
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, December 16, 1994                   TAG: 9412160057
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Knight-Ridder/Tribune
DATELINE: WASHINGTON                                LENGTH: Medium

PRESIDENT PROPOSES TAX BREAKS

President Clinton proposed Thursday night to give most American families a huge new tax break for college and other education expenses, in addition to a tax credit for children.

Expenses up to $10,000 a year for college tuition or any other post-high school education would be fully tax deductible for those with income below $120,000 under Clinton's surprise proposal.

``Just as we made mortgage interest tax-deductible because we want people to own homes, we should make college tuition deductible because we want people to go to college,'' the president said.

He also proposed giving a $500 tax credit for each child under age 13 to families with incomes up to $75,000, and to expand tax breaks for Individual Retirement Accounts.

A new job-training voucher for unemployed workers - worth $2,000 to $3,000 per person - was the final of four new goodies Clinton is sponsoring in the name of helping middle-class working families cope with economic change.

The president's proposals raised the stakes in a tax-cut bidding war that has broken out on Capitol Hill among both Republican and Democratic lawmakers.

That political competition is raising anxiety in financial circles.

Financiers worry that vote-hungry politicians may send federal budget deficits soaring by slashing tax revenues needed to pay the government's bills. If that happens, the federal deficit would rise and higher inflation, rising interest rates and renewed recession could follow.

Clinton insists he would offset each dollar that his tax cuts would cost - about $60 billion over five years - by slashing federal spending.

He stopped short of proposing to eliminate any Cabinet-level departments, but he would cut spending sharply in the Departments of Energy, Transportation, and Housing and Urban Development.

Transportation would surrender federal power over the nation's air traffic control responsibilities to private enterprise, for example. Energy would sell off to private investors the Strategic Petroleum Reserve - created after the 1970s energy crises to assure the nation a secure oil supply in emergencies.

Each of the three departments also would take deep cuts in management personnel and be forced to consolidate - and cut back - scores of existing programs.

by CNB