THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, March 23, 1995 TAG: 9503230014
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 61 lines
To cut taxes or not to cut taxes, that is the question that increasingly haunts Republicans in Congress.
As part of their Contract With America, House Republicans promised to deliver the middle-class tax cut that candidate Clinton ran on but promptly forgot. That seems to have jogged the president's memory. He immediately abandoned deficit reduction and offered his own me-too tax-cut plan.
Not so fast, said Republicans, we will cut taxes and balance the budget. Unfortunately that is beginning to look easier said than done. Many Republicans are now having second thoughts. Sen. Bob Packwood is opposed to tax relief until the deficit is addressed. As the head of the Finance Committee, he's in a position to do something about it.
Packwood isn't alone in worrying that the numbers don't add up. Voters are concerned about a deficit that saps the economy and threatens the dollar. In an NBC/Wall Street Journal poll, 53 percent said money from cuts in spending should go to reduce the deficit. Only 26 percent said it should go for tax relief.
Many Republicans worry that adding $70 billion a year in tax cuts to the deficit while trying to eliminate the deficit is contradictory. And terrible for their image.
Giving tax credits to households earning $200,000 a year and billions in capital-gains cuts to investors while cracking down on welfare mothers could turn into the worst public-relations disaster since ``Let them eat cake.''
A new Washington Post/ABC poll found that 59 percent of the people worry that ``Republicans will go too far in helping the rich and cutting needed government services that benefit average Americans as well as the poor.''
With that in mind, 102 Republican House members have proposed making the $500 per-child tax credit available only to families earning $95,000 or less. Such a change would reduce the impression they are pandering to the prosperous and substantially decrease the cost of tax cuts.
Speaker Gingrich has expressed a willingness to consider modifications if needed to win passage. He nevertheless believes that ``every person in the U.S. is overtaxed, whether that person is wealthy or struggling to get by. And so is every business in the U.S.''
Perhaps, but the government is also overdrawn to the tune of $200 billion a year. Why? Because all those overtaxed Americans still aren't paying enough to cover the cost of government services they consume.
And no one receiving a government service is going to be happy to give it up. Not those who receive food stamps, but not those who receive mortgage deductions, Medicare, tax-free income on bonds or farm subsidies either. No assault on the deficit can succeed unless spending is attacked on a broad front. Everyone must believe that pain is apportioned equitably.
Some Republicans, including Gingrich, suggest tax cuts are important psychologically. They can serve as the spoonful of sugar that will help the medicine of spending cuts go down in a most delightful way. But if every dollar in sugar means another dollar's worth of bitter medicine, Packwood is right. Cut the deficit first. by CNB