Clinton Stakes His Ground on Tax Cuts

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Should the rich get richer off tax cuts? Yes, say the Republicans, because they actually paid the most taxes in the first place. No, says the White House, because the budget surplus should be used to secure the future of the middle class and benefit the poor. President Clinton put the political battle over taxes on the front burner Sunday, vowing to veto a $792 billion tax cut passed by the House last week, as well as a $500 billion bipartisan compromise version being touted in the Senate. Instead, he’s offering a $250 billion cut, composed in large part of measures targeted to favor low-income families.

"The administration is trying to make this a class warfare issue by showing that 80 percent of the Republican tax cut would go to the richest 20 percent of American families, while the poorest 20 percent will only get 0.3 percent of the money," says TIME White House correspondent Jay Branegan. "But the House Republicans are unapologetic about demanding that he who gives most should get most, and they’re beating the ‘give it back’ drum because they believe Americans are overtaxed and won’t trust the government to act prudently with the surplus." Even as the politicians spend the summer sparring over the reliability of projected surplus figures invoking the imagery of class politics, economists will counter caution. And the most important economist in the land, Fed chairman Alan Greenspan — who happens to be a Republican — last Thursday told the House Banking Committee in no uncertain terms that the priority for spending the surplus should be reducing the national debt rather than cutting taxes. But with next year’s election likely to be another politics-lite race for the center, a budget fight offers the parties a chance to remind voters of the few big differences between them.