In the latest budget retreat by Republicans, House Speaker Newt Gingrich said Thursday that he was considering a smaller, shorter-lasting tax package than the GOP has sought.
In their negotiations over balancing the budget over seven years, one of the severest clashes between President Clinton and Republicans has been over tax cuts. In their most recent offers, the GOP was seeking about $200 billion in lower taxes over seven years and Clinton $130 billion. Many congressional Democrats want no tax cuts.
But after a meeting of House Republicans, Gingrich told reporters that he would “look at a four-year package … with all the major tax cuts.” He did not say how much it would cost, but said it “frankly is a smaller number.”
Gingrich’s remark came as the House, over Democratic objections, moved toward recesses until Feb. 26. The Senate, however, planned to meet next week.
Clinton, during a news conference with French President Jacques Chirac, said Gingrich’s comment persuades him that the quest for a balanced-budget agreement “is far from gone.”
“If we keep working at it, we can reach a balanced budget agreement,” Clinton said.
It was unclear how many Republicans had embraced the idea. Sen. Bob Dole, R-Kan., back from a campaign trip, said, “I didn’t see that. I’ve been floating around New Hampshire.”
And House Budget Committee Chairman John Kasich, R-Ohio, told a reporter, “Newt’s big on trial balloons.”
Meanwhile, fearing that Clinton would use the approach of a debt ceiling crisis to damage them, Republicans pushed a bill through the House and Senate on Thursday ensuring that 44 million Social Security checks will go out at the end of this month.
The bill authorizes the Treasury to issue an amount equal to the estimated $30 billion needed to pay March Social Security benefits. Treasury Secretary Robert Rubin has said that unless Congress raises the $4.9 trillion ceiling on the federal debt by March 1, the government would not have enough money to simultaneously meet interest payments and current expenses.
Shrinking the duration of their proposed tax cut could give Republicans the best of both worlds. Making it less costly would require smaller spending cuts, which could help win support from Democrats for a balanced-budget plan. But since lawmakers are loathe to let tax reductions expire, the tax cuts could well end up lasting seven years or more anyway.
When they took over Congress last year, House Republicans called their tax-cut plan the “crown jewel” of their “Contract With America” campaign manifesto. The plan includes a $500 per child tax credit for many children aged 18 and under, plus a reduction in the capital gains tax rate paid on profits of property sales.
Clinton proposed a similar tax credit for children, and has said he would accept a lower capital gains tax - long a top GOP priority as part of a balanced-budget deal.