Clinton Presses Plan: No Taxes Without Cuts

President Clinton sought to reassure voters Friday that he would not agree to proceed with tax increases unless Congress simultaneously cuts government spending. But he complicated his message by suggesting he might consider a new national sales tax later in his term.

“I have no interest in raising a penny in taxes if we’re not going to do the cuts,” Clinton said, in a line that drew applause from an audience at a morning town meeting in a high school gymnasium. “I don’t want to get a deal where we’re going to raise the money and not do the cuts. Not a penny.”

But that message was at least partly overshadowed by a comment Clinton made earlier to the gathering. Asked by an audience member why he had not proposed a national sales tax, Clinton said: “I think we may well have to look at that in the years ahead.”

White House aides privately have discussed a national sales tax, or value added tax--a form of levy common in most of Europe, Japan and Canada--as a way of financing the costs of Clinton’s proposed national health program. But they were taken aback by Clinton’s public discussion of the idea.

The White House had honed the theme of the day around the no cuts, no taxes message to address one of the largest political vulnerabilities of his plan--the belief on the part of many voters that Congress will raise taxes but never get around to cutting spending.

Almost immediately after Clinton finished his town meeting, White House Press Secretary Dee Dee Myers sought out reporters to say Clinton’s remark about the national sales tax “was . . . an honest answer to a question. He certainly didn’t intend to send any signal” of a plan to raise yet more taxes.

Once the event ended, aides privately warned the President that his words were certain to create political trouble. A few minutes later, Clinton told reporters as he was getting into his limousine that “I wasn’t floating that as a trial balloon.

“It’s not something that is now under consideration,” he insisted.

During his campaign, Clinton generally had spoken negatively about value added taxes, suggesting they would be inequitable and hurt state governments, which rely heavily on sales taxes for revenue. But this time, his response was notably warmer. Clinton said he had not proposed such a tax as part of his current economic plan because it “is a radical change in the tax system of the United States” and “there’s only so much change a country can accommodate at one time.”

But, he said, “all our competitors do it.” Moreover, he added, sales taxes “can be designed” so that “you don’t make it a regressive tax” that disproportionately hurts the poor.

“You have to be really careful to be fair to the people,” Clinton said, adding that to achieve that with a value added tax one would have to exempt food, most clothing and perhaps have a “certain amount of allowance” to shelter the goods and services purchased by lower-income families.

The remarks about value added taxes came during a trip that has otherwise gone about as well as White House planners could have expected.

Clinton repeatedly emphasized his willingness to consider additional budget cuts if members of Congress will propose them--a challenge to Republicans and conservative Democrats that White House strategists hope will call the bluff of congressmen who advocate deficit cuts but resist politically painful steps to achieve them.

“I’ve just been there four weeks,” he said at his second event of the day--a speech at a middle school in Hyde Park, N.Y., where Franklin D. Roosevelt used to live. “If anybody has good ideas, I’d love to have them.”

Clinton also visited Roosevelt’s Hyde Park home and surrounding grounds, where he and the former President’s son, James, placed roses on F.D.R.’s grave.

While Clinton campaigned outside Washington, his budget director, Leon E. Panetta, was promoting the President’s plan before the Senate Budget Committee on Capitol Hill.

While most Democratic members of the panel supported the general thrust of the program, Sen. J. James Exon (D-Neb.) predicted that it could not be passed in the Senate without major revisions to make it acceptable to Republicans as well.

“Unless we can reach some kind of compromise, we’re going to see gridlock again on this,” Exon told Panetta.

GOP lawmakers at the hearing, however, declared total opposition to the plan and indicated they would do their best to defeat it rather than amend Clinton’s program in hopes of salvaging it.

Sen. Phil Gramm (R-Tex.), for example, advocated eliminating the stimulus package. Sen. Pete V. Domenici (R-N.M.), who was asked by Panetta if he could accept the tax increases in Clinton’s program, shot back: “Of course not!”

Despite Exon’s analysis, Panetta said he felt confident that some version of the program will pass both the Democratic-controlled House and Senate before Congress takes its August recess.

Panetta also said that Clinton’s health care reforms will probably require higher taxes on alcoholic beverages and tobacco products--so called “sin taxes.”

“It’s a little bit early to say, but I suspect that some of the sin taxes probably are going to be used for that,” Panetta said in response to questioning. Treasury Secretary Lloyd Bentsen said Thursday that the Clinton Administration was considering raising sin taxes to pay for health reforms.

Panetta’s reception contrasted sharply with the enthusiastic greetings Clinton has received on the road. When the President arrived here Thursday night, he was nearly mobbed by about 1,000 people who waited to shake hands with him despite near-zero temperatures.

Although Clinton lost this part of Ohio in the November election, the outpouring of people and the minute-by-minute attention lavished by local television stations testified to the political good feelings a presidential visit can generate.

“I shook hands with him,” 39-year-old Frank Clemmons exclaimed after greeting Clinton early Friday morning outside the local McDonald’s, where Clinton fetched a cup of decaffeinated coffee after a morning jog. “It felt great,” Clemmons said.

Clinton, too, seemed revived by the chance to get out of Washington and greet the public once again. Yet simply getting “out in the country,” as Clinton put it, does not in itself shield him from opposition. One high school student here sternly challenged Clinton on his position in favor of abortion rights, drawing a long and philosophical response from the President, who talked of the disputes among theologians on “when does the soul enter the body.”

“It is a deep moral question over which serious Christians disagree,” he said. “In a great democratic society, you have to be very careful what you apply the criminal law to,” he added.

Nor does a presidential trip guarantee a unanimously friendly welcome. During his 40-minute drive from an Air Force base near Newburgh, N.Y., to Hyde Park, thousands of people lining the motorcade route waved and held signs.

Many signs were positive, but others were in bitter opposition to the new President. “Fire the liar,” proclaimed one sign. “Impeach Clinton,” declared others.

As he entered the town of Hyde Park, one house displayed two large bed sheets with spray painted messages. “Welcome President Rodham Clinton,” the signs declared, in a slap at the role of the President’s wife, Hillary Rodham Clinton. “We love your change--not.”

Times staff writer William J. Eaton in Washington contributed to this story.

TAX BREAK GIFT: Charitable organizations would benefit from an expanded tax break proposed by Clinton. A19

How Clinton Calculates His Bottom Line

Accumulated deficit for the years 1994 through 1997 with no change in current policy: $1.241 trillion

Subtract Clinton’s spending cuts of $247 billion: $994 billion

Subtract Clinton’s tax increases of $246 billion: $748 billion

Add stimulus and investment package of $169 billion

A total cut of $325 billion

Equals an accumulated deficit for the years 1994 through 1997 under the plan with a total cut of $325 billion: $916 billion*

* numbers do not add up due to rounding