Congress Urged to Go Slow on Tax Cuts, Spending

Warning that a new round of tax cuts or spending programs could derail last year’s historic budget agreement, White House officials and key Republicans pressed Congress on Sunday to wait until a surplus actually materializes before deciding how to spend it.

Treasury Secretary Robert E. Rubin and White House Budget Director Franklin D. Raines urged House and Senate members to go slow, noting that the administration’s budget projections do not anticipate a surplus within the next three or four years.

Their comments were echoed by two leading Republicans, House Budget Committee Chairman John R. Kasich (R-Ohio) and Ways and Means Committee Chairman Bill Archer (R-Texas), who agreed that Congress should take pains to ensure that last year’s balanced budget accord is given ample time to work.

The warnings come amid increasing election-year clamor by rank-and-file lawmakers to “spend” any future surplus, either on tax cuts or new domestic programs. All of the House of Representatives and one-third of the Senate is up for election in November.

Underlying the cautionary remarks by White House and GOP budgeteers is the political reality that neither party wants to find itself backing policies that endanger the hard-fought goal of bringing the federal budget into balance for the first time in a generation.

“It’s very hard to stick with the discipline of deficit reduction and fiscal responsibility, but it is that discipline that has produced the economic conditions of the last five years,” Rubin said on CBS-TV’s “Face the Nation.”

Rubin said much of the current discussions “consist of proposals for tax cuts, and I think that is very dangerous because that threatens to throw us back into the kinds of conditions we had in the 1980s, the conditions of fiscal irresponsibility.”

Archer, while an avid fan of tax reductions, concurred with Rubin that lawmakers should be careful about planning to spend a surplus that has yet to appear.

“We don’t have a surplus yet,” said Archer, interviewed on ABC-TV’s “This Week.” “I keep saying, ‘What surplus?’ . . . We’ve got to be very careful.”

“This is going to be a battle royal,” he added.

The prospect of a budget surplus would have seemed inconceivable only a few years ago. In the 1980s, large tax cuts combined with big defense budgets contributed to a series of rising deficits. By the early 1990s, the annual shortfall had reached nearly $300 billion.

But the objective of a balanced budget has become increasingly plausible as the U.S. economy has continued to expand and as Washington has gradually tightened the purse strings on federal spending. Last month, administration budget officials said it is likely that this year’s expected $58-billion deficit would be revised downward, perhaps to as little as $23 billion.

Many Republicans are disposed to enacting additional tax cuts this year if at all possible. Both House Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Trent Lott (R-Miss.) have said they would like to see Congress cut taxes during the session that begins later this month.

Even Kasich, while urging restraint, indicated interest in ameliorating the income tax “marriage penalty” in remarks on NBC-TV’s “Meet the Press.” The penalty occurs when married people pay more in taxes as a couple than they would if they remained single.

But Kasich, who helped lead the push for a balanced budget, made clear he does not want to cut taxes if doing so would delay or endanger the goal of erasing the deficit.

“I’m in favor of cutting taxes as long as we cut government. What I don’t want to see us do is to borrow money from our children tomorrow in order to finance a tax cut today,” said Kasich.

President Clinton has said he is open to doing something about the marriage penalty. He also has indicated interest in giving tax breaks to families to offset the cost of child care and to companies to encourage the use of environmentally clean technologies.

Raines, who also was on “Meet the Press,” acknowledged that the White House has publicly discussed possible new spending programs and tax breaks to be included in the president’s 1999 budget, which will be submitted to Congress in February. But he stressed that all of the proposals under consideration would be offset by more spending cuts or by the elimination of tax preferences.

“Any proposals that we make for new investments will be paid for, and therefore we will not exceed the overall spending levels as contained in the budget agreement,” Raines said.

One of those proposals already has drawn fire from Republicans: Clinton’s plan to make it possible for people who are 62 to 64 years old to buy into Medicare.

“To add more people to this Medicare system would be a mistake, and I don’t believe this will happen,” Kasich said.