Compromise Helps Tax-Cut Bill Outlook Gop Group Convinces Leaders To Tie Trims To Deficit Reduction

House Speaker Newt Gingrich agreed with dissident Republicans on Monday to loosely tie his treasured tax-relief legislation to future reductions in the federal deficit, removing a big barrier to passage of the tax bill in the House of Representatives later this week.

The dissidents had held the bill hostage for two weeks, obliquely threatening to block a final vote unless they were guaranteed that Congress would not rush tax cuts into law, then renege on its promise to cut spending as well.

With Monday’s accord, Republican leaders escaped that threat and received some assurance that their five-year, $189 billion package of tax cuts will pass an increasingly skeptical House. Gingrich has called the bill the “piece de resistance” of the “Contract With America,” and threatened to keep the House in session past its scheduled recess on Friday to pass it.

For their part, the Republican dissidents won at least a symbolic victory. “We’ve taken a tax-cut bill and made it a balanced-budget bill with a tax-cut component to it,” Rep. Michael N. Castle, R-Del., said in an interview. Castle and two other Republican deficit hawks, Reps. Fred Upton of Michigan and Bill Martini of New Jersey, led the uprising that ended with the compromise announced Monday.

But critics of the compromise said the three men had been snookered. Rep. Glen Browder, D-Ala., who had been allied with Castle and the rest, said the rebels set out to obtain a flat guarantee and wound up with “a fig leaf of deficit reduction.”

“It’s nothing except cover to go ahead and pass the tax cuts,” Browder said. “The package is essentially what Gingrich wanted.”

The dissidents did get considerably less than they had first sought. When Castle, Upton and Martini and some 27 other Republicans began their effort two weeks ago, they demanded that tax cuts be made contingent on Congress’ approval of a seven-year plan to eliminate the federal deficit.

And to keep Congress honest they sought to require legislators to meet a specific deficit-reduction goal in each succeeding year’s budget or face the loss of the tax breaks for that year.

The agreement reached Monday preserves the first demand: It would require that Congress approve 1996 budget legislation with a “clear path” toward erasing the federal deficit before tax relief officially becomes law.

But the notion of suspending the tax cuts if Congress fails to follow through has been dropped, replaced by a general requirement that the House and Senate budget committees report each year on the government’s progress toward a zero deficit.