Senate resistant to House tax cut


WASHINGTON -- The head of the Senate Finance Committee, which oversees tax legislation, said again yesterday that his panel would have little appetite for reducing taxes until Congress had brought the federal deficit under control.

The remarks by Republican Sen. Bob Packwood of Oregon underscore the widespread presumption that any tax cut even approaching the five-year, $189 billion package now in the House is a dead letter in the Senate.

"This feeling on the Finance Committee -- Republican and Democrat -- is that the best thing we can do for the taxpayers of this country is just try to move toward deficit reduction," Mr. Packwood said on the ABC News program "This Week." "And if that gets their mortgage interest rates down a point or two, that is more impor- tant than anything else we can do."

Mr. Packwood and many economists say that federal borrowing to finance daily government business drains so much money from the economy that it has raised everyone else's cost of borrowing the money that is left. But he and other legislators also say that they believe that average citizens prefer erasing the deficit to widening it with a tax cut.

Some senators also criticize the smaller $63 billion, five-year tax cut that President Clinton proposed in February. One Democrat on the Finance Committee, Sen. Bill Bradley of New Jersey, attacked both plans, calling the White House proposal unfortunate and the House plan "a political document."

"I find it very difficult to believe that the Senate will support it, either Republicans or Democrats," Mr. Bradley said of the House plan on NBC's "Meet the Press."

Mr. Packwood and others argue that a nation with a total debt approaching $5 trillion and growing by $200 billion a year cannot afford a tax cut. To balance the budget in seven years as promised, Republicans in Congress must already reduce projected spending by at least $1.1 trillion, and any tax cut would increase that figure.

The House Republican proposal would give a $500-per-child tax credit to families earning under $200,000 a year and reduce the capital gains and alternative minimum taxes. Mr. Clinton's proposal offers a similar break to families that are generally less well-off and gives cuts to those who pay college tuition or invest for retirement.

Mr. Clinton proposes some spending cuts to offset those breaks. But his budget makes no overall attempt to reach a balance and instead will average $200 billion-a-year deficits through 2000, effectively diminishing the deficit as a percentage of the growing national economy.

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