Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, November 11, 1994 TAG: 9411110051
SECTION: NATIONAL/INTERNATIONAL PAGE: A-1 EDITION: METRO
SOURCE: From Newsday and Knight-Ridder Newspapers
DATELINE: WASHINGTON LENGTH: Medium
The sudden shift in the political landscape was made apparent Thursday when Rep. Bill Archer, R-Texas, stood in the hearing room of the House Ways and Means Committee and ticked off the ways he would dismantle legislative achievements.
Archer, who is expected to be chairman of the influential committee in the next Congress, made it clear that health care reform would be a low priority ford the committee. He called universal coverage ``a myth ... a code word for socialized medicine.''
Archer said he would push instead for a bevy of tax cuts and a reform of welfare that would force recipients into jobs immediately and slash benefits after two years.
The biggest winners from the tax changes would be America's most affluent taxpayers. About 73 percent of a proposed capital gains tax cut would go to families earning more than $100,000 a year; 95 percent of the benefits from an expanded Individual Retirement Account provision would go to the top 20 percent of earners.
Archer said that he would replace the lost revenue with unspecified ``innumerable spending cuts'' in nondefense programs. In the initial round of tax-cutting, he would:
Provide a tax credit of $500 per child for families earning up to $250,000 a year, a move that would cost the federal government $107 billion in lost tax revenue over the next five years.
Repeal the tax increase imposed last year on Social Security benefits of well-to-do pensioners, and raise the tax-free earnings limit on pensioners' outside income. The five-year tax loss would be $23 billion.
Reduce the effective rate of the capital gains tax by 70 percent. That would be achieved by excluding 50 percent of gains from taxation while adjusting the basic value of stocks, bonds and other assets for inflation (called indexing). The revenue loss would be $56 billion in the first five years and sharply rise to $160 billion over the next five.
Reinstate Individual Retirement Accounts for people earning more than $50,000 a year. The IRA program would increase revenues by $5 billion over the first five years, but lose $50 billion over next five.
Raise the estate tax exemption to $750,000 from $600,000. That would reduce tax revenue by $6.5 billion over five years.
Allow businesses more generous write-offs for new equipment, permitting them in effect to deduct more than the original cost over the life of the asset. It would increase federal revenue by almost $20 billion over first five years, then lose about $58 billion over the next five.
Encourage workers to set up tax-exempt ``Medisave'' accounts to pay for health insurance and medical care while adding to the pool of domestic savings.
(The estimates of the costs of the tax changes are from the GOP's "Contract With America," an analysis by the Center for Budget Priorities and from the Joint Taxation Committee.)
Archer said that he does not know exactly how much the tax cuts would drain from the Treasury, but other Republicans have acknowledged that these tax-cut plans would cost $190 billion over five years. He said that Republicans would make deep cuts in domestic spending to offset the revenue losses and prevent a ballooning deficit.
In another sign that pledges of bipartisanship and cooperation with the White House may be short-lived, Rep. Newt Gingrich, R-Ga., the likely next speaker of the House, blasted the White House staff in an interview as ``left-wing elitists'' and described President Clinton and his wife, Hillary Rodham Clinton, as ``counterculture McGoverniks'' - a reference to George McGovern, the liberal who ran for president in 1972.
The president shot back: ``I'm a middle-aged man who's worked very hard in his life to be a mainstream American, and I think I've done a reasonable job of it.''
Regarding Tuesday's elections, he said that voters ``clearly said that we have to do more to limit government's reach into their lives and to make more efficient the government they pay for.''
by CNB