Clinton Assails Cost Increases in GOP Budget Plan

As Republicans in Congress prepare for a crucial stage in their effort to cut taxes on businesses and families, President Clinton on Saturday accused GOP lawmakers of lacing their proposed federal budget with $148 billion in “back-door” tax increases for the middle class.

“Buried deep within their plan is a vast collection of tax increases and other costs on working people,” Clinton said in his weekly radio address. He cited new fees on student loans, increased out-of-pocket expenses for Medicare and new curbs on tax credits for the working poor.

Clinton’s argument represents a new tack in his criticism of GOP budget plans. Until now, the Administration has focused on attacking Republicans for pushing tax breaks for the wealthy while cutting spending for the less affluent. Now he is pointing to increased costs faced by middle-class taxpayers despite GOP lawmakers’ claims that they are not raising taxes.

In a prerecorded response to the President’s address, Sen. Trent Lott (R-Miss.) accused Clinton of having “a deep-seated hostility toward significant tax relief for the American people.”

“He’d rather pit one group against the other, playing to the politics of envy,” said Lott, the Senate majority whip.

Lott also complained that Clinton was sitting on the sidelines and mounting a “scare campaign” while Republicans try to revamp Medicare and make other changes to balance the federal budget.

“President Clinton is an excellent campaigner, but this isn’t a campaign for personal office,” he said. “It’s a crusade to restore and renew our system of government.”

The President’s fresh line of attack comes just as Senate Republicans are preparing to take another major step in crafting a centerpiece of the GOP legislative agenda: a plan to cut taxes by $245 billion over seven years, including a reduction in capital gains taxes and credits for families with children.

The Senate Finance Committee is expected to meet this week to draft its version of the tax-cut legislation. The House last March passed a $354-billion tax cut, which will have to be pared back to fit the $245-billion target set by the seven-year budget-balancing plan Congress adopted in May.

Despite comments by Senate Majority Leader Bob Dole (R-Kan.) last weekend that GOP enthusiasm for a tax cut that large may be waning, he and other Republicans have insisted since then that they remain committed to the $245-billion cut.

Senate Finance Committee Chairman William V. Roth Jr. (R-Del.) will unveil his tax-cut recommendations this week. They are expected to include at least the capital gains cut, a $500-per-child credit for families, liberalized tax treatment of individual retirement accounts and estate-tax relief for farmers and small businesses.

Most of the GOP proposals criticized by Clinton in his Saturday address would not in fact affect families’ taxes. But Clinton said they amounted to a tax hike because they drained taxpayers’ resources.

“In Washington they may not call it a tax increase, but when government makes a working family pay more, it sure feels like a tax to them,” he said in an address delivered from Martha’s Vineyard, Mass., where the First Family went for the weekend to attend the wedding of Hollywood celebrities Mary Steenburgen--a friend of the Clintons from Arkansas--and Ted Danson.

Clinton cited Republican proposals that would require state agencies to charge single parents a fee for government help in collecting child-support payments. “That’s a tax hike on responsible mothers and their children, which will lower their already modest incomes,” Clinton said.

He also took the GOP to task for proposals to increase the fees and interest payments charged to students and their families for college loans.

House and Senate committees have proposed eliminating or scaling back the interest subsidy the government now provides for six months after a borrower leaves school. Another GOP proposal would impose a new fee on colleges, which even its proponents predict will be passed on to students through higher tuition charges. “That’s a tax hike on middle-class families and students that we can’t afford for our future,” Clinton said.

As he has on other occasions, Clinton also criticized GOP proposals that would save money in Medicare by increasing the costs borne by the elderly; scale back the earned income tax credit, which provides a tax break for working families to help pull them out of poverty, and restrict Medicaid coverage of nursing home care in a way that critics say would force the elderly to impoverish themselves before their spouses could qualify for assistance.

“All told there are about $148 billion of these hidden taxes and fees,” Clinton said. “They represent a cynical assault on America’s values.”

White House Chief of Staff Leon E. Panetta, in a briefing to detail the proposals included in that $148-billion total, also cited GOP proposals that would increase federal employees’ contributions to their pension plan, increase rent charged in federally subsidized housing and increase the fees paid by veterans who use GI Bill education benefits.

“Despite continuing comments that we have received from Republicans that they would not raise taxes on the American people . . . in fact, they have done just the opposite,” Panetta said.

However, Panetta would not rule out the possibility that the Administration might go along with some of these proposals in the process of working out a budget compromise with the Republican-controlled Congress.