Clinton Signals A Compromise On Tax Credit

President Clinton’s budget chief, seeking ground for compromise with moderate Republicans, said Tuesday the White House may be willing to scale back the tax cuts Clinton proposed last year, and hinted that might be done by restricting a $500-per-child family tax credit to lower-income families.

Alice M. Rivlin, director of the Office of Management and Budget, said “I think in the optimistic scenario, you would end up with a budget that had a smaller and more targeted tax cut, maybe smaller than ours,” she said.

If Republicans in Congress negotiate with the administration, she said, the result could be “a compromise position that might be nobody’s first choice, but that is really quite a good budget.”

“It would have additional deficit reduction but not as much as the Republicans want. It would have some tax cut, but more focused on people who really need it and perhaps more focused on education. It would protect the spending that we think is most important to reform education … and invest in the future. And it would contain a health reform of some dimensions that would reform Medicare and Medicaid and lead to lower rates of growth, but not decimate those programs.”

Rivlin’s comments were the administration’s first signal of a specific budget issue on which Clinton is willing to bend.

Conservative House Republicans led by Speaker Newt Gingrich, R-Ga., and Budget Committee Chairman John R. Kasich, R-Ohio, have proposed tax cuts of an estimated $350 million over the next seven years, even as they act to slash federal spending.

Clinton denounced those tax cuts as too large and a windfall for the wealthy. But late last year, fearful of being left behind in a tax-cutting contest, the president proposed his own tax cuts of $63 billion over five years - including a tax credit of up to $500 per child for families making less than $75,000 per year, and a tax deduction for most college tuition.

Then polls showed that most voters were unimpressed by either tax cut proposal and more interested in balancing the budget.