President promises no 'raw pain'

February 17, 1993|By Gilbert A. Lewthwaite | Gilbert A. Lewthwaite,Washington Bureau

WASHINGTON -- President Clinton will unveil an economic plan to Congress tonight introducing two new thresholds of pain to taxpayers -- $30,000 and $140,000 -- while arguing the benefits of the plan will outweigh the costs to the middle class.

Those are the income levels that will define whether and how much individual tax bills will increase under his proposals. They are the basis for Mr. Clinton's claim that the rich will be hit hardest.

"I think that when you see the whole program, it won't be raw pain," said Mr. Clinton, arguing that economic revival and social reform would leave middle-income Americans better off.

But, as Mr. Clinton continued a flat-out campaign to sell his program to an anxious public and a nervous Congress, there were early signs of trouble yesterday:

* The stock market took a nose dive on fears that increased taxes could stall the fledgling economic recovery and that a reported surtax on earners of more than $250,000 would shrink the pool of investment money.

* Republicans on Capitol Hill signaled their opposition to too many tax increases and not enough spending cuts. Senate Minority Leader Bob Dole predicted a rough ride for the package through Congress. "It's not what I thought the new Democratic approach would be," the Kansas Republican said. "Hang on to your wallets."

White House officials sought yesterday to clarify the confusion caused by Mr. Clinton's comment in his broadcast to the nation Monday night that 70 percent of the new tax burden would fall on those with incomes of more than $100,00.

The $100,000 figure, the officials said yesterday, was not a benchmark for tax increases. It was simply the income figure above which 70 percent of the new taxes would be collected. The tax increases will be triggered at $30,000 and $140,000.

Families or individuals with adjusted gross incomes of less than $30,000 would pay no new taxes. Any extra outlays they face because of increased energy or other taxes in the Clinton program will be offset by tax credits.

Individuals with adjusted gross incomes between $30,000 and $140,000 would pay more in energy taxes and any other excise or consumer levies Mr. Clinton announces tonight, but no new income taxes. If they are retired with incomes of more than $25,000 for an individual and $32,000 for a couple, they probably will see 85 percent of their benefits taxed instead of the current 50 percent.

Individuals earning more than $140,000 would see their top income tax rate increase to 36 percent from 31 percent.

The same increase will apply to couples with adjusted gross incomes of $180,000 or more.

White House officials did not deny a report in the Wall Street Journal yesterday that the surtax on millionaires Mr. Clinton proposed during the campaign would be levied on incomes above $250,000.

During the campaign, Mr. Clinton also committed himself to restricting income tax increases to individuals with incomes of .. more than $150,000 and couples making more than $200,000. The worsening deficit has forced him to lower the thresholds to garner more revenues.

"When you look at the overall package, it's going to be fair," the president said on the eve of his address to a joint session of Congress. "And people are going to see that if they are being asked to contribute, those who are doing better than them are going to be asked to contribute far more."

Mr. Clinton dismissed the Dow Jones industrial average's loss of points, its biggest slide in 15 months, noting that the market has risen markedly since his election.

To garner support on Capitol Hill, Mr. Clinton continued yesterday his daily practice of meeting with Democrats. Afterward, House Speaker Thomas S. Foley predicted that voters would be willing to "take the package as a whole."

First lady Hillary Rodham Clinton also met with Democratic and Republican members yesterday to discuss health care reform. But Mrs. Clinton, who heads the administration's health care reform task force, declined to comment on whether a new round of tax increases might be needed to finance coverage for 35 million Americans who lack health insurance, or whether employee-paid health benefits would be taxed as income under the plan Mr. Clinton will unveil today.

Altogether, Mr. Clinton is looking for about $250 billion in new tax revenues from individuals and corporations over his first term in an effort to help reduce the deficit by about $145 billion in fiscal 1997.

He also will introduce 150 federal spending cuts, 100 of them in nondefense programs, guaranteeing that special interests will try derail various elements of the package.

While special interest groups prepare to make their voices heard, the Clinton administration is cranking up its own reaction from the grass roots. Mr. Clinton and his top officials will scatter across the country tomorrow to deliver a nationwide sales pitch to voters.

The Democratic National Committee is providing "talking points" thousands of party leaders, elected officials and Clinton supporters around the country.

In an effort to put a pro-Clinton spin on local news coverage of the president's address, state and local Democrats will stage speech-watching parties. Reporters from local TV and radio stations and from newspapers will be urged to attend and, afterward, to interview prominent Clinton supporters in attendance.

More than 300 Baltimore Democrats are expected to gather for a speech-watching party at the Camden Club at Oriole Park.

The Baltimore news media have been invited to "drop by" for the speech, said Anne Lansey, an assistant to Vera Hall, the Baltimore councilwoman who is chairwoman of the state Democratic Party.

LIVE ON TV

President Clinton's address tonight will be broadcast live on all four networks, ABC, CBS, NBC and CNN and on C-SPAN beginning at 9 p.m.

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