More modest tax cuts essential Key to budget balance: Both parties need to scale down proposed reductions.

November 27, 1995

(TC WHILE REPUBLICANS contend that President Clinton has made a "sacred commitment" to balance the budget in seven years and Democrats hold just as adamantly that he has an "escape clause" in the proviso that to preserve key social programs, it is time to focus on what may be -- and should be -- the real crux issue: taxes.

Under the massive GOP budget bill now heading for a presidential veto, the Republicans propose to cut taxes over their prized seven-year period by a staggering $245 billion. Mr. Clinton, always the halfway kid, offers rival reductions of $105 billion. What citizens should realize is that every dollar of revenue lost makes budget balance harder to achieve and increases the spending cuts required to get there.

Take the $500 child credit proposed, at different income levels, by both parties. The Concord Coalition, a nesting place for deficit hawks, calls the whole idea "a cruel hoax on children" since it adds to the public debt these children will have to finance when they reach adulthood. Former Gov. Dick Lamm of Colorado likes to say that Christmas is a time when kids get presents paid for by their parents and deficits are a time when parents get goodies from government and let their kids pay for it.

Even though tax cuts in the midst of moderate recovery make little economic sense, they have become a kind of holy grail among many Republican legislators. Some buy into the Reaganomics theory that lower taxes spur economic growth which, in turn, produces higher revenues. Others take the contradictory (and more realistic) view that lower taxes mean smaller government and are therefore a lever worth pushing.

Democrats under Mr. Clinton are hardly in a more persuasive position since he won the Whiter House calling for a "middle class tax cut." It was a pledge that has prevented him -- at least so far -- from taking the high road of rejecting any tax cuts whatsoever in a drive to balance the budget. But at least within Democratic ranks, there is a so-called "Coalition" campaigning hard to achieve that elusive objective. And within Republican ranks, there are some old-fashioned budget balancers who agree, at least privately.

One hopeful sign of rethinking on taxes was a key change in the wording of the bipartisan agreement that ended the partial government shutdown on Nov. 20. Instead of referring to "tax relief" as part of a balanced budget plan, the accord merely called for "tax policies" to aid working families and stimulate growth. If this should turn out to be a tip-off to a more prudent approach to tax cuts on the part of both parties, it would, in Governor Lamm's analogy, be a nice Christmas present for children who will be saddled with the national debt.

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