Friday, February 28, 1997

Archer claims Clinton tax cuts evaporate after year 2000

WASHINGTON (AP) - Details of the Clinton administration's tax-cut package released Thursday show that much of its middle class tax relief evaporates after 2000 and would require a fresh act of Congress to be revived.

"We know now that the administration proposes only temporary tax relief, resulting in a budget that calls for a tax hike on the American people," House Ways and Means Chairman Bill Archer told reporters.

With this new information, the congressional Joint Tax Committee now estimates the Clinton budget will amount to a $13.3 billion tax hike by 2002 if the tax cuts aren't renewed by Congress. Clinton's budget, released this month, boasted a net tax cut of $22 billion through 2002 while achieving a balanced budget.

The White House described the tax language as technical, not a departure from its previously stated budget goals.

"The important thing is the president has a proposal for targeted tax relief that fits within the structure of a balanced budget proposal," White House spokesman Mike McCurry said. "The president's confident that the budget that he's presented will balance by the year 2002 and also achieve the tax relief that he has proposed."

Lawrence J. Haas, spokesman for the Office of Management and Budget, didn't dispute Archer's statement that technical "statutory language" detailing the Clinton tax plan show five major cuts will expire Dec. 31, 2000.

They are the $500 tax credit for families with small children, the so-called HOPE scholarship tuition tax credit, the tax deduction for education and job training, the expanded Individual Retirement Accounts and the deduction for environmental cleanup of so-called "brownfields" in industrial urban areas.

"What Chairman Archer is saying is correct. But it is only part of the story," Haas said.

The Clinton administration wrote the tax-cut package in such a way to convince the Congressional Budget Office that the administration budget plan will achieve balance by 2002 and beyond, Haas said. The technical budget language asks Congress to extend the tax-cut package in October 2000 if deficit targets are met.

The Clinton administration's OMB has more optimistic predictions for the economy's direction in the next five years than the GOP-controlled Congressional Budget Office. But instead of a fight over the assumptions, such as a confrontation that partially led to the 1995 government shutdown, the administration agreed to use the congressional office.

"Because we understand that CBO will use its own assumptions, we know we had to send statutory language to satisfy them," Haas said.

But Haas stressed that during negotiations later this year, the administration will be arguing strongly that its economic forecasting record is better than the CBO's and should be the starting point for discussions.

"We are fulfilling our commitment to balance under CBO but we don't think that is the optimal starting point," Haas said. "We think our assumptions are the best around and will prove to be more accurate."