Gingrich Sets Balanced Budget as Top Goal

In the strongest signal yet that Republicans may back away from the big tax cuts that once were the “crown jewel” of their agenda, House Speaker Newt Gingrich said Monday that balancing the budget was a “moral imperative” that should take precedence over cutting taxes.

“Let’s take tax cuts away for a moment,” the Georgia Republican said in comments to reporters. “Let’s just talk about balancing the budget. Now what’s the liberal excuse for not balancing the budget?”

Gingrich’s remarks echoed a recent and controversial suggestion by House Majority Whip Tom DeLay (R-Texas) that Congress this year should first pass pending cuts needed to balance the budget and return to tax cuts later in the year.

Expanding on Gingrich’s comments later, Gingrich spokeswoman Christina Martin said, “The speaker’s No. 1 priority is balancing the budget. Tax cuts will be addressed in this session, but they will take a back seat to balancing the budget.”

That scenario has met with bitter opposition from a core of conservative Republicans who remain committed to the long-standing GOP strategy of insisting that tax cuts be an integral part of any balanced budget plan. Indeed, 27 House Republicans today are sending a letter to Gingrich and other GOP leaders demanding that they oppose any balanced budget that does not include tax cuts.

“Tax relief for families is nonnegotiable,” said the letter, which was drafted by Rep. David M. McIntosh (R-Ind.) and circulated for signatures even before Gingrich made his comments.

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An aide to one of the Republicans who signed the letter denounced Gingrich’s shift on the issue as part of a “new rehabilitation strategy” to help the speaker repair the political damage he suffered from the ethics investigation of his political activities, which resulted in a formal House reprimand.

“He views this as, ‘We’re going to get a budget with less partisan rancor, irrespective of principal,’ ” the aide said.

In the last Congress, Republicans proposed $245 billion in tax cuts--including a $500 per child tax credit for families and cuts in taxes on capital gains--as part of their balanced-budget plan. But President Clinton vetoed the bill and Democrats made great political hay out of the claim that the GOP plan would cut taxes for the wealthy while reducing benefits for the elderly and the poor.

Since the 1996 election, in which their margin of control in the House was reduced, Republican ranks have been roiling with controversy over budget policy and tax cuts as GOP congressional leaders have groped for a strategy for responding to Clinton’s current budget plan. That plan, which the administration says would balance the budget by 2002, includes tax cuts for families and education expenses. But the cuts are small compared to what the GOP has been seeking.

“It is unthinkable that President Clinton is proposing tax relief in his budget, even if it is meager and shallow, and Republicans may not,” said McIntosh and his fellow conservatives in the letter to Gingrich.

The debate over fiscal policy within the GOP has reopened long-standing divisions among Republicans that pit conservatives who give top priority to tax cuts against moderates and so-called “deficit hawks,” who want to give precedence to balancing the budget.

Gingrich’s comments signal that he has changed his allegiance in that debate. “We’ve said all along we think it’s very, very important to balance the budget and get as large a tax cut as possible while balancing the budget,” he told reporters. “But we think that the moral imperative is to balance the budget.

Martin, Gingrich’s spokeswoman, said the speaker considered his position a “tactical” shift in light of the drubbing Republicans took last year.

Martin said: “Perhaps the best strategy would be one where we take smaller steps and put the more divisive issues like tax cuts toward the end of the process, so we are not in the position where right out of the starting block liberals say Republicans are simply out for tax cuts for the rich.”

Pressure on Republicans to drop their insistence on big tax cuts mounted last week when Clinton backed off a proposal to set up a commission to recommend changes in the consumer price index, the gauge used for setting annual increases in Social Security and other federal benefits. That change would generate hundreds of billions in savings--without which, many budget analysts say, Congress would be hard pressed to finance big tax cuts.

After Clinton backed away from the idea of creating a commission to handle the politically charged issue of adjusting the CPI, Senate Republicans indicated that they would likely draft a budget that would allow for small tax cuts--but only if they were matched by offsetting spending cuts or tax increases.

Senate Republicans generally have been less enthusiastic about tax cuts than their House counterparts.