WASHINGTON – As President Bush (search) pushes Social Security reform, his ambitious tax reform agenda may already be in trouble, say an increasing number of congressional sources and tax experts.
The White House is about to name an advisory panel on tax reform, but that may be the last movement the nation sees on the issue for a while.
The tax reform panel was set to consider a range of ideas, from dumping the IRS (search) to simplifying the tax code by replacing the graduated income tax with a flat tax or a national sales tax. Those ideas, however, won't be easy to put into action.
"This tax reform that we're going to be going through, and inevitably we're going to get there, is very much like tax reforms" previously achieved, said Bill Beach, director of the Center for Data Analysis of the Heritage Foundation (search). It starts out "with a very cloudy forecast with a map that leads through the Valley of Death with everybody saying, 'It can't possibly be done.'"
On Monday, Bush denounced the tax code's complexity before newly elected members of Congress.
"We've got to make sure we simplify the tax code. I don't know whether that's an issue in your district or in your state. I suspect it might be. It's a complicated mess," the president said.
The rhetoric was tough, but when the president skipped the tax reform panel at his two-day economic summit last month, tax policy watchers concluded that changes had fallen behind tort reform and partial privatization of Social Security (search) on the president's priority list.
"The president essentially says, 'I ran and was elected on pledges to reform the nation's system of torts, to go after Social Security and make it more secure in the future, and to change the tax system so we have a simpler, fairer, more pro-growth tax system.' I think he's going to take those goals in that order," Beach said.
Another clue that the president may be dialing down radical reforms is the small change he suggested about the estate tax, also known as the death tax, which was abolished by Congress. He marked that as a significant step toward reform.
"The death tax takes up more than 300 pages of laws and regulations in the current tax code. By getting rid of the death tax forever, we have simplified the code by 300 pages," he said.
The president has also been slow to appoint the members of a tax reform advisory panel. The main problem for the White House is the president refuses to name anyone who advocates a specific type of reform.
GOP sources have said they expect the White House to name a panel by week's end.
"We're very close to naming a panel. We are in the final stages of establishing who will be on that bipartisan advisory panel," White House spokesman Scott McClellan said Monday.
The tax reform panel will report to Treasury Secretary John Snow (search), meaning reform proposals will have to run through Treasury's analytical bureaucracy before reaching the president. That could mean the president won't advance his reform ideas until 2006.
Click in the box near the top of the story to watch a report by FOX News' Major Garrett.