Clinton, Dole seek ways to cut taxes Both contenders constrained by need to balance budget

Campaign 1996

June 04, 1996|By Carl M. Cannon | Carl M. Cannon,SUN NATIONAL STAFF

WASHINGTON -- President Clinton and Bob Dole groped yesterday for ways to offer Americans some tax relief, but they ran headlong into a huge constraint: the out-of-balance federal budget.

Dole, the likely Republican presidential nominee, is under pressure from his advisers to propose a 15 percent across-the-board income tax cut. But in a speech yesterday advertised as a "major" address on tax policy, the old deficit hawk couldn't quite bring himself to say the words.

Instead, Dole focused his attention on a balanced budget amendment he is bringing back to the Senate floor in the next week -- and dared Clinton to support it.

The president, for his part, is also planning to unveil a tax-cut plan. But it appears to be a relatively incremental addition to a proposal that he offered a year and a half ago and that has gone nowhere.

Clinton is expected to make this announcement, which would give tax credits to those attending two-year colleges, today in a speech at Princeton University in New Jersey.

With Republicans in charge of Congress and Democrats running the White House, neither side's version of a tax cut is considered even remotely likely to pass in 1996. This year, election-driven positioning on taxes is also being tempered by each party's desire to appear fiscally responsible on the budget, which both sides have pledged to balance by 2002.

Joe Lockhart, a spokesman for the Clinton campaign, issued a statement reminding voters that 12 years of Republicans in the White House had left the nation with a $3 trillion debt.

"President Clinton's leadership has cut the deficit in half, lowered interest rates and created more than 8.5 million new jobs," Lockhart said. "The difference is Senator Dole talks while the president leads."

Haley Barbour, the Republican Party chairman, countered yesterday that the president's achievements on deficit reduction have fallen short of his claims.

"For four years, Bill Clinton has professed his commitment to balancing the budget," Barbour said. "But for four years, he has stood in the way of balancing the budget."

Republicans like Barbour hope that Dole will do more than come out for a balanced budget. Even some of Dole's own advisers insist it is tax cuts that will put one of their own in the White House.

Tax cuts a winner

Tax cuts, these Republicans say, have been a proven winner for them since 1980, when Ronald Reagan pledged a 30 percent reduction in marginal tax rates, and as recently as 1994, when they vowed to grant a $500-per-child tax credit -- and won both houses of Congress.

Dole has a history as a balanced-budget man, however, and so far in the campaign he has been reluctant to say much about tax cuts. Yesterday, he seemed to fuse the two issues -- tax cutting and balancing the budget -- by referring to federal budget deficits as a "stealth tax." Deficits, he said, produce higher interest rates, which, in turn, drive up the cost of mortgages, auto payments and student loans.

Dole then pledged to bring the balanced budget amendment up for a vote before he steps down as Senate majority leader in a week. And he challenged Clinton, as leader of the Democratic Party, to make sure it passes by urging Senate Democrats to vote for it.

"I believe we can cut taxes, reform the tax code and balance the budget," Dole said yesterday.

At the White House, Clinton huddled with his advisers to map out a contrasting approach: expanding on his own long-dormant tax-cutting proposals.

After promising a middle-class tax cut in the 1992 campaign, Clinton spent 1993 expanding tax credits only for the working poor. The middle class, in fact, was hit by a modest increase in gasoline taxes, which has since been repealed by a Republican-controlled Congress.

In the wake of the November 1994 elections that produced that Republican Congress, Clinton finally unveiled a specific tax-cut plan. It consisted of three parts: allowing IRA-retirement funds to be used for educational expenses, first-time home purchases and some medical expenditures; a child tax credit more modest than the Republicans' version; and tax deductions of up to $10,000 for college tuition or other job-retraining expenses.

One gap in the plan was that it would do little to facilitate post-high school studies among students from families, typically working class, that do not itemize their tax deductions. The new proposal, first reported by the Bureau of National Affairs, a business-oriented newsletter, would offer a direct tax credit to those who attend two-year schools, White House officials said yesterday.

"One thing the president is very interested in is how you extend that type of opportunity to the community-college level," said Mike McCurry, Clinton's spokesman.

Dole tweaks Clinton

"I can't tell you how glad I am to be able to make this speech before President Clinton gets a copy of it and makes it himself," Dole told laughing supporters in Michigan. "Everything I recommend, he's for. I mean, tomorrow, he's going to have a big tax-cut package."

Clinton and his supporters tweaked Dole right back, telling reporters that instead of pushing a constitutional amendment to balance the budget that would take 18 months to pass, Dole ought to return to the White House for budget negotiations that could finish in 18 hours if both sides were serious.

"Why don't we do it right now?" the president said. "We can balance the budget tomorrow; all he has to do is come back to the negotiations."

Pub Date: 6/04/96

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