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Put On A Happy Face--For Now

Congress passes tax cuts and a balanced budget, but the deal isn't done yet

TIME magazine

(TIME, July 7) -- The embattled House Speaker is always claiming to be happy when he looks just miserable. But last week, when Newt Gingrich said, "It feels very good to be here," he actually seemed to mean it. Congress had just passed bills to balance the budget for the first time in 29 years and cut taxes significantly for the first time in 16. In celebration, Gingrich wore a yellow happy-face sticker on his lapel.

The battle to reconcile House and Senate versions should wipe the smiley off his coat. The Senate's budget includes a measure raising the Medicare age from 65 to 67 and charging higher premiums to wealthy recipients; the House bill does not. (Though the Senate's provisions are expected to die quickly, reformers are glad such medicine has finally been proposed.) And though both House and Senate offer $135 billion in tax relief, including cuts in the estate and capital-gains tax as well as a per-child tax credit, the two versions distribute the cuts in different ways. While the Senate bill, which is more favorable to the lower-middle class, has garnered Democratic support, the pro-business House version is more contentious. The President, who will offer his own version this week, says he won't sign a bill that contains a House provision indexing capital gains to inflation. Clinton also wants an increase in education tax credits and insists that low-income families who qualify for the earned-income tax credit also get a credit for each child. The House would bar them.

A familiar statistical duel has erupted over who would benefit from the relief. Republicans insist that 75% of the House cuts go to families making less than $75,000; Democrats say 70% of the cuts go to the richest 20% of Americans. (Both sides use self-serving methodology.) Gingrich wants a deal. "We are going to do everything we can to get the bill signed," he says. But a concession to Clinton on, say, capital gains could cost Newt conservative support. And getting a good deal from Clinton is never easy. "If [Republicans] think Lucy's going to keep the football on the ground, that's fine," says an aide to minority leader Dick Gephardt. "They'll be on their backs in the grass."

--By Tamala M. Edwards





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