Gore taxes White House credibility

Dueling interpretations of vice president's entry into tax-cut sweepstakes

August 05, 1999|By Jonathan Weisman | Jonathan Weisman,SUN NATIONAL STAFF

WASHINGTON -- White House officials publicly dismissed Vice President Al Gore's $300 billion tax-cut plan yesterday as merely a document for his presidential campaign and not a serious legislative proposal for consideration in the tax debate on Capitol Hill.

The White House strongly indicated that as aides prepare to do battle with Republicans over the size and scope of a tax cut, they have no intention of adding Gore's proposals to the mix.

"As the vice president will continue to do, he is laying out ideas for where he will want to take the country when he assumes office in 2001," said Joe Lockhart, President Clinton's spokesman. "But, I mean, there should be no doubt that the president's budget is [the one] up there" on Capitol Hill.

But those blunt public words masked a belief that Gore's proposal could become the foundation for a compromise position on taxes, at least among fractured Democrats. Gene Sperling, the chairman of the president's National Economic Council, said last night that Gore's tax package -- unveiled Friday with little fanfare -- could be a bridge between the White House and Capitol Hill.

"If there comes to be some point where we needed a unified Democratic position, the vice president would have laid out a good starting point to work from," Sperling said.

A different approach

Gore caused some consternation in the White House last week by proposing a plan significantly different from Clinton's. Under the Gore initiative, the president's proposed retirement savings program would be pared back by at least $100 billion to make room for expanded education savings accounts, tax relief for married couples and a permanent extension of the research and development tax credit for private industry.

Where Clinton stresses targeted tax cuts intended largely to promote saving and draw more people into the work force, Gore hits on themes that may have more resonance on the campaign trail, such as education and the "marriage penalty."

"What the vice president has laid out are ideas that will be helpful in producing a compromise," said Gore's chief of staff, Ron Klain.

Some White House aides publicly contradicted that notion yesterday. One White House aide who asked not to be named characterized Gore as "inserting himself into the debate" on taxes.

Another aide, Maria Echaveste, a deputy chief of staff for Clinton, hinted that Gore's plan was more a political platform than a serious legislative proposal.

"He's running for office," she said of Gore. "He's got to lay out the direction he wants to take the country."

But Sperling said the plan may be the White House's best hope of salvaging some of its tax proposals. Clinton has repeatedly asserted that his proposed tax cuts -- totaling about $250 billion over 10 years -- would be a more fiscally prudent alternative to the $792 billion Republican plan he has vowed to veto.

Retirement savings

But the centerpiece of the Clinton proposal -- a retirement savings program dubbed Universal Savings Accounts -- has failed to gain much support, even among Democrats on Capitol Hill. Under the proposal, about $33 billion a year would be taken from the federal budget surplus and used to create individual retirement accounts. Taxpayers could invest that federal seed money as they choose. And savings from lower-income taxpayers would be matched by the government.

When a group of Senate Democrats drafted their own tax plan, they ignored the Universal Savings Accounts.

Tom Daschle, the Senate Democratic leader, conceded yesterday that Clinton's proposed savings accounts have yet to get off the ground.

"People don't understand it, and they have too many competing options," the South Dakota Democrat said.

Gore pointedly called for modifying the accounts, scaling them back and phasing them in slowly.

"The vice president believes that to get the USA accounts passed by Congress, they're clearly going to have to be part of a tax package that has other things as well," Klain said.

Clinton has other proposals, from tax credits for child care and stay-at-home parents to tax relief for families burdened by long-term health care costs.

But Gore has cast those proposals aside. Instead, he wants to expand existing tax-deferred education savings accounts from a $500 maximum annual contribution to a $2,500 maximum. The accounts would also be available for use by adults 30 or older who seek further education and training.

Under the vice president's plan, lower-income married couples who save up to $500 a year in their education accounts would receive a tax credit of up to $250.

That proposal would cost about $20 billion over 10 years.

Marriage penalty

Gore also proposed eliminating the "marriage penalty" for middle-income couples by raising the standard deduction by $1,400 to make it equal to the standard deductions of two individuals who are not married. He would also raise the amount that married couples could earn and still qualify for the earned-income tax credit.

Those proposals would cost $65 billion over 10 years.

Finally, Gore proposed making permanent the research and development tax credit, which Congress extends each year. That would cost $20 billion.

Though it may grate on some in the White House, Gore's split-the-difference approach has merit, Sperling said, since it takes the most cherished part of the Senate Democratic plan -- a marriage penalty fix -- and combines it with the most cherished part of the Clinton plan -- the USA accounts.

If Democrats on Capitol Hill had embraced Clinton's savings accounts, Gore's proposal to scale them back would have rankled, Sperling said, but the White House now has to be realistic about compromising.

Pub Date: 8/05/99

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