Republicans link $792 billion tax cut to falling debt

The Associated Press

WASHINGTON -- House Republicans overcame opposition from rebellious GOP moderates to their $792 billion tax cut with a compromise Wednesday to condition it on annual reductions in the federal debt.

Debate began late Wednesday after the deal was struck, but House leaders decided to save final action on the bill until this afternoon.

"I'm confident we have the votes," said Rep. Roy Blunt, R-Mo., a member of the Republican leadership.

The agreement, forged during hours of closed-door meetings, averted what could have been a political disaster for Republican leaders on a key piece of their agenda. It conditions the bill's 10 percent reduction in income tax rates over the next 10 years on annual progress in reducing the nation's debt, a major concern of the moderates.

"It gives the public confidence that the Congress is committed to debt reduction as well as tax relief," said moderate Rep. Charles Bass, R-N.H. "If the debt doesn't go down, the across-the-board tax percentage doesn't kick in."

Other elements of the sweeping tax legislation, including a reduction in the capital gains tax, elimination of the estate tax and relief from the marriage penalty, wouldn't be affected by the compromise.

But after a day of frantic efforts at persuasion by Speaker Dennis Hastert, R-Ill., and others, GOP leaders sounded optimistic they could prevail on one of their most important political issues.

"You always know how many horses are in the herd. The only question is how long it takes to get them into the barn," said Majority Leader Dick Armey of Texas.

Several moderate Republicans had balked at the original package, including Reps. John Edward Porter and Ray LaHood of Illinois, Michael Castle of Delaware, Fred Upton of Michigan, Marge Roukema of New Jersey and Sherwood Boehlert of New York.

Republicans hold a slim 222-211 edge in the House, with one independent who usually votes with Democrats and one vacancy. Needing 218 votes to pass the bill, the GOP cannot afford to lose more than four members of its party to pass the tax cut with only Republican support.

President Clinton and Democratic lawmakers almost uniformly opposed the size of the tax cut, contending it would take too much of the projected $2.9 trillion surplus over the next 10 years. They, instead, want to use the bulk of the surplus to ensure the future of Social Security and Medicare and add a prescription drug benefit to the Medicare program. They also want to set aside part of the annual surpluses for increases in defense and education spending.

At his news conference Wednesday, Clinton said the GOP tax bill would "squander" the surplus and represents "the kind of risk-taking that got us into deficits before." He issued his strongest veto threat yet, but said he would sign "the right kind of tax cut" of roughly $250 billion.

"If Congress passes the wrong kind, of course, I will not sign it," the president said. "I will not allow a risky plan to become law."

There was some question about the significance of the emerging compromise, because a tax bill making its way to the Senate floor doesn't contain a similar income tax cut.

The House modification could be largely a tactical retreat designed to advance the bill to final passage without reducing the size of the bill.

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