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GOP, Clinton Head for Collision on Tax Cut

The Budget
By Steven Mufson
Washington Post Staff Writer
Monday, August 2, 1999; Page A2

Leading Republican members of Congress dug in their heels over tax cuts yesterday, and a senior White House official said the Clinton administration would rather have no tax cut than endanger budget balance and key domestic spending programs.

With two months left before the start of a new federal spending year, Republican lawmakers sounded as though they were on a collision course with congressional Democrats and the White House. They held out little hope of a compromise between the GOP program of $792 billion in tax cuts over the next 10 years and the White House-backed plan of up to $295 billion.

"We are much further apart than the public understands," Sen. Phil Gramm (R-Tex.) said on ABC's "This Week." Sen. John H. Chafee (R-R.I.) said on NBC's "Meet the Press" that Congress and the White House were heading for "a train wreck."

Gene Sperling, chairman of the administration's National Economic Council, on NBC, said that President Clinton had not seen any proposal larger than $295 billion that would avoid deep cuts in key domestic programs. "It would be better to do nothing and pay down $100 billion [a year] of our national debt than to sign a large and irresponsible tax cut that would signal to the world that the era of fiscal discipline in the United States is over," Sperling said.

Republicans insisted, however, that Americans deserved a tax break and said that otherwise the money would end up being spent by the government rather than paying down the national debt. "The question is still out as to whether or not this becomes a stand-off between Republicans who want to cut taxes, and the president who wants to spend it," Sen. Paul Coverdell (R-Ga.) said on "Fox News Sunday." "This money is going to get spent. The question is who spends it: the citizens who earned it, or the president."

The House and Senate have both passed tax cut measures with $792 billion in cuts over 10 years, but they differ in details. The House offers an across-the-board 10 percent tax cut while the Senate would lower the 15 percent tax bracket to 14 percent.

The White House and most Democrats say the tax cuts would eat up almost all of the estimated $1 trillion in non-Social Security surpluses projected for the next decade. That would take away money needed for reforming Medicare, improving education and paying down the debt.

On yesterday's talk shows, Democrats argued that reducing the federal debt was already helping the economy by reducing borrowing costs for ordinary Americans. "We've been giving Americans a large tax cut in the form of lower mortgage rates and lower interest rates," Sperling said.

"I'd like to suggest that we might be best off if we just quit now, went home and let nature take its course," said Sen. Daniel Patrick Moynihan (D-N.Y.). "There is no need for a tax cut."

Republicans said their cuts would take effect gradually, with little impact in the first two years and that they would prevent excessive growth in government as surpluses grow.

"We view this as an opportunity to pare back the size of the government, to give taxpayers some of their own money back," Sen. Mitch McConnell (R-Ky.) said on NBC.

Democrats responded that the Republican plan relied on spending cuts of up to 50 percent in key programs, such as education, that neither party would be able to meet. Sperling said Republicans were "twisting themselves like pretzels" to come up with figures that justified deep tax cuts.

© 1999 The Washington Post Company

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