Huge tax cuts proposed by Republicans in Congress would "blow a $3 trillion hole" in the federal budget just as Medicare and Social Security are strained by baby boomer retirements, President Clinton said yesterday.
"Tax cuts that size are quite simply bad economic policy," Clinton said in his weekly radio address.
Citing a new Treasury Department analysis, Clinton said the House GOP plan to cut taxes by $864 billion over 10 years -- including a 10 percent across-the-board income tax cut -- would cost more than three times that after taking full effect in the decade after 2009.
In addition to jeopardizing the retirement programs, Clinton administration officials said the GOP tax bill would result in cuts of up to 40 percent in defense and domestic spending. The proposal, Clinton said, risked "return to an era of deficits with high interest rates and economic stagnation."
The proposed 10 percent income tax cut by itself would cost about $400 billion over the first 10 years, according to the Treasury analysis, but when fully phased in beginning in 2010 it would jump to $1.5 trillion over the following decade.
Clinton demanded that Congress use some of the projected 10-year, $2.9 trillion surplus to secure Medicare, provide a prescription drug benefit and invest in areas such as education.
In the Republican radio response, Wisconsin Gov. Tommy G. Thompson said deep tax cuts he helped enact in his state beginning in 1986 have translated into $5,600 less in taxes for the average Wisconsin family. Similar tax cuts in dozens of states have improved lives across the nation, he said.
"There are those in Washington who wish to use the federal government's swelling coffers to finance a spending spree on additional government programs, instead of providing hardworking families a meaningful tax cut," Thompson said.
"That is flat-out wrong," he said. "Republicans are drawing a clear line in the sand with Democrats. And the American people will have a clear understanding of which party is truly fighting to empower families through tax cuts."