House Panel Takes Up Tax Package : Congress: Democrats resist GOP attempts to knock out key parts of Clinton plan. $30 billion in investment credits are not likely to pass.


Democrats on the House Ways and Means Committee confronted a pleasant dilemma Thursday--how to divvy up $30 billion in tax breaks among competing demands from business, energy users and troubled urban areas.

The issue arose as the panel began the task of considering President Clinton's request for $337 billion in new taxes and $95 billion worth of tax breaks over the next five years--key elements of his deficit-reduction package.

In a series of party-line votes Thursday, Democrats defeated Republican attempts to knock out major parts of the White House package, signaling that most of it would be approved by the committee intact, despite controversy generated by the king-size tax increases.

Since it appears certain, however, that the committee will not go along with Clinton's request to allocate $30 billion for investment tax credits for corporations and small businesses, tax breaks in that amount appear to be available for other purposes--and there is no shortage of competing claimants.

Business interests would like to earmark $15 billion to limit Clinton's proposed corporate tax increase--raising the rate to 35% instead of the 36% sought by the President.

Agricultural interests and industrial critics of the proposed energy tax would like to reduce its impact on them. Advocates for big cities--including many members of the Congressional Black Caucus--want to earmark part of the $30 billion to make more tax incentives available for investment in inner cities.

Faced with the clamor, some senior Democrats on the tax-writing committee have suggested that Clinton take the lead in allocating the $30 billion. But so far he has remained aloof from the infighting.

"I don't foresee any major changes in the President's proposal before the (Ways and Means) committee starts acting on it," said Samuel Sessions, the Treasury official who is working with the panel on the bill.

Republicans, outnumbered 24 to 14 on the committee, expect to be shut out of major decisions about the bill and already have indicated that they will oppose whatever bill the Democrats produce. In an unusual action, Republicans on the panel voted against the traditional closed session to begin marking up the bill. GOP freshmen complained that it was an "outrage" to bar the public and press from the session.

In its first roll-call showdowns Thursday, the committee divided strictly along party lines to reject GOP efforts to knock out the Clinton energy tax, a proposed change in the tax on higher-income recipients of Social Security and a proposed expansion of tax reductions and government payments for the "working poor" that the President strongly favors.

In each case, the vote was 24 to 14, and one Republican staff aide said admiringly of the majority Democrats: "They really hung together on some tough votes."

"This committee intends to support the President's (tax) proposal and it will prevail," Rep. Pete Stark (D-Oakland) predicted. House leaders, however, remained concerned that the tax bill may be torn apart in the Senate, the killing field for Clinton's $16.3-billion stimulus package.

Committee Chairman Dan Rostenkowski (D-Ill.) is expected to have the strongest voice in deciding how to deal with the unexpected "surplus" of tax breaks. But he faces a delicate balancing act in trying to craft legislation that not only can get through his committee but also can attract the 218-vote majority required for House approval.

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