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Clinton Assails GOP Tax Cuts as Budget Busters

White House Budget Director Jacob Lew (Post File Photo)  

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  • Live Online: White House spokesman Barry Toiv will talk about the tax plan at 1 p.m. Aug. 31.

  • Transcripts: GOP Reps. Thune, Portman and McIntosh and Democratic Reps. Frost and Cardin on the tax cut.
  • By George Hager
    Washington Post Staff Writer
    Thursday, August 26, 1999; Page F1

    With congressional Republicans back in their home districts trying to build support for their big tax-cut bill, the White House went on the attack yesterday, charging that the plan would trample budget rules, trigger major cutbacks in Medicare and completely kill off some farm safety-net programs.

    "This is an irresponsible policy," said White House Budget Director Jacob Lew, who released a report yesterday outlining the cutbacks that would be necessary if the GOP tax cuts were enacted. "We hope the Congress will treat this new report as something of a wake-up call."

    Lew's attack--accompanied by strong letters to GOP leaders from President Clinton--served mainly to bolster the administration's case for vetoing the tax cuts, which Clinton said again yesterday that he plans to do.

    Though the House and the Senate approved the $792 billion, 10-year tax cuts in early August, they held off sending the legislation to Clinton for his signature so they could try to build public support for it during their month-long summer recess. Congress comes back into session on Sept. 8, and leaders plan to send Clinton the tax bill shortly thereafter.

    In letters to House Speaker J. Dennis Hastert (R-Ill.) and Senate Majority Leader Trent Lott (R-Miss.) from Martha's Vineyard, where he is on vacation, Clinton reiterated that it would be "irresponsible" of him to sign a tax bill that he said would divert money that would otherwise go to paying down the national debt. "If your tax cut became law, it would leave America permanently in debt," Clinton said.

    Republicans shot back immediately. "Using tired rhetoric from his swanky Martha's Vineyard vacation can't mask the president's lust for higher taxes and his disdain for allowing America's middle class to keep more of their hard-earned dollars," said Lott spokesman John Czwartacki.

    Hastert said he "can't understand why the president would want to stand between the taxpayers and well-deserved tax relief to keep the economy growing." He parried charges that the tax cut would force cutbacks in Medicare by noting that Clinton's own budget calls for $11.9 billion in Medicare cuts next year.

    Despite the rhetoric from both sides, there are likely to be no Medicare cuts this year. Strategists at the White House and on Capitol Hill agree that any budget deal this year is likely to spend more for Medicare, by undoing some of the cuts in the 1997 budget agreement.

    The White House report that links the GOP tax cuts to Medicare cuts is the byproduct of budget rules written when the federal government was running massive budget deficits. Those rules, which are still in place despite the advent of budget surpluses, require that any tax cuts be "paid for" by raising other taxes or cutting spending.

    The GOP plan to pay for the tax cuts by dipping into the budget surplus would violate those budget rules and trigger mandatory spending cuts of nearly $100 billion over the next five years, according to the White House, which is charged with enforcing the rules. The rules exempt Social Security and operate according to formulas first set in a 1990 law.

    Hardest hit would be Medicare, which would be cut $41.4 billion between 2000 and 2004. The cuts also would carve more than $19 billion out of two farm assistance programs, eventually shutting down the crop-insurance program and wiping out assistance to farmers from the Commodity Credit Corp. The White House said the cuts would also eliminate various veterans benefits, make student loans more expensive, and kill or cut back other social spending.

    The House, which can easily waive budget rules before legislation gets to the floor, included a provision in its version of the tax-cut bill that would have turned off the automatic spending cuts. But the Senate did not. The Senate would have had to find 60 votes to waive the rules, a likely impossibility given that the tax bill squeaked through on a 50-49 vote.

    Although the White House is technically right about the spending cuts, none of them would take effect unless Clinton signed the tax bill, which he has vowed not to do. Ironically, even the administration's own, much smaller package of tax cuts would break the budget rules and trigger automatic spending cuts--though Lew, the budget director, suggested that a broad budget compromise with a smaller package of tax cuts would get the 60 Senate votes needed to turn off the spending cuts.

    © 1999 The Washington Post Company

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