As promised, Clinton vetoes GOP tax cut; $792 billion plan rejected as 'too great a burden on America's economy'


WASHINGTON -- President Clinton carried out his long-promised veto of the Republicans' $792 billion tax cut proposal yesterday, rejecting it as "too big, too bloated" and "too great a burden on America's economy," even as he invited Congress to cooperate on a grand economic compromise.

"Every generation of Americans is called upon to meet the challenges of its time," he said in a Rose Garden ceremony, calling for negotiations on a more modest tax cut, as well as on Medicare and Social Security.

"But few have the unprecedented opportunity we have -- to meet the challenges not only of our time, but the great challenges of our future."

Clinton made a point to keep the fanfare and the gloating to a minimum, but his overture for compromise was roundly rebuffed by angry Republicans who held out little prospect for a deal this year. The Republican leadership accused the president of denying Americans an array of popular tax cuts while turning his back on the taxpayer.

"This was a broad tax relief package that would provide relief to married families, to women to go back into the workplace, for education in America, for low-income Americans," said Senate Majority Leader Trent Lott of Mississippi. "I regret that the president has stolen this tax cut from working American families."

Clinton is still eager to secure a major domestic accomplishment to burnish his post-impeachment reputation, and White House aides tried to remain upbeat.

John Podesta, the president's chief of staff, said Clinton would press hard for a sweeping Medicare reform plan that is being considered by the Senate Finance Committee. Then he would turn to Rep. Bill Archer of Texas, chairman of the tax-writing House Ways and Means Committee, to help forge a compromise to ensure the long-term solvency of Social Security.

Clinton appealed to Republicans, saying: "Many in Congress seem ready to throw in the towel. That would be a disservice to the American people."

To that, House Speaker Dennis Hastert, an Illinois Republican, replied: "Congress is not going to throw in the towel on tax relief for the American people. We will have another tax bill in this Congress."

Privately, White House and congressional aides are pessimistic that any major legislation will be enacted this year beyond the 13 annual spending bills and a modest tax package that would merely extend existing tax breaks, such as the research and development credit, that would otherwise expire.

Republicans in Congress are also discussing a modest bill that would cut some business taxes to offset the possible costs of a higher minimum wage that has been proposed by Democrats.

But even those bills might require extensive negotiations with the White House and congressional Democrats, and Republican leaders said neither is a critical priority. Some Republicans say that rather than accept a smaller tax cut, they would prefer to continue the debate into next year's election, casting themselves as tax cutters and the Democrats as big spenders.

The Clinton administration's talk of compromise might also be overblown. The president pointedly did not invite congressional leaders for a White House budget summit as he has done in the past.

A Senate Democratic leadership aide, speaking on condition of anonymity, said the White House has made little effort to work out a compromise on Medicare with the Republicans, though administration officials will be meeting with Democrats today on the president's Medicare reform plan.

White House officials have been talking to Archer, who has offered a proposal for shoring up the Social Security program that could be the basis for a reform effort this year. Podesta said the two spoke 10 days ago.

But Archer said his proposal doesn't have a chance "without aggressive leadership from the White House," which has not been forthcoming.

Lott said yesterday that there had been no back-channel approaches from the White House.

"None," he said. "There's no communication, no real effort to negotiate or talk to us about any of these issues. I don't know, maybe they're gone. I think they adjourned."

Lott offered little hope for compromise, saying the Republican majority would turn its attention to ensuring that Social Security funds are not spent and that Clinton's proposed tax increases, such as a 50-cents-a-pack cigarette levy, are not enacted.

"Preventing things from happening is something you can do these days, so I'm glad he's modified his goals to something that's achievable," scoffed one senior White House aide.

For Clinton, the Republicans' huge tax bill has been a political gift. The measure never received the public support that Republicans had hoped for. In vetoing it, Clinton has been able to portray himself as the fiscally prudent defender of American prosperity, even while imploring the Republicans to send him a more modest tax cut.

"At a time when America is moving in the right direction, this bill would turn us back to the failed policies of the past," he declared yesterday.

Publicly, the White House approach yesterday was restrained. Aides declined to invite Democratic congressional leaders to the veto ceremony, and the president toned down his rhetoric, declaring the legislative slate clean.

"As of today, there's a new dynamic," Clinton's spokesman, Joe Lockhart, declared before the veto.

But that mood quickly soured as Republican leaders denounced the veto, leaving both sides with little more than a campaign issue to take to the voters next year.

"The president reached a hand out in his statement today," Lockhart said yesterday afternoon. "And as far as I can tell, what it was met with was most of the Republican leadership saying, 'Well, we're just going to go home.' "

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