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Clinton Officials: GOP Tax Cuts Would Cause Deficit

The Budget
By Juliet Eilperin
Washington Post Staff Writer
Monday, July 12, 1999; Page A8

White House officials attacked Republican lawmakers' tax cut proposals yesterday, saying they would produce a deficit and force drastic cuts in domestic spending by the end of the next decade.

White House Chief of Staff John D. Podesta suggested on ABC's "This Week" that while the country could afford President Clinton's $250 billion tax cut plan over 10 years, the $864 billion proposal of House Ways and Means Committee Chairman Bill Archer (R-Tex.) was untenable.

"In the president's plan we put about a $250 billion tax cut on the table that went to savings, went to long-term care, went to those investments into these new markets to bring businesses into the places that have been left behind in America and create some job creation," Podesta said. "What the Republicans have done is said, 'Let's just blow this whole surplus on a big and, we think, risky tax cut plan.' "

Congress is preparing to focus this month on how much of a projected $1 trillion budget surplus should be returned to taxpayers over the next decade.

Archer has drafted a plan phasing in a 10 percent across-the-board tax cut, reducing capital gains taxes, eliminating the "marriage penalty" couples pay for filing taxes jointly, and phasing out the estate and gift taxes inheritors pay. His Senate counterpart, Finance Committee Chairman William V. Roth Jr. (R-Del.), has proposed a $792 billion tax cut somewhat more aimed at middle-class Americans, by lowering the bottom tax bracket from 15 percent to 14 percent and providing more opportunities to save for retirement.

The House will begin considering tax legislation on Tuesday, but the battle was joined on the Sunday talk shows, with Treasury Secretary Lawrence Summers saying on NBC's "Meet the Press" that Clinton "absolutely" would veto any tax cut package "in the $700 to $800 billion range."

Senate Majority Leader Trent Lott (R-Miss.), also on NBC, said the debate over tax cuts highlighted a basic philosophical disagreement between the two parties. "Democrats think the solution's in Washington, the money should stay in Washington. The Republicans think the money should be returned to the people that earned it."

Lott added, however, that he believed Summers "left room for discussion in a number of areas" on the question of tax reduction.

Setting the tone for the debate, Podesta furnished Office of Management and Budget estimates showing that under the Archer plan the country would face a $50 billion deficit in 10 years because directing funds to a tax cut instead of to debt reduction would demand $179 billion in additional interest payments by the federal government. It also would force $500 billion in cuts to domestic programs, he said, and would provide $200 billion less in defense spending than the president's plan.

According to OMB spokeswoman Linda Ricci, under this scenario domestic spending in 2009 adjusted for inflation would have to be 27 percent lower than in 1999.

Podesta, who said that the GOP plans did not address the solvency of Medicare and Social Security, challenged Republicans to identify which popular programs they would target to compensate for such large tax cuts.

"So if they want to have that debate, do they want to cut Head Start? Do they want to cut the environment, do they want to close the national parks?" he asked.

But Senate Majority Whip Don Nickles (R-Okla.) said Republicans have done more to shore up Social Security than have Democrats.

"We're the ones that said we should save 100 percent of the Social Security surplus for Social Security, unlike the White House's original budget," Nickles said on "Fox News Sunday." "Then we said, let's take the surplus and let's give it back to taxpayers. A lot of taxpayers are paying too much."

© 1999 The Washington Post Company

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