Lott: Moment Gone For Quick CPI Fix (4/28/97)
Closing In On A Budget Deal
Tax cut worries, revised economic projections still being discussed
WASHINGTON (AllPolitics, May 2) -- President Bill Clinton said this morning he's optimistic about chances for a budget deal, which lawmakers and the White House hope to announce later today. (256K wav sound)
One last-minute development sidetracked the process, as budget negotiators learned today that an unexpected $200 billion, produced by the strong economy, would be available over the next five years.
The news left negotiators to figure out what to do with the windfall. The money could be applied toward domestic spending, tax cuts or deficit reduction.
Negotiators for the White House and congressional Republicans have been on the verge of working out the framework for a five-year balanced budget plan since mid-day Thursday. An agreement could end more than two years of often bitter wrangling over a plan to balance the federal budget.
Among the features of the emerging plans are $135 billion in tax cuts, including a $500-per-child tax credit; $115 billion in Medicare savings; and restoration of welfare benefits for legal immigrants. There is also a provision to extend healthcare coverage to five million children who are currently uninsured.
Though he had hopes for an agreement today, Clinton warned that he would only sign off on a budget plan that includes "appropriate but disciplined tax relief," that would not inflate the deficit.
"We have to be very careful not to set conditions in motion which could explode the deficit again because of the way the tax cut is written or other provisions are written after this budget period ends," Clinton said.
White House officials say they understand the Republicans' need for a capital gains tax cut and estate tax relief; the latter would raise the tax-free exemption well above the current $600,000 limit.
But the president's top aides say they're still concerned about the long-term impact of those cuts on the deficit. They say that's the last substantive issue on the table.
This budget deal would go beyond the president's earlier proposed tax cut package that includes college education deductions and credits, a $500-per-child tax credit, and the elimination of capital gains taxes but only on homes sales up to $500,000.
So what does the president get from all of this? In exchange for the deeper tax cuts, he gets a commitment from the Republicans to support increased spending for his high priority education, environmental and job-creation programs.
He also gets a big piece of the historic legacy he wants, becoming the president who finally balanced the budget.
Both sides seem to hopeful enough that a deal will be reached to make tentative arrangements for two separate announcement ceremonies. Clinton will make comments at the White House while the Republican congressional leadership will gather at the Capitol Rotunda.CNN's Wolf Blitzer contributed to this report.
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