Gop Split On Tax Breaks For Wealthy Moderates Want Tax Credit To Go Only To Families Who Earn Less Than $95,000

In the first big revolt against the new GOP leadership, nearly half the House Republicans urged Tuesday that the “Contract With America” be revamped to reduce proposed tax breaks for the affluent.

Their move came amid signs that the party is having second thoughts about other elements of the 10-point Republican manifesto as well, including get-tough welfare reform, term limits for Congress and significant increases in defense spending. Already, a proposed constitutional amendment requiring a balanced budget has faltered.

In a letter to the House leadership, 102 GOP members said they want a proposed $500-perchild tax credit to go only to families who earn less than $95,000 a year. The GOP plan, promised in the “contract” and included in the tax bill approved last week by the House Ways and Means Committee, would extend the full credit to families with incomes up to $200,000 a year.

The original bill would cut taxes by $189 billion over five years, with $105 billion of that coming from the family tax credit. Republicans promise to cut federal spending to offset the lost revenue.

“Passage of this amendment would still cover 85 percent of the families in America.” the letter said. “But it would effect an additional $12-$14 billion in savings for deficit reduction” over five years.

The new proposed limit could help save Republicans from the stinging Democratic criticism that they are cutting spending on programs such as school lunches for the needy to finance tax cuts for the well-to-do.

The GOP insurrection came on a day when the Washington Post released a poll showing 59 percent of the public feared the GOP “will go too far in helping the rich and cutting needed government services that benefit average Americans.”

An ABC News-Washington Post poll showed Tuesday that a majority of Americans - 52 percent - now agree with the statement: “The more I hear about what Republicans do in Congress, the less I like it.”

The move against the House Republican leadership reflected a growing sentiment that Congress should act first to reduce the federal deficit before cutting taxes.

“Many members of the Republican Conference are concerned that we provide families with tax relief and that we also address the national budget deficit,” said two leaders of the tax challenge, Reps. Pat Roberts, R-Kan., and Greg Ganske, R-Iowa, in a joint statement.

At the White House, spokesman Mike McCurry called the request “the first glimmer of hope that some fiscal sanity might prevail.” Chief of Staff Leon Panetta said the change in the tax plan would bring it closer to President Clinton’s tax proposals.

House Republicans would not be able to pass the full tax credit without the 102 signers of the letter or without the help of Democrats. Even if they did pass it - an unlikely prospect - they face tough opposition from fellow Republicans in the Senate.

Sen. Bob Packwood, R-Ore., chairman of the tax-writing Finance Committee, said on Monday that cuts in federal spending should be used to reduce the deficit before they are used to finance tax cuts.

“I think we can say on a bipartisan basis we are willing to step forward and make deficit reduction the first priority, and I think of an immense magnitude beyond what people are thinking possible,” he said.

Republicans also face a potential splinter over one of their key welfare proposals, namely the plan to cut off cash benefits to poor women under the age of 18 who have babies out of wedlock.

While GOP leaders say the change would help stem an alarming rise in illegitimate births, critics like Rep. Christopher Smith, R-N.J., and Roman Catholic Cardinal John O’Connor of New York fear it could accomplish that goal by prompting women to have abortions.

To answer those fears, Republicans will offer amendments to mitigate the effects of the proposed cutoff. Smith is expected to push an amendment that would allow teenage unwed mothers to receive vouchers good for diapers and other baby products. And Rep. Jim Bunn, R-Ore., is expected to propose providing cash or vouchers to the parents or guardians of teenage unwed mothers.

Other promises in trouble include term limits, the balanced budget amendment and defense spending increases. Many prominent Republicans, including party whip Tom Delay, R-Texas, and Judiciary Committee Chairman Henry Hyde, R-Ill., oppose term limits.

The Senate already has rejected the balanced budget amendment. Senate Majority Leader Bob Dole, R-Kan., promised to bring it up for a vote again, but there are no signs that any of those who opposed it will change their votes.

And while the GOP contract suggested that significant increases in defense spending may be necessary, the House Republican leadership now supports limiting defense spending for the rest of the decade at a level that would not keep pace with inflation.

xxxx Gingrich response In response to the calls from his own party to scale back tax relief, House Speaker Newt Gingrich said Tuesday a vote was possible, telling reporters, “I don’t think that’s out of the question.”

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