The great sausage factory: how a tax cut is born

Call it high-stakes sausage politics. The Memorial Day weekend is closing in - the deadline that President Bush set for passing one of the largest tax cuts in US history. Negotiations are tense, loyalties on the line. The well-drilled GOP House is on board, and it's all riding on a single senator.

So it was on May 23, 2001. The senator was Vermont's James Jeffords, who gave the president his vote on a $1.25 trillion tax cut - but at the expense of his Republican affiliation and control of the Senate.

A nearly identical scenario is playing out this week, as the White House fights its way back to a $330 billion tax cut: early setbacks, tense negotiations, big play in the Senate, where a single vote, still pending, could decide the issue. As both the White House and business groups lobbied for the final up or down on Tax Cut II, the lessons of Tax Cut I were clearly in mind:

Lesson 1: Don't drive any Republican out of the party. A 51-48-1 Senate (the slim GOP majority in the chamber at the moment) is still preferable to the 50-50 Senate that one defector upended last time around - and could again.

Lesson 2: Votes lost on the Republican side can be made up by Democrats, if you're willing to bend a little.

So, President Bush accepts $20 billion in aid to states he and most Senate Republicans did not want, because it could deliver the 50th vote. "Why should we reward states for not being responsible," grumbled Sen. Trent Lott (R) of Mississippi in the runup to the vote.

The $350 billion package of tax cuts and spending that the Senate is expected to vote on before it adjourns for the Memorial Day weekend is less than the $726 billion the president wanted. But it is much more than many longtime capital watchers thought he would get, including business supporters. Business and tax groups, who have been waiting since the Reagan administration for another round of big tax cuts, say they're now expecting new tax cuts every year from the Bush administration, as long as there is one.

The strategy is to go slow, build coalitions one senator at a time. Business groups started advertising in key states months ago, and contacting prominent business executives to lobby their senators. "If you have a near majority of Republicans, you can go regionally and pick off Democrats," says Jonathan Collegio, a spokesman for Americans for Tax Reform.

Once again, the battle in the final hours is coming down to winning over one or two senators. These include Sen. George Voinovich of (R) Ohio, who inherited a bankrupt Cleveland as the new mayor in 1979 and still talks about how tough it was to dig out. He's also one of a fading breed in the Republican Party, a genuine deficit hawk. Despite all of his Jeremiads about the dangers of too much red ink, there was always a little give.

Also, Olympia Snowe, nearly the last of the old New England Republican moderates. She had pushed hard for a "trigger mechanism" to deactivate the 2001 tax cut, if deficits returned. They did, and she was not eager to vote for more. At the "no-way" extremities: Rhode Island's Lincoln Chaffee (R), master of the rumpled "deer in the headlights" look, but unmovable when he thinks he's right. And the right size for a tax cut when the country faces whopping deficits is "zero," he said early and often. The White House enforcers didn't even try to win him over. Or John "straight talk" McCain of Arizona, who said "zero" on deficits from the start.

"What the president and House and Senate have done is lay down markers into the future. We're going to continue to cut rates, capital-gains tax, and abolish double taxation of dividends and the death tax - and when we have the votes, we'll move them," says Grover Nordquist, president of Americans for Tax Reform and a leading lobbyist for the tax cut.

Sens. Chaffee and McCain say there has been no arm twisting from the White House, nor would it do any good. But the administration could make up for the GOP no-votes with a couple Democrats, such as Ben Nelson of Nebraska, a former governor of a state that leans Republican, Evan Bayh of Indiana, and Zell Miller of Georgia.