GOP leaders agree to link tax cuts, balanced budget

April 04, 1995|By Knight-Ridder News Service

WASHINGTON -- House Republicans removed a major stumbling block to their $190 billion tax-cut plan yesterday after GOP leaders agreed to make tax reductions conditional on passing a budget that would eliminate the deficit by 2002.

"There are other problems, but I think this clears a major obstacle," said Republican Rep. Fred Upton of Michigan, a leader of a group of lawmakers who demanded assurances that the tax cuts would not add to the deficit.

The GOP package is scheduled to come to the floor tomorrow. Although the House seems to be moving toward passing the tax cuts, prospects in the Senate are uncertain. The Senate is expected to scale back the House bill substantially.

Yesterday's agreement spells out that the tax cuts would not take effect unless Congress passes legislation this year that puts the budget on track to being balanced by 2002. If Social Security is excluded, that would require a 20 percent reduction from projected spending in all other programs.

Mr. Upton said two other issues are still being worked on within the Republican caucus: a proposal to limit the $500-per-child tax credit to families making up to $95,000 instead of $200,000, and changes in the federal employees retirement system that would reduce benefits. The tax plan would cost $190 billion over five years, according to estimates from the nonpartisan Joint Committee on Taxation. It is the last major item in the GOP's "Contract with America" awaiting a House vote before the chamber adjourns Friday for a three-week break.

Meanwhile, Vice President Al Gore blasted the tax plan, calling it "highly partisan" and "extremist," and accused Republicans of cutting taxes for the wealthy at the expense of the poor and the middle class.

Mr. Gore said the GOP plan would give more than half of the tax cuts -- and three-fourths of the capital-gains benefits -- to the richest 12 percent of Americans, who earn $100,000 or more a year.

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