Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, March 12, 1990 TAG: 9003122788
SECTION: NATIONAL/INTERNATIONAL PAGE: A1 EDITION: METRO
SOURCE: The Baltimore Sun
DATELINE: WASHINGTON LENGTH: Medium
Rep. Dan Rostenkowski, D-Ill., the House's chief tax writer, called for an end to the government's "binge of irresponsibility" of embracing budgets "that duck the tough decisions."
While Democratic congressional leaders have yet to reach a consensus on spending and tax policies for the coming fiscal year, Rostenkowski, who has seen some of his own power erode, said he believed it was time "to do more than bellyache about the lack of government leadership."
Clearly intending to gain wide attention for his package, he presented it over the weekend in a newspaper article and television interview.
While the "no smoke and mirrors" proposal is certain to provoke controversy, it demonstrates the scope of the spending cuts and tax increases needed to bring the budget into balance.
His seven-point plan, which projects reaching a $34 billion surplus in the fiscal 1995 budget, would:
Freeze spending for one year, including cost-of-living raises for Social Security recipients. Only means-tested programs for the poor would be excluded. The freeze would reduce spending by $105 billion over five years.
Cut military spending by $150 billion over five years, with the savings earmarked solely for deficit reduction. New spending on education, health care, foreign aid or other purposes would have to be funded either by cutting other spending or raising taxes.
Impose a one-year freeze on adjusting the tax brackets and personal exemption to reflect wage inflation, for savings of $50 billion over five years.
Create a 33 percent tax bracket for the highest income individuals. Because of an anomaly in the 1986 tax overhaul law, some taxpayers pay a 33 percent rate on part of their income while the wealthiest pay a 28 percent rate. Rostenkowski's plan would apply the 33 percent rate to those upper-income taxpayers to raise $44 billion over five years.
Increase excise taxes on gasoline, alcohol and tobacco and impose a tax on the sources of environmental pollution to raise $100 billion over five years. He suggested a tax of 20 cents to 25 cents per gallon on gasoline. The current federal tax is 9 cents a gallon.
Reject all proposals to reduce taxes, including a proposal by Sen. Daniel P. Moynihan, D-N.Y., to lower the Social Security payroll tax and the administration's proposal for tax-free savings accounts and a lower capital-gains tax rate.
Repeal the Gramm-Rudman balanced-budget law. He argued that the law, which requires a reduction in the federal deficit, has been used as a crutch by leaders who avoid making real progress on reducing the deficit.
The amount of projected savings and revenue came from the Congressional Budget Office, which, Rostenkowski said, estimated that the package would erase almost 80 percent of the federal debt that would otherwise be accumulated over the five years and produce a budget surplus of $34 billion by the 1995.
As the deficit declines, the CBO estimated the government would save $61 billion in reduced interest costs.
President Bush, in the budget he presented to Congress in January, proposed a package of spending cuts and revenue measures to reach a balanced budget by 1993.
But the CBO, using economic assumptions that were less optimistic than those used by the White House, said last week the Bush plan would not arrive at a balanced budget until after 1995.
Whereas the Rostenkowski plan would reach a surplus of $34 billion by 1995, the CBO said, the Bush budget would show an $11 billion deficit that year.
by CNB