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How Long Will the Dems Carry the Torch?

They call him "the Torch." In four years as U.S. senator from New Jersey and 14 years in the House, Democrat Robert G. Torricelli has burned bright. But along the way, he has scorched friends and enemies alike.

Now, as federal investigators zero in on Torricelli's campaign finances, the Torch is feeling the heat. So is the Democratic Party, which, for the moment, is rallying around the embattled lawmaker--in part to safeguard the 50-50 split in the Senate. Torricelli faces voters again in 2002, and so far New Jerseyites are not abandoning their colorful senator. All that could change if he is indicted, but Torricelli is a fighter.

The case against Torricelli centers on David Chang, who pled guilty last year to making illegal contributions to Torricelli's '96 reelection effort. Now Chang claims he gave the senator gifts and cash in return for help winning international business deals. Torricelli says he has done nothing illegal and denounces Chang as a convicted felon fabricating stories to reduce his sentence. Chang's lawyer declined to comment.

WAITING GAME. The key political question is whether Torricelli can hold his seat with such an ethical cloud overhead. The 2002 elections are crucial to Dems, who need one more vote to control the Senate. "The situation makes it difficult for Democrats in our state," says Democratic ex-Senator Frank R. Lautenberg of New Jersey, an admitted Torricelli foe. "A negative outcome would certainly have an effect on the party and the chances for next year."

What's a party to do? In this case, wait it out. Manhattan U.S. Attorney Mary Jo White has not told Torricelli that he is a target of the probe. Indeed, legal experts say the case could continue for years. "The party can't abandon him. He hasn't been charged with anything," says Joseph E. diGenova, a Reagan-era prosecutor. "They have to walk a tightrope."

Torricelli pled his case at an Apr. 24 meeting of Democratic senators. Afterward, he described the exchange as "heartening" and his party as "very supportive." Beyond that, it has been business as usual for the Torch, who's still hot on the fund-raising circuit. His campaign had raked in $2.5 million by Mar. 31--more than any other senator.

Yet the case is taking its toll. New Jersey has been trending more Democratic--an Apr. 22 (Newark) Star-Ledger poll found that 42% of voters would support Dems this year, while 33% would vote Republican--but that hasn't translated into new support for Torricelli. A Republican poll in March gave Torricelli only a slight edge over possible GOP opponent Bob Franks.

So far, potential primary rivals, including Representative Robert Menendez (D-N.J.), say they have no plans to challenge Torricelli. And among the party faithful, there's not even a whisper that he should resign--though that could change if a Democrat replaces acting GOP Governor Donald T. DiFrancesco in November. On Apr. 25, DiFrancesco, facing his own ethical problems, declined to run for a full term. "[Torricelli is] paying close attention to his race, he's engaged and completely focused," says Jim Jordan, executive director of the Democratic Senatorial Campaign Committee, which Torricelli ran from 1998-2000.

Even Republicans concede that there are high legal hurdles. The U.S. Supreme Court set the standard in 1999 when it threw out an illegal gratuities case stemming from the prosecution of ex-Agriculture Secretary Mike Espy. Now prosecutors must show that pols performed favors in exchange for gifts. "It's hard to make a case," says Jan Baran, former general counsel to the Republican National Committee. Legally or politically, it won't be easy to snuff out the Torch. Pressure to squeeze up to $85 billion in immediate tax relief into President Bush's long-range rate cuts is forcing Treasury Secretary Paul O'Neill to be creative. One idea he's floating: a retroactive tax cut that would produce additional refunds for just-filed 2000 tax returns. Rather than a per capita tax rebate--the Democrats' pet idea--"the ideal is an early implementation of the rate cuts," retroactive to Jan. 1, 2000, O'Neill says.

The notion could help the Administration solve two problems. The Bush team fears that if Congress passes a rebate, the President's 10-year tax cut will stall. Tying refunds to rate cuts, strategists figure, creates a seamless plan that Democrats can't split up.

The other problem is how to distribute the stimulus, even if House-Senate negotiators cut it to $60 billion as expected. If the IRS tries to dole out that much cash by reducing workers' withholding retroactive to January, take-home pay would shoot up this fall, only to drop back when the permanent rates kick in. That would create the appearance of a tax hike, which both Bush and Congress are eager to avoid. So Treasury figures it will need a mix of lower withholdings and refund checks. Basing those refunds on 2000 tax returns "gives life to the idea of rate reductions," O'Neill explains.

Still, the idea faces hurdles. Dems are dismissive. And refunds pose a logistical challenge: Treasury's printers would take almost six months to produce the required 125 million checks.

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