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

DATE: FRIDAY, March 10, 1995                   TAG: 9503100072
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

HOUSE GOP UNVEILS $189 BILLION TAX CUT

Portraying the measure as a boon to ordinary Americans, House Ways and Means Committee Chairman Bill Archer, R-Texas, unveiled the package in a speech to the conservative Family Research Council in a House office crammed with couples and small children.

``For families and for working Americans, we will bring a new day of hope and opportunity,'' Archer said.

Despite the pep-rally atmosphere, the bill's introduction ignites what is likely to be one of Congress' fiercest, least predictable battles this year. The political difficulties will be enormous as lawmakers simultaneously try to slash taxes and erase the mammoth budget deficit. The measure's huge price tag alone tells the story: $189 billion over five years, with a 10-year cost likely to balloon to about $700 billion.

Democrats immediately pounced, accusing the GOP of crafting tax cuts that would benefit wealthy families while pursuing reductions in school lunches, heating assistance and other programs that help the poor.

With some noteworthy exceptions, the measure delivers most of the tax reductions the GOP pledged in its ``Contract With America'' during last autumn's election campaign. Its cornerstone is a $500-per-child tax credit for families earning $200,000 or less per year. It also would reduce the capital gains tax rate for companies and individuals, establish new individual retirement accounts and reduce levies paid by many companies.

Majority Republicans seem certain to push the plan through the Ways and Means panel next week and the full House soon afterward. But beyond that, its future is murky.

Not only does a possible veto fight loom with President Clinton, but the legislation's fate in the Senate is shaky as well, because many Republicans there prefer chopping away at the federal deficit to trimming taxes. Balancing the budget would take more than $1 trillion in spending slashes over the next seven years, a sum budget-cutters never have approached.

``I put a lot higher priority on deficit reduction than I do on tax cuts,'' said Senate Finance Committee Chairman Bob Packwood, R-Ore.

House Republicans have vowed to pay for the tax measure by revamping welfare, continuing some restrictions on Medicare and cutting other programs. But they have not specified where most of the savings would come.

From the White House to Capitol Hill, Democrats attacked.

``The president rejects the idea of targeting the most vulnerable in our society - our children, needy families, the homeless - in order to pay for these tax cuts, especially for tax cuts that are benefiting the wealthiest,'' said White House Chief of Staff Leon Panetta.

``The Republican extremist express is out of control,'' said Rep. Sander Levin, D-Mich.

Clinton and House Minority Leader Richard Gephardt, D-Mo., each have presented their own tax-cut plans, much smaller measures than the GOP package and focused more on lower-income people.

But enthusiasm for reducing levies has waned among lawmakers of both parties, particularly Democrats, amid indications that many voters prefer deficit reduction to tax cuts.