Bush gets stuck on tax pledge No-new-taxes issue clouds media blitz

September 11, 1992|By Karen Hosler | Karen Hosler,Washington Bureau of The Sun

WASHINGTON -- Attempting to clarify once and for all his plans for reviving the economy, President Bush repackaged his approach yesterday as an updated version of traditional Yankee capitalism, relying heavily on expanded trade, entrepreneurial incentives and down-sized government.

But he got stuck in a new snarl over whether or not he has taken another pledge to swear off tax increases.

In a midday speech in Detroit and in a five-minute nationally televised political commercial last night, Mr. Bush tried to shed his image as keeper of the status quo and offer a prescription for change.

"That's the direction I want to go: Tax less, spend less, cut the deficit and redirect our current spending to serve the interests of Americans," he told the Economic Club of Detroit.

His televsion spot contained a homeier message in which he warned "there is no simple solution." He told voters that the future of their children depends on whether thew choose the candidate who "can lead America to a better, freer more $H prosperous future."

Mr. Bush said his approach is based on a "fundamental philosophical difference" with his Democratic challenger Bill Clinton, who, he says, wants to "tax and spend" and seeks "uniformity" and "centralized" management, rather than free choice and competition.

But before he spoke, White House officials were frantically trying to downplay Mr. Bush's remarks Wednesday in New Jersey, when he apologized for breaking his no-new-tax pledge of 1988 and added emphatically, for the first time, "I'm not going to do it again. Ever. Ever."

"It wasn't a pledge, no," White House spokesman Marlin Fitzwater told reporters less than 24 hours later. "He was saying, as he's said before, that he wouldn't make that mistake again."

The president's decision to accept a tax increase as part of the 1990 budget deal hurt him so much politically that he has repeatedly called it a mistake.

Mr. Bush has been trying to avoid making such a firm no-new-tax promise again, even to the point of advocating tax cuts. But many economists believe additional taxes are an inevitable part of any plan to reduce the federal deficit.

The president's "Agenda for American Renewal," was a 29-page booklet that his re-election campaign hurriedly distributed around the country yesterday. The president also displayed it to his viewers last night and urged them to "please call" an 800-number [1-800-368-1200] for a copy. But only a few new elements were offered to the series of proposals Mr. Bush has been talking about all year.

The most significant was a plan to pursue a new free-trade network that would link the United States with Latin America, Eastern Europe and some nations of the Pacific, which economists hailed as a potential boon to the manufacturing industry.

"Trade is one of the only things we've got going for us," said Diane Swonk, an economist for the First Chicago Bank, who noted that Midwestern states are already benefiting from the not-yet-adopted free trade agreement with Mexico and Canada. "Those countries are just hungry for trucks and equipment," she said.

Perhaps Mr. Bush's most controversial new suggestion was his promise to cut 5 percent from the salaries of the 54,000 federal workers earning more than $75,000, saying they should have to "tighten their belts" as taxpayers have.

That plan was immediately denounced as "bashing" of federal employees by Rep. Constance Morella, a Maryland Republican whose Montgomery County district includes many highly-paid federal employees.

"They're taxpayers, too," she said, adding that even though Mr. Bush could not get such a pay cut through Congress on his own, "The fact that he even says it, makes people feel terrible."

He also added a few new details to his proposal for an across-the-board tax cut, saying income tax rates could be cut 1 percent if Congress would agree to his plan to impose a ceiling on the growth of mandatory programs, such as Medicare and Medicaid.

For a family of four earning the median income of $43,000 annually that would mean a tax cut of $5 a week, according to Treasury Department officials.

In addition to that tax cut, which would cost the government $25 billion, Mr. Bush said he would reduce the tax rate on small businesses from 15 percent to 10 percent and cut the capital gains tax on profits from the sale of assets as well.

While saying he is optimistic that the newly-elected Congress would cooperate with him, Mr. Bush declared, "If Congress balks, we'll move forward anyway."

His fourth major attempt to offer prescriptions for the economy came only weeks away from an election that threatens to be a referendum on whether Americans are satisfied with the current, coma-like state of the national economy.

Mr. Bush acknowledged that the economy has been hurt on a number of fronts, including over borrowing by government, business and individuals during the 1980s. Even so, he did not directly accept responsibility for deficit spending during the Reagan and Bush administrations.

But he insisted he has already begun the process of turning the economy around.

"If America is going to lead the world, we need a leader who knows the territory," he said, in a slap at Mr. Clinton, who has no foreign policy experience. "We face great risks as well if we fail to make the right choices."

The Arkansas governor quickly reacted.

"The plan Mr. Bush outlined today is really just more of the same," Mr. Clinton said.

"He wants to give a big tax cut to the wealthy, a small sop to the middle class and make elderly people on Medicare and students going to college and disabled veterans pay for it . . . . We've tried this for 12 years . . . . It hasn't worked."

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