Senate Majority Leader Trent Lott (R-Miss.) said yesterday Republicans would not simply split the difference with Democrats and agree to tax cuts of about $500 billion over 10 years. But he suggested they would consider a comprehensive deal on taxes and a Medicare prescription drug benefit, if President Clinton is serious about negotiating.
Lott replied "nope" when asked on "Fox News Sunday" whether Republicans might go for a tax cut somewhere between the $300 billion that the administration and congressional Democrats are advocating and the roughly $800 billion the Republicans are proposing.
"Now if [Clinton] wants some genuine reforms plus prescription drug benefits for the poor that really need it, we can work that out," Lott added. "And on . . . sending back taxes to the people, I think we should do that. If he vetoes that, then he'll have to explain it to the farmers" and other interest groups.
Lott's comments, hinting that a deal was possible while holding fast to Republican demands for a huge tax cut, is part of intense political maneuvering by the two parties as they inch toward negotiations late this summer or early fall.
Chief White House economic adviser Gene Sperling responded yesterday that Lott and the Republicans "simply want to talk about how large their tax cut is without acknowledging they leave nothing for Medicare over the next 10 years and nothing for key priorities such as education, veterans and health."
"We believe the public believes we should first take care of Social Security, Medicare and national defense before deciding how much of a tax cut you can afford--and not the other way around," Sperling added.
Over the weekend, Clinton launched a salvo at Republicans, warning that the tax bill moving through the House would threaten the nation's ability to deal with retiring baby boomers early in the next century. The president cited new Treasury Department estimates that the cost of the tax bill would explode from $864 billion over the first 10 years to $3 trillion during the decade beginning 2010.
At the very time the nation will confront the demographic challenge of large numbers of retirees, Clinton said, "the Republican plan will blow a $3 trillion hole in the federal budget, threatening our ability to secure Social Security and Medicare for the next generation."
Lott responded yesterday that the Republicans intend to devote roughly two-thirds of the projected $3 trillion surplus over the coming decade to retirement benefits for seniors, adding: "We think that third dollar of the three ought to be sent back to the people that earned it.
"When it comes to tax cuts, I feel very strongly that the American people are overtaxed," Lott said. "I think what he [Clinton] wants is typical of the Democrats. They want to keep [tax revenue] in Washington and spend it.
"He says, 'We want tax cuts, but only a little bit,' " Lott added. "Oh, and by the way, he proposes about $100 billion in tax increases. I mean, he's being a little disingenuous."
House Ways and Means Committee Chairman Bill Archer (R-Tex.) took a similarly tough line early last week when he unveiled a House plan for tax cuts of $864 billion. He spurned suggestions that the Republicans should consider scaling back their plan--in the face of criticism that it was too large and based on dubious long-term forecasts--and predicted that Clinton and the Democrats would eventually come around.
But by Friday, House GOP leaders were beginning to backpedal in response to strong objections to the large tax package from moderate Republicans and fiscally conservative Democrats, and they agreed to trim $72 billion from the bill.
With huge projected surpluses to work with, both parties see opportunities for a compromise this fall that would satisfy the administration's demands for more spending and improvements in the Medicare system, including the creation of a new prescription drug benefit, and Republicans' calls for a big tax cut, increased defense spending and education initiatives.
Lott noted yesterday that he has worked with Clinton on previous budget agreements, saying, "We've done some good things on Medicare reform, some tax cuts, spending restraint.
"Now, if he wants to get serious, join with us, great," the majority leader added. "But I think that maybe the demagoguery needs to be toned down."
CAPTION: Senate Majority Leader Trent Lott suggested that Republicans would consider a comprehensive deal on taxes and a Medicare drug benefit.