Clinton, GOP Bullish On Tax Cuts
The outlook is optimistic, but obstacles remain
By John King/CNN
WASHINGTON (July 15) -- President Bill Clinton and Republican congressional leaders are sounding optimistic about reaching agreement on legislation to balance the federal budget and cut taxes, with talk of bipartisanship and a quick deal dominating a White House meeting today.
"It does not serve the American people well if we explicitly and publicly turn this into the gunfight at the OK corral," Clinton said.
Republicans reciprocated with happy talk of their own. But major obstacles remain.
Most taxpayers with children are sure to benefit from any final agreement because both Clinton and Republicans support a $500-per-child tax credit. But they dont see eye to eye over just who should get this new tax break.
Clinton wants to give the credit to low income workers who already get a break on their taxes because they fall below the poverty line. Republicans call that new welfare spending.
The bottom line: Clinton's credit would cover two million more children than the House Republican plan in the first five years and 300,000 more than the Senate GOP plan.
Democrats accuse Republicans of shortchanging the middle class in favor of a big cut in capital gains taxes, from 28 percent to 20 percent.
"With regard to fairness perhaps the most important element is to ensure that we provide the bulk of tax relief to working families," said Senate minority leader Tom Daschle.
But GOP leaders say cutting capital gains taxes is vital to encouraging investment, and keeping the economy in high gear.
"We believe there ought to be a tax cut for those who save, invest and create jobs. And I'm very prepared to take on any kind of class warfare argument," said House Speaker Newt Gingrich.
Another big question is Medicare reform. Clinton is warming to a Senate plan that would make elderly couples who earn more than $75,000 a year pay higher taxes.
Such means testing of Medicare is fiercely opposed by liberal Democrats, who are in no rush for a deal. But Clinton and Republican leaders are in a hurry, and optimistic they can bridge their differences by the end of the month.
"This could end up being a very historic summer," said Gingrich.
Disagreements over education tax breaks also remain to be worked out. But the White House and GOP leaders are voicing confidence they are within reach of a deal that would provide the first balanced budget in three decades, and the first big tax cut in 16 years.
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