Deficit package gains in Senate Panel Democrats reach accord

June 17, 1993|By David E. Rosenbaum | David E. Rosenbaum,New York Times News Service

WASHINGTON -- The Democratic senators on the Finance Committee agreed yesterday on a set of new tax increases and spending cuts, pushing deficit-reduction legislation one step closer to becoming law.

The agreement, struck after days of agonizing bargaining, incorporates much of what President Clinton proposed and the House of Representatives approved last month. But it differs from the president's plan in important respects.

Most significantly, instead of a new tax on all forms of fuel, which the president wanted, the Democratic senators favored a 4.3-cents-a-gallon increase in the federal sales tax on gasoline, diesel fuel and most other forms of fuels used for transportation.

From the president's perspective, the details are not so important as the fact that the legislation can pass through the Finance Committee bottleneck. "What he's most interested in at this point," said the White House press secretary, Dee Dee Myers, "is seeing the process move forward so that we can get it to conference and hammer out an agreement."

Treasury Secretary Lloyd Bentsen praised the senators last night and called the agreement "an important step along the path to enactment."

The Democrats hold a slim 11-9 majority on the crucial Finance Committee, and the accord among them guarantees that the committee will approve the deficit-reduction measure this week and send it to the full Senate for a vote.

Sen. Daniel Patrick Moynihan of New York, making his debut as chairman of the Finance Committee with this legislation, called the measure "the most progressive change in taxes since World War II."

Eighty percent of the tax increases would be borne by taxpayers with incomes above $100,000, he said, and families with incomes below $20,000 would get a tax cut.

Sen. David L. Boren of Oklahoma, who had threatened to block the president's proposal, called the bill the senators approved "a great improvement" and added: "It keeps faith with the Democratic Party being on a new course, a centrist course."

The fuel tax the Democrats agreed to would raise only about $24 billion over the next five years, much less than the $72 billion to be generated by the administration's proposed energy tax.

To make up most of the lost revenue, the senators would reduce Medicare spending by $19 billion in addition to the $50 billion cut sought by the president, would restrict some of the tax breaks for business Mr. Clinton wanted to stimulate investment and would limit somewhat the increase in tax credits Mr. Clinton proposed for low-income workers.

Overall, the measure is projected to lower the deficit by a total of slightly more than $500 billion over the next five years. But the last few billion dollars were obtained through a gimmick.

Some tax breaks scheduled to expire, like one giving businesses a tax credit for research and development expenses, would be extended by this legislation for only a year or two instead of five, even though no one doubts that they will be extended again once they lapse again.

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