Cutting the tax cut.

DURING a recent TV interview, beleaguered Senate Finance Committee Chairman Bob Packwood was asked by Robert Novak if there would be a tax cut this year. Packwood responded with a sigh: 'I'm hopeful.' And the check is in the mail, the government is here to help you, and Senator Packwood will respect you in the morning. Even if Senate Republicans do approve a tax cut this fall, it's likely to be a far cry from the bold Reaganite vision in the Contract with America that helped make Bob Packwood a committee chairman. The Contract promised a $350-billion tax cut over seven years -- including a $500-per-child income-tax credit for overburdened families, an end to the marriage penalty, repeal of the Clinton tax hike on senior citizens, a capital-gains tax cut, and expansion of IRAs to boost savings.

In the House - Senate budget conference early this summer, GOP leaders trimmed the package to $240 billion in order to pacify party moderates. Now the Senate Republicans are squawking at even the Lite version. They want to shrink the package to as little as $150 billion (still over seven years). That barely pays for the family tax cut alone. It leaves almost no money for capital-gains tax relief or any of the other pro-growth tax changes vital to the conservative revolution. Embarrassingly, the Senate GOP is threatening to pass a smaller tax cut than Bill Clinton himself proposed earlier this year.

For some mysterious reason a large voting block of GOP senators regards the Contract tax cuts as a political loser. This is precisely what House Democrats thought round about last October. Senate Republicans also maintain that since they were never actual signatories to the Contract, they are not bound by its terms. But voters will hold all Republicans accountable for the fate of the Contract. If it is not signed, sealed, and delivered to America this fall as promised, the majorities in both houses will be in jeopardy -- and rightly so. No politician in American history ever lost an election for cutting taxes, but the political graveyard is crammed with the corpses of tax raisers.

Will the tax cuts compromise the mission of balancing the budget? We're talking about a 3 per cent reduction in federal revenues. Only in Washington would a 3 per cent tax cut be derided as a massive, unaffordable giveaway. More important, economic growth is a key component of deficit reduction; and tax cuts, especially capital-gains-tax-rate reduction, are a key stimulant to that growth. If the economy were to grow just one percentage point faster each year over the next seven years, the deficit would fall by half.

House Republican Conference Chairman John Boehner had it right earlier this year when, in the midst of a budget debate, he threw up his hands in frustration and groaned: 'It shouldn't be this hard to cut taxes.' So far cutting taxes has proved to be excruciatingly hard. Failing to do so could be even harder on Republicans come November 1996.