5-Year, $80-Billion Tax-Cut Bill Unveiled; Couples, Farmers Among Beneficiaries

A five-year, $80-billion tax-cut bill benefiting married people, farmers, families and small businesses was unveiled Saturday by the House’s top tax writer, setting up a possible election-year collision with President Clinton.

“If we don’t return a portion of the surplus to you, the taxpayers who sent it here, the big government types will find a way to spend it,” said Ways and Means Committee Chairman Bill Archer (R-Texas).

“Our plan protects Social Security and reduces the worst penalties in the tax code, but it’s also a safety check against big government and wasteful spending,” he said during the weekly Republican radio address.

Archer said the measure would benefit millions of two-earner couples who now pay a marriage penalty tax, allow the self-employed to fully deduct health insurance premiums, bolster several child and education credits, and extend expiring business tax credits.

The bill, which would also help farmers suffering from low prices and speed up credits for estate tax relief, would use about 10% of the projected $1.6-trillion budget surplus over the next decade, setting aside 90% to preserve Social Security. Archer has dubbed it the “90-10” plan.

“We can save Social Security and cut taxes,” Archer said.

Clinton and his Democratic allies in Congress, however, adamantly oppose any use of the surplus for tax cuts, arguing it should all be reserved to shore up Social Security, a point the president drove home in his own radio address. He said he plans to “continue our economic growth by staying with our economic strategy that has made our country the envy of the world, by maintaining our fiscal discipline, setting aside the surplus--every penny of it--until we save Social Security first.”

The ranking Democrat on the Ways and Means Committee, Rep. Charles Rangel of New York, said last week the president would veto a tax bill that dips into the surplus.

“Let’s work out Social Security while we’ve got the chance,” Rep. Charles Stenholm (D-Texas) said last week.

Nonetheless, the Ways and Means Committee intends to begin considering the measure Thursday as Republicans race against a planned October adjournment and try to focus on issues amid the distraction of independent counsel Kenneth W. Starr’s report on President Clinton’s affair with Monica S. Lewinsky.

Details of Archer’s plan were welcomed by Senate Finance Committee Chairman William V. Roth Jr. (R-Del.), who must persuade reluctant GOP moderates and at least some Democrats to support the measure in order to reach the 60-vote Senate procedural threshold needed to pass the bill. There are 55 Republican senators.

“With this as a starting point, I am hopeful that we can reach bipartisan agreement on a middle-class tax cut in the Senate before the end of the session,” Roth said.

Archer said that if the surplus projections remain high, Congress next year could pursue larger tax cuts, including a possible across-the-board income tax rate reduction. Some Republicans are talking about a 10% cut in income taxes, which would cost $600 billion over five years.