Tax-cut bill passes on close vote

House GOP leaders forge compromise with party moderates

President promises veto

$792 billion measure would dispose of surplus over 10 years

July 23, 1999|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- After appeasing rebellious moderates in their own party, Republican leaders narrowly won House approval yesterday for a sweeping $792 billion bill that would return most of the anticipated budget surplus to taxpayers over the next 10 years.

The fate of the legislation, which would grant the most far-reaching tax reductions since 1981, remains uncertain.

President Clinton has called the proposed tax cuts far too big and has pledged to veto the bill.

The 223-208 vote, delayed for more than a day as Republican leaders worked to secure the necessary support, was cast closely along party lines.

Only four Republicans, including Rep. Constance A. Morella of Montgomery County, rejected the legislation, the heart of the Republicans' domestic agenda.

Six Democrats broke ranks with their party to support the measure.

In practical terms, the legislation serves mainly as an opening bid by House Republicans to win approval for a broad tax cut.

Months of negotiations -- with the Senate, congressional Democrats and the White House -- are likely to follow before a bill can be enacted into law.

But the vote puts the Republicans on record as favoring an enormous tax cut as the best use of the nation's burgeoning budget surplus.

Under current forecasts, that surplus will reach nearly $3 trillion over the next decade.

"This is the first step in making sure the American people get to keep more of what they earn," declared Rep. Bill Archer of Texas, the House Ways and Means Committee chairman, who engineered a decisive compromise with moderates.

"If this money is left in Washington, the politicians will spend every dime of it on more government programs. Let's start today and give it back."

Under the compromise crafted by Archer, the gradual 10 percent income tax cut would be suspended in any year, from 2002 to 2009, in which interest payments on the national debt rose.

The legislation's proposals include a 10 percent reduction in income tax rates, phased in over 10 years; an easing of the "marriage penalty" that hurts many two-income couples; a drop in the capital gains rate; and a gradual elimination of the estate tax and the alternative minimum tax.

House Democrats echoed Clinton's complaints that the Republican tax cut was dangerously excessive.

They argued that the legislation would leave too little of the surplus to pay for education, Medicare and Social Security; that it siphons off money needed to pay down the federal debt; and that it risks putting the government into deficit again and imperiling the economy.

The Democrats also noted that under the House Republican bill, about half the total benefits would go to taxpayers with incomes exceeding $300,000.

"We are for tax cuts," said House Democratic Leader Richard A. Gephardt of Missouri. "We think the American people deserve tax cuts.

"We think this bill is too much."

Action on the issue now shifts to the Senate, which is scheduled to vote next week on a tax-cut proposal of the same size but made up of different elements.

Though both bills face a certain veto from Clinton, Republicans say they want to make a political statement that will set a high bar for the forthcoming negotiations -- and perhaps stake out a position on an issue that could work in their favor in the 2000 elections.

Rep. Charles B. Rangel, a New York Democrat, contended that the certainty of a presidential veto made it easy for Republicans to load up their bill without addressing the economic consequences.

"It's a Christmas tree decorated with everything you can think of for Republicans," Rangel said. "When the president vetoes it, he becomes the Scrooge."

Rep. Tom DeLay of Texas, the House Republican whip, responded that the Democrats were ill-suited to the role of fiscal conservatives.

"Democrats think it's irresponsible to return money to the people who earned it," DeLay said. "When the Democrats were in the majority, we had nothing but tax increases for as far as the eye could see. The Democrats are big-government addicts."

Republican leaders were able to secure the final dozen or so moderate votes they needed to pass their bill by agreeing that the phase-in of the 10 percent tax cut, which begins with a 1 percent reduction next year, would be delayed if the $3.6 trillion national debt began to rise.

Republican moderates, such as Rep. Marge Roukema of New Jersey, had complained that the Republican bill failed to allocate any of the $1 trillion surplus that is not from Social Security toward paying down the debt.

An additional surplus of nearly $2 trillion that comes from Social Security taxes would be used to buy back government bonds.

But that money would become debt owed to the Social Security trust fund.

Archer and other Republican leaders argue that their tax reduction would actually extend America's economic prosperity, which has already begun to shrink the debt through lower interest rates.

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