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House GOP to Seek Bigger Tax Cut

The Budget
By Juliet Eilperin and Eric Pianin
Washington Post Staff Writers
Thursday, July 1, 1999; Page A4

Anxious to one-up President Clinton after his week of policy initiatives, House GOP leaders are preparing a cornucopia of tax cut proposals totaling as much as $1 trillion. But they face resistance from moderate Republicans as well as Democrats.

With the Clinton administration forecasting huge jumps in the surplus beyond the excess payroll taxes in the Social Security trust fund, GOP leaders are contemplating boosting their current $778 billion plan.

House leaders are planning a rally today where they will describe their proposal, which includes eliminating the so-called marriage penalty, reducing capital gains and estate taxes, and raising the maximum that people may invest in individual retirement accounts.

GOP tax writers also are studying an across-the-board tax cut proposal that would shave at least 1 percentage point off all taxpayers' total tax obligation, according to a House GOP aide.

"Our overarching theme is that the president has all these proposals to spend this money in Washington and we want to move this money out of Washington," said John Feehery, spokesman for House Speaker J. Dennis Hastert (R-Ill.). "The speaker believes that this money is an overcharge and should go back to the American taxpayers."

Hastert met on Tuesday with the other top House GOP leaders and Ways and Means Committee Chairman Bill Archer (R-Tex.) and agreed in principle to endorse the concept of a $1 trillion tax cut -- a proposal more than three times the amount that Clinton and congressional Democrats say they would be willing to approve.

Republicans say a substantial increase in the size of their tax plan is justifiable because there will be more money available than previously anticipated to bolster the Social Security and Medicare programs and pay down the national debt.

But their new approach already is drawing fire from House and Senate Democratic leaders, who charge that the Republicans are more interested in placating their conservative base than seriously negotiating a reasonable tax package.

And moderate Republicans warned Hastert over lunch yesterday that they would oppose using the improved budget surplus projections to fatten the GOP tax package.

"When you do a tax cut, you're going to have to live with the consequences of that," said Rep. Michael N. Castle (R-Del.), a leader of the moderates. There are "a lot of questions out there, and they should be answered before we start talking about an additional $200 billion in tax cuts."

Some moderates also noted during the luncheon meeting that appropriators are having serious problems finding the money to fund several of the larger domestic spending bills, including those financing health, labor, education and veterans programs.

House Minority Leader Richard A. Gephardt (D-Mo.) and Senate Minority Leader Thomas A. Daschle (D-S.D.) said they were outraged that Republicans would seek to increase their tax cut plan just when prospects had improved for significant reforms of Social Security and Medicare.

"There cannot be any misunderstanding about the magnitude of the tax cut," Daschle told reporters. "Democrats will not support, at the expense of Social Security and Medicare and education, a tax cut the size of what Republicans are proposing today."

But Archer said this week that House Democrats are refusing to consider any GOP tax plan, and that at this point it doesn't matter how much the Republicans propose.

The House and Senate will take up GOP tax legislation next month, and many in both parties assume that Clinton will veto whatever is approved, setting up a showdown over taxes and entitlement programs later this fall.

"I've talked to the Democrats, and they're not going to support tax relief in the aggregate number that we think is appropriate for the American people," Archer said. "So, it's not a case of hammering out the details. They're on a united basis opposed to this tax bill."

The White House on Monday issued revised forecasts showing that over the coming decade, the budget surplus excluding excess Social Security payroll taxes will amount to slightly more than $1 trillion, or $333 billion more than projected in February.

Archer and other Republicans insist that under the terms of the budget resolution passed by Congress earlier this year, any excess surplus outside of the Social Security trust fund is fair game for tax cuts.

But in something of a surprise, the Congressional Budget Office is expected to announce today that the projected surpluses over the next decade will be slightly less than the administration estimate.

The CBO is expected to say that, excluding Social Security, budget surpluses over the next 10 years would be about $170 billion greater than the amount the nonpartisan agency projected in January, according to the Associated Press.

Although House Democrats are largely in agreement with Clinton that any tax cut package should be targeted to moderate- and low-income families and should total no more than $250 billion over 10 years, some Senate Democrats favor a bigger tax cut as part of a comprehensive deal on Medicare and Social Security.

Democratic Sens. John Breaux (La.), Bob Kerrey (Neb.) and Robert G. Torricelli (N.J.), among others, have expressed interest in working with Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) on a compromise. "There's an opportunity to come together," Breaux said. "There are Republicans who want a tax cut and some Democrats who want to do some things on Social Security and Medicare."

© 1999 The Washington Post Company

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