President Clinton is preparing to revive a controversial plan to motivate Americans to put aside money for retirement and to propose new tax breaks for some of the 44 million people who lack health insurance in his final opportunity to shape the nation's spending and tax policy, senior White House officials said yesterday.
The officials said the subsidized retirement accounts, expanded efforts to help those without health insurance, and some type of new financial assistance for poor families will form the core of a tax cut that Clinton will propose next month in the last budget of his administration.
While administration officials will continue to tinker with the details of these proposals this week and next, White House Chief of Staff John D. Podesta said yesterday that the tax cut Clinton will outline in his Jan. 27 State of the Union address will be roughly the same size as the $322 billion of tax initiatives over 10 years that the president recommended to Congress last winter.
That prospect means that the final year of Clinton's term could reprise the running feud between the White House and congressional Republicans, who have a far different vision of how best to use the nation's growing budget surpluses to help American families.
House and Senate GOP leaders last summer pushed through a package that would have provided $792 billion worth of tax cuts over the coming decade by eliminating the so-called marriage penalty and estate taxes and reducing levies on capital gains. But Republicans' hopes for broad tax relief died in a presidential veto. In the end, Congress and the White House agreed in November only to extend several relatively minor tax provisions that had been set to expire.
The White House has contended that the country will be better off using the luxury of unprecedented surpluses to pay off some of the national debt and to prop up the nation's major entitlement programs, which will become increasingly strained in the early decades of the new century as the U.S. population ages.
And Clinton's chief of staff made clear yesterday that the White House this year will not deviate from that strategy. On CBS's "Face the Nation," Podesta said, "We've got an important opportunity now to make investments in Social Security [and] in Medicare," as well as the military and a few key domestic priorities such as education.
Other senior White House aides said yesterday that, in the budget he is to release Feb. 7, the president will renew his call for what the administration last year dubbed "Universal Savings Accounts." Although they would be separate from Social Security, the administration believes such accounts could take pressure off the government's vast retirement system by fostering personal savings.
Last year, the White House said the USA accounts would cost $250 billion over 10 years and proposed that they be paid for out of future budget surpluses. The idea was to give poor and middle-class Americans tax credits of as much as $300 a year to invest privately--and to match the income that certain people set aside on their own.
One administration official said yesterday that, while Clinton remained wedded to the basic idea, aides were debating whether this year's version would be paid for entirely from surpluses and whether the subsidies would be identical to those the White House recommended before.
While the broad contours of the tax cut will be similar to last year's, Podesta said on CBS, "I think we may manage to change the package a little bit to invest in some other important priorities."
Gene Sperling, Clinton's chief economic adviser, said yesterday that the administration is "working on health care tax incentives that would go beyond what was proposed in last year's package."
Sperling and other aides declined to specify how much money would be devoted to helping people get health coverage or which groups of Americans the initiative was intended to help. Recent insurance proposals from the White House, Capitol Hill and presidential campaigns have focused at various times on uninsured children, people who work for small businesses and low-income adults.
"It's still a work in progress," Sperling said of this year's insurance initiative.
Clinton's budget last winter included $72 billion of tax initiatives over 10 years dealing with health care and several other domestic priorities. All stalled in Congress.
They included a plan to give $1,000 tax credits to help people with disabilities or lasting illness pay for long-term care. The administration also proposed $1,000 tax credits to make it easier for people with disabilities to return to work by helping to pay for their transportation and job-related expenses. And it recommended $500 tax credits for families with very young children to defray the expense of day care or staying home with a baby.
Sperling said that this year's budget "will go even further in ensuring we have a tax code that rewards work and family for the hardest-pressed parents." He and other Clinton aides said the president had not yet decided on the precise contours of that proposal.
Addressing another administration priority--gun control--Podesta said that Clinton's budget will include money to help develop technology that would make it impossible for a gun to be fired by anyone except its owner.