House Speaker Dennis Hastert said Friday he looks forward to working with President Clinton on the budget. (AP)

By Juliet Eilperin and Eric Pianin
Washington Post Staff Writer
Saturday, October 2, 1999; Page A1

"The proposal was floated to his people as well as others, is my understanding, and there was no response," Hastert said during a morning news conference.

But from Austin, Bush campaign spokeswoman Mindy Tucker said the Bush campaign never gave any approval to congressional Republicans. "We're not coordinating with the House on issues," Tucker said.

Hastert's comments underscored congressional GOP dismay with Bush and came after the presidential candidate had effectively undermined a key House Republican tactic for keeping spending under control this year. The growing controversy has also served to distract attention from Republicans' efforts to portray themselves as the champions of Social Security and gave gleeful Democrats ammunition with which to depict House GOP leaders as cold budget cutters.

During a campaign appearance in California on Thursday, Bush said he was against the House plan to save $8.7 billion over the next year by deferring tax credit payments for low-income working families. "I don't think they ought to balance their budget on the backs of the poor," said the GOP presidential front-runner.

In the wake of those comments, which marked the first time Bush has so clearly distanced himself from the GOP-controlled Congress, politicians from across the political spectrum rushed to pile on the issue yesterday.

President Clinton said he was "delighted" that Bush has "joined our position on this." Attacking Bush by name for the first time in this presidential contest, Vice President Gore said it is unreasonable for the Texas governor to oppose some Republican budget cuts but support others.

"First, Pat Buchanan leaves the Republican Party, and now George Bush abandons the Republican position on the earned income tax credit," Gore said.

Meanwhile, Sen. John McCain (Ariz.), a Republican presidential candidate, said Congress shouldn't "tamper with a much-needed tax credit for working Americans" and suggested that cutting special interest subsidies would be a better way to meet budget targets.

The flap comes at a particularly critical time in the Republicans' struggle to challenge Clinton on budget issues and complete work on 13 spending bills for the new fiscal year that began yesterday. With Bush and a majority of Republican senators opposed to the tax-credit deferral plan, House leaders have little choice but to drop it and go back to the drawing board next week.

Senate Majority Leader Trent Lott (R-Miss.) told reporters, "I think in the end the House and Senate Republicans will find other ways to deal with this problem and will decide not to do that."

But GOP lawmakers and aides expressed their anger with Bush. "A large portion of our membership and an enormous amount of staff feel they were clearly double-crossed by George Bush," said a senior GOP aide. "The last president who distanced himself from his party in Congress got impeached. He should learn a lesson from that."

Rep. Ray LaHood (R-Ill.) said, "Perhaps he ought to butt out of congressional affairs. . . . I think he learned that he needs to consult the majority party before he makes policy statements."

According to sources close to Hastert, the speaker's chief of staff, Scott Palmer, specifically told Bush campaign policy director Josh Bolten about the tax credit plan and other possible budget saving measures when the two met in Austin last month. Bolten did not raise any objections to the plan, the sources said.

Hastert said he was not sure the information provided to his staff ever filtered up to Bush. "I'm sure that that information never really got to Governor Bush," he said.

Tucker, Bush's spokeswoman, confirmed that three Hastert aides, including Palmer, had recently met with Bolten at Bush headquarters in Austin. "Josh Bolten does not remember the issue coming up," she said.

Tucker also said that she had met with the Hastert aides but that the sessions were mostly introductory and not substantive. "I met with them, and it did not come up," she said.

Despite reports of close coordination between congressional Republicans and the Bush campaign, Bush advisers said they have followed a deliberate policy of avoiding such discussions.

Bush learned about the proposal to defer payments of the earned income tax credit, which goes to the working poor, Thursday morning during a daily briefing. He responded to a question about it while making a campaign appearance.

The proposal emerged after weeks of intense deliberations among House GOP leaders and was considered necessary in crafting a huge labor, health and education spending bill that would stay within the limits. The leadership had considered other alternatives, including withholding welfare block grant money to the states, but concluded that they weren't politically feasible.

A senior GOP House member said yesterday that, in light of the opposition from Bush and Senate Republicans, it is unlikely the leadership could pass the spending bill on the floor with the tax credit proposal.

House Majority Whip Tom DeLay (R-Tex.) defended the plan as a way of bringing the earned income credit in line with other income-supplement programs such as Social Security. He said it would be difficult to find a substitute.

"We don't know what to do about it," DeLay said yesterday. "After three months, we were pretty much scraping the bottom of the barrel."

In addition to postponing the tax credit payments, Republicans have also proposed saving $230 million by consolidating three adoption programs; another $200 million by eliminating cash benefits as part of a trade adjustment assistance program for unemployed workers; and $116 million by freezing administrative costs for the federal government's direct student loan program.

These measures, they argue, will enable them to avoid using Social Security funds to finance the budget. National Republican Congressional Committee Chairman Thomas M. Davis III (R-Va.) announced Thursday that the committee will begin running ads this weekend in the districts of vulnerable Democrats, accusing them of raiding Social Security.

Democrats immediately attacked the ads, with House Minority Leader Richard A. Gephardt (D-Mo.) calling the effort "the most cynical thing I have ever seen in all my time in politics."

Staff writers Dan Balz and Ceci Connolly contributed to this report.