Clinton Calls for Middle-Class Tax Cuts

Arkansas Gov. Bill Clinton set out a detailed program Wednesday for middle-class tax cuts and a restructuring of the American economy that is expected to form the core of his campaign for the Democratic presidential nomination.

Clinton said the country must abandon both “the Republican failed experiment in supply-side economics” and “the old Democratic theory that says we can just tax and spend.”

Speaking at Georgetown University, his alma mater, Clinton called for a “crusade for the forgotten middle class, a crusade to give economic power back to ordinary people and to enable all of us together to recapture the American dream.”

To back up that call, Clinton offered proposals ranging from increased spending on education and worker training to targeted tax credits designed to reward investors who back new, start-up businesses.

Clinton’s plan includes a tax cut averaging $350 for middle-income families, to be paid for by a tax increase for families with income over $200,000.

He also proposed a tax penalty on companies that pay top executives vastly more than their workers. He noted that many American executives are paid far more relative to their workers’ earnings than are executives in Japan and Germany, America’s most successful economic rivals.

President Bush, asked about the tax-penalty idea during a radio interview later in the day, said, “I don’t know what government should do about setting salaries.” He added, “I don’t believe that’s the function of government.”

The middle-class tax cut, Clinton said, would reduce tax bills roughly 10% for “average working families” and would be part of a program to boost the economy out of its current recession.

In addition to the tax cut, Clinton also called for rapid passage of a highway construction bill currently bogged down in Congress and accelerated spending of the money provided by the bill in order to increase construction jobs.

He also suggested that the Federal Housing Authority raise its ceiling on guaranteed home loans to reduce the size of the down payments people need to buy houses.

But even if all those steps were taken and the recession ended, Clinton warned, the country still faces a long-term slide in living standards, which he blamed on both Republican presidents and Democratic congresses.

“Republicans have forgotten about the very people they’ve always promised to help,” Clinton said, “but Democrats forgot about them, too.”

“For too many Americans for too long, it seemed that both the Congress and the White House have been more interested in looking out for themselves and for their friends, but not for the country and not for the people who make it great.”

Reversing that decline, he said, would require a long-term economic program focused on improving American education and worker training, as well as tax credits designed to reward innovation and research.

Clinton’s education proposal would guarantee college loans for all students who agree to pay back their loan either with payroll deductions or with two or three years of community service.

He also spelled out welfare reform proposals. After collecting benefits for two years of benefits, he said, a recipient would be required either to find a private sector job--presumably making further public aid unnecessary--or begin to do community service work in exchange for continued welfare.