House Republicans yesterday proposed a $500-per-child tax credit for families earning up to $200,000 a year as part of a comprehensive alternative to President Clinton's fiscal 1995 budget.
The Republican alternative would include funds to begin implementing the GOP versions of health care and welfare reform and crime control legislation and, according to the proponents, would result in about $15 billion less in deficit spending than the president's plan.
Rep. John R. Kasich (Ohio), the ranking Republican on the House Budget Committee, challenged the Democrats to make good on Clinton's 1992 campaign pledge to tax relief for the middle class. The GOP plan would benefit the wealthy as well as the middle class.
Kasich and other Republican Budget Committee members who announced the plan said the tax credit -- a dollar-for-dollar reduction in beneficiaries' tax bills -- is necessary to blunt the impact of last year's tax increase and to assist cash-strapped middle-class families.
"What we do here is we eliminate one-third of the president's tax increase, and we do it by downsizing the government and giving the people of this country a share of the savings," Kasich said.
Clinton advocated a 10 percent middle-class tax cut during the 1992 presidential campaign, which would have been limited to people with incomes of less than $78,400 a year. But he dropped the idea shortly after the election when he and his advisers were confronted by a worsening deficit. The GOP plan would cost $108 billion over the next five years.
House Budget Committee Chairman Martin O. Sabo (D-Minn.) has virtually ruled out the prospects for a tax cut this year as Congress struggles to stay within tight spending limits imposed last year as part of a long-term economic and deficit-reduction package.
"I would love to hand out tax credits, but I don't think it's in the works for this year," Sabo said.
The Democratic-controlled House Budget Committee is scheduled to vote this afternoon on a fiscal 1995 budget resolution that incorporates much of the president's budget.
Clinton unveiled a $1.52 trillion hold-the-line fiscal 1995 budget Feb. 7 that would kill or pare hundreds of programs to make room for modest spending on his priority "investment spending."
"I'd say the basic thrust of the president's budget is preserved," Sabo said.
The president's budget calls for a slight decline in discretionary spending -- the third of the budget that Congress has direct control over -- from $550.1 billion this year to $542.4 billion in the coming year.
However, a Congressional Budget Office analysis of Clinton's budget released last week indicated that Congress would have to trim an additional $3.1 billion from discretionary spending to stay below the mandated spending ceiling. Budget Committee Democrats say they have identified additional cuts in defense and domestic programs to make up the difference.
The committee Democrats also have restored funding in several areas that Clinton sought to cut.
For example, the Democrats restored $520 million of spending authority for a low-income energy assistance program that had been cut in the Clinton budget. The Democrats also put back money for transit operating assistance and Rural Electrification Administration loan guarantees.
The budget resolution provides the overall blueprint for spending for discretionary and mandatory programs for the coming year. Once the House and Senate complete work on the resolution, the appropriations committees will begin carving up the available discretionary funds through adoption of 13 separate spending bills.
The president's budget has projected a deficit for the coming year of $176.1 billion, which would be the lowest since 1985.