GOP Front-Runners in Attack Mode on Taxes and Spending

Oct. 4, 2007 — -- In a further sign of how intense the race for the GOP presidential nomination is becoming, the two Republican front-runners attacked one another today on issues near and dear to Republican primary voters — taxes and spending.

Five days before a CNBC debate focused on economic issues, former Massachusetts Gov. Mitt Romney took to the stump in New Hampshire to attack former New York Mayor Rudy Giuliani as tax-friendly.

Within minutes, Giuliani's campaign arranged a conference call with one of Romney's predecessors, former Massachusetts Gov. Paul Cellucci, who eagerly lambasted Romney for "desperation" and "hypocrisy" and "weak arguments from a governor who in four years really had no tax cuts for the people of Massachusetts."

The back and forth began this morning at St. Anselm College in Manchester, N.H. Romney, from a neighboring state, leads in polls in the first-in-the-nation primary state, though Giuliani is quickly gaining ground.

Giuliani, who has a history of holding liberal views on social issues such as abortion, gay rights and guns, is hoping that his record as a conservative on economic and national security issues — not to mention the argument that only he can defeat Democratic front-runner New York Sen. Hillary Clinton — will carry the day. Romney's attack indicates that Giuliani's rivals do not intend to let him make his pitch on his terms.

The Line-Item Veto

"I don't think there's any tool more important than the line-item veto," Romney said when asked to contrast his record on taxes and spending with Giuliani's.

The line-item veto allows executives to veto individual items in spending bills without killing the entire bill. Many states give their governors line-item veto power, but the president does not have it — a federal judge ruled in 1998 that the Line Item Veto Act, one of the items in the Contract With America, was unconstitutional.

Romney noted that as mayor in 1997, Giuliani filed a lawsuit to challenge the constitutionality of the line-item veto, saying it improperly shifted congressional powers of taxation and appropriations to the executive branch. Giuliani said at the time he was worried his city's residents might be deprived of millions in health-care funding.

"Mayor Giuliani was the mayor who fought the line-item veto – went to court to stop the line-item veto—went all the way to the Supreme Court to stop the line-item veto," Romney said. "And he won—and because he won, he killed the line-item veto. It is the single most important tool we have to stop excessive spending. And that was a serious mistake."

By contrast, Romney said, "I line-item vetoed hundreds of items as governor of Massachusetts. Hundreds. And that vehicle is the most powerful tool a president of the United States could have to rein in unnecessary pork barrel, earmarked spending."

This is something of a change of tone for Romney, who faced such an overwhelming Democratic majority in the Massachusetts state legislature, he once joked to columnist George F. Will that "My vetoes count for nothing."

As for Giuliani's position on the line item veto, Cellucci, who has endorsed Giuliani, said that on this accusation Romney was "wrong on the facts."

The former mayor "supports the line-item veto. It's just that he thinks it has to be done via constitutional amendment," Cellucci said.

NYC Commuter Tax vs. the Romney Record

Giuliani's strategy is to not attack his rival Republicans, choosing instead to personally attack only Democrats. He often trots out surrogates such as Cellucci to do his dirty work for him, thus getting his points across while simultaneously appearing to be above the fray.

Romney has no such policy, and today he also criticized Giuliani for opposing a proposed repeal of a .045 percent income tax on commuters who worked in New York City, which in 1999 Giuliani argued was part of a political game by the governor and the legislature to win over suburban voters and would deprive New York City of hundreds of millions of dollars.

"Can you imagine a greater outrage than this, which is that not only did you have to pay the local taxes in New York City if you were commuting there, but you had a special tax applied to you called the commuter tax," Romney asked, pointing out that "Mayor Giuliani sued the Republican governor to keep in place the commuter tax. Can you imagine what would have happened up here in New Hampshire if I, as governor of Massachusetts, said everybody who commutes to Massachusetts has got to pay an extra special tax as a commuter? It just seems absolutely wrong."

"So we've got some different views on taxes," he said.

Cellucci described the commuter tax as minuscule and pre-existing, and described Giuliani as having enacted 23 tax cuts as mayor, asserting "it's about having the intensity and the determination to get a result."

But most of his remarks were devoted to extensively hammering Romney.

"The tax burden actually went up 10 percent during his time" as governor, Cellucci said. "As part of the Romney effort to close so-called loopholes, one of the changes was an income tax increase on people who did not reside in the state, but worked in the state or had a business in the state."

"Talk about hypocrisy," Cellucci said, "one of the loopholes (Romney) closed was that he increased income taxes on people who did not reside in Massachusetts but were employed or had a business in Massachusetts. He actually increased taxes on those people!"

Cellucci contrasted his own record as governor — having reduced the state income tax rate from 5.95 percent to 5.3 percent — to Romney's.

"He said he was going to cut the income tax from 5.3 percent to 5 percent, but when he left as governor, the rate was still 5 percent," he said. And while Cellucci said Romney initiated a sales tax holiday and a capital gains tax reduction, "he did not have any broad-based tax cuts in Massachusetts as governor. If you look at my record, you'll see billions of dollars in broad-based tax cuts."

Later in the day, Giuliani spokeswoman Katie Levinson issued a statement saying, "No amount of political spin can help Mitt Romney rewrite the history books. Mitt Romney failed to pass a single tax cut as Governor and the Cato Institute gave him a 'C' for his handling of the economy as Governor. Mitt Romney can repackage himself as many times as he wants but his failing fiscal record speaks for itself."

The Giuliani campaign also issued a press release claiming more growth, reduced taxation, and smaller government in New York City during Giuliani's reign than Massachusetts showed during Romney's gubernatorial term.

Romney spokesman Kevin Madden countered via press release: "What we have here is a fundamental disagreement over tax policies affecting American families. Mayor Giuliani crusaded against the line-item veto and fought very hard to keep a commuter tax burden on hardworking taxpayers. Governor Romney strongly disagrees with Mayor Giuliani on those issues, since the line-item veto helps reduce wasteful spending and families ought to be protected from higher tax burdens, instead of having their mayor file lawsuits in court in an effort to keep them."

And no doubt the argument will continue long after this afternoon.