Balancing The Budget

Capitol E-Mail: Jack Kemp On Tax Cut Plans (3/20/97)

The OMB Watch Home Page

CBO Reports And Studies Online

Join a thread, start a thread -- it's your chance to sound off!

An Intricate Pas De Deux On Taxes

Republicans, administration talk timing of tax cuts

WASHINGTON (AllPolitics, March 24) -- House Speaker Newt Gingrich's strategic retreat on immediate tax cuts stirred a lot of opposition within his own party last week.

But Republican leaders are standing behind Gingrich, and the White House has signaled it might also be willing to defer its targeted tax cuts, in the interests of a balanced budget agreement.

"If having a separate vote on tax cuts turns out to be a means of getting a bipartisan balanced-budget agreement, we're open to that," Gene Sperling, chairman of the National Economic Council, told The Associated Press.

President Bill Clinton has said he wants to get moving on a balanced budget agreement after Congress' Easter recess, but it's too early to say whether the two sides' latest talk on taxes will translate into real progress toward a budget agreement.

Republicans say their long-term goals remain unchanged: tax relief, a balanced budget and fewer government regulations.

But some agree with Gingrich that when they tried to put all their priorities, as well as Medicare and welfare reform, into one budget proposal last year, they looked like obstructionists and lost to Clinton in what turned out to be an important battle of public perceptions.

Rep. Bill Paxon (R-N.Y.) said it's not a question of compromise on tax cuts.

"Our principles are solid. This week we had a discussion about strategy and there was a little emotion, surprising for Republicans on that issue, but our goals are bedrock-solid," he said on ABC's "This Week." What was different about last week's strategy debate, Paxon said, was that it played itself out in the open. "I'm not sure that's necessary from here on," he said.

Jack Kemp, often mentioned as a Republican presidential candidate in 2000, remains critical of Gingrich, suggesting he not get "wobbly in the knee" on the tax cut issue.

Kemp said deferring tax rate reductions in favor of balancing the budget might mean never cutting rates at all.

The Clinton Administration and GOP lawmakers are far apart on their general approach to tax cuts. Republicans favor cuts in estate and capital gains taxes, while the president wants narrower cuts, targeted for education and raising children.

Some Clinton aides say the president is taking a big political risk by moving away even temporarily from his tax cut proposals. But they say he wanted to reassure moderate Republicans that he wasn't going to try to score political points at their expense.

And privately, moderate Republicans say Clinton's response does give new life to the negotiations. Still, conservative opposition to any delay in tax cuts remains strong. The Christian Coalition is just one group vowing to mobilize its forces.

Said Christian Coalition executive Brian Lopina: "We would view it as a breach of faith if they did not pass it again. We are certainly very strongly hopeful that they will."

House Minority Leader Richard Gephardt says he's keeping an open mind. "I'd be willing to look at any ideas that would get us toward this balanced budget and do it in a bipartisan way," Gephardt said.

Just before leaving for Helsinki last week, the president said balancing the budget would be his top priority upon his return home. Now he's back and it's crunch time. His aides say the next few weeks should determine the fate of a balanced budget and tax cuts, if any.