Dole urges broad cuts in taxes Rate reductions, credits would total $548 billion in 3 years

'I'm betting the country'

White House calls program a return to supply-side era

Campaign 1996

August 06, 1996|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

CHICAGO CARL M. CANNON OF THE SUN'S NATIONAL STAFF CONTRIBUTED TO THIS ARTICLE. — CHICAGO -- Trying to strike a chord with financially strapped voters, Bob Dole promised yesterday to stoke the engine of American growth with a broad array of tax cuts.

"It's time to unshackle the U.S. economy from the big-government ball and chain and 'Go for the gold,' " the Republican presidential contender told an enthusiastic crowd at a forum sponsored by the Chicago Chamber of Commerce.

Dole's economic proposal, which is to be the central theme of his campaign, comes at the beginning of a two-week period in which he will announce his choice for a running mate and deliver his acceptance speech next Thursday at the convention in San Diego.

Dole contended that high federal budget deficits and high taxes are producing the "Clinton middle-class squeeze." He pledged to balance the budget and provide "tax relief for America's working families."

Dole's $548 billion program calls for a 15 percent reduction in income tax rates phased in over three years, slicing in half the tax on capital gains, and providing tax credits of up to $500 per child. He would expand the use of IRAs and repeal the 1993 increase on Social Security income subject to taxes.

The result, Dole said, would be to lower the federal income tax bill of a family of four making $35,000 a year by 56 percent.

"But this is only the beginning," he said. "We will not stop until we repeal the entire tax code and replace it with a simpler, fairer, flatter system that will allow Americans to file their tax returns without the help of a lawyer or an accountant, or both."

At the White House, President Clinton and his top financial advisers denounced Dole's plan as a replay of a failed strategy advanced by supply-side economists associated with the Reagan administration -- one the Democrats now blame for quadrupling the national debt.

"I am unalterably opposed to going back to the mistake we made before in having big tax cuts that are not paid for," Clinton said. "It will balloon the deficit, raise interest rates and weaken the economy."

White House press secretary Mike McCurry, noting Dole's history as a budget-balancer leery of tax cuts without accompanying spending cuts, said "it was a sad thing to watch Senator Dole humiliate himself by walking away from those beliefs."

It is by Dole's own description a "dramatic" proposal that dwarfs the $245 billion proposal that Republican lawmakers pushed through Congress last year only to be vetoed by Clinton.

"As of this moment, Bill Clinton and his party are the defenders of the status quo," Dole declared. "We are the party of change."

Dole's plan is being offered at a time when he is still lagging by as much as 15 to 20 points behind Clinton. "They say I'm betting the farm; I'm betting the country," Dole said.

"This is not a time to bet the country, it is a time to lead the country," countered White House chief of staff Leon E. Panetta.

The Clinton campaign yesterday launched an ad campaign charging that Dole is "gambling with our future" with a return to "supply-side economics."

"We are anxious to get into this debate," said Joe Lockhart, Clinton's campaign press secretary, who showed up at the Fairmont Hotel.

The focus of the Democrats' criticism is that Dole's tax cuts are not fully offset by spending cuts. Instead, Dole relies in part on $147 billion worth of "income growth effect," increased tax revenues he says would result from the more buoyant economic growth produced by the tax cuts.

White House budget adviser Gene Sperling said the growth factor anticipated in Dole's package was twice what Reagan had projected from the similar-sized tax cuts of 1981.

But Dole came prepared for criticism, and he spent a substantial portion of his speech defending himself. On the issue of fiscal austerity that has been a hallmark of his career, Dole said:

"We have long had a debate in our party about which should come first: Growth advocates say tax cuts. Fiscal conservatives say balanced budget. I say they're both right."

"Cutting taxes and balancing the budget are just a matter of presidential will. If you have it, you can do it. I have it, I will do it."

To help him keep this promise, Dole said, he would have two advantages not available to Reagan: a GOP-led Congress and a line-item veto, which beginning in January will allow the president for the first time to delete individual items from a larger spending bill.

Dole also cited attacks by Democrats that he is returning to the "failed" policies of the '80s.

He challenged the assertion that Reagan policies failed. "During the Reagan years, we vanquished inflation, brought interest rates down from double digits and averaged nearly 4 percent economic growth in the longest, peacetime expansion in history."

He said one of his proudest achievements was "helping to pass Ronald Reagan's historic across-the-board tax cut," which cut income tax rates by 25 percent.

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