no cattle."
Bush responded: "That's cute but . . ." McCain interrupted: "They're always cutest when they're true."
Bush shot back: "That's not true."
McCain said: "That certainly is."
Bush maintained that he has "$2 trillion set aside for Social Security." But McCain said that money is simply the amount that will build up in the Social Security trust fund. "It needs $5 trillion to $7 trillion more, and we've got to do it soon, so that [people] can invest their retirement into savings investments of their own choice so we can save the system."
The dispute over McCain's plan continued after the debate, as his campaign issued a statement attempting to counter Bush's charge. The statement said that education and training expenses paid for by employers "are not considered fringe benefits under the tax code nor will they be under the McCain plan . . . the Bush campaign erroneously described the McCain plan [and] grossly overstates the revenue impact."
The Bush campaign stood by the attack. "That's an incorrect analysis of the code," said Bush spokesman Ari Fleischer. "We're correct and I'm happy to let it go to independent tax experts."
Forbes sought repeatedly to enter into the tax debate, saying that the tax cuts Bush has taken credit for in Texas are largely illusory. "Most Texans have never seen those tax cuts, and the same thing is going to happen with your proposal on the federal level," Forbes said. Bush accused Forbes of distorting his record and said his tax cut in Texas had provided a substantial homestead exemption of $10,000: "It may not be real in million-dollar houses," Bush said to the wealthy magazine publisher. "But it's real if you've got a $40,000 house."
Staff writer Ben White contributed to this report.
CAPTION: GOP candidates Steve Forbes, George W. Bush and John McCain appear at Iowa debate.