Packwood Relents On Tax Cut Proposal

If the federal budget can be balanced without touching Social Security or harming the economy, “then there is room for a tax cut,” Senate Finance Committee Chairman Bob Packwood said Saturday.

The Oregon Republican made clear that such a result - a balanced budget and lower taxes - would be hard to achieve.

However, in a change of emphasis from previous comments, Packwood said that under certain circumstances, that goal is “doable.”

Appearing on CNN’s “Evans & Novak,” Packwood took a measured step away from his remark last month that he favors aggressive steps to reduce the deficit and balance the budget over the $189 billion tax cut Republicans have proposed.

“Between the two, if I could only do one, the balanced budget would occupy a higher priority than the tax cuts,” Packwood said Saturday.

But, he added: “I think we can do both. Now if we can do that, without changing Social Security or any change in the Consumer Price Index, then there is room for a tax cut.”

“It’s harder to do both, obviously.”

But he made clear that he doubts that any tax cut could be of the magnitude of the Republican proposal.

“I find it hard to believe you could do $180 (billion) to $190 billion in tax cuts and balance the budget,” Packwood said.

Packwood also said that given the choice, he would rather reduce the tax rate as a move toward greater savings and productivity than to support the $500-perchild tax credit which is at the center of the GOP proposal.

The tax credit proposal, he said, is “probably the worst way to go to improve our economy.”

“I prefer a rate cut,” he said. “In fact, I prefer almost anything to the child care credits.”

Packwood also repeated his proposal to put a $250,000 cap on home mortgage deductions to pave the way for reducing the capital gains tax. He said that would remove a tax break for “bigger mansions” while increasing incentives to invest.