Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, April 27, 1990                   TAG: 9004270109
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

SOCIAL SECURITY TAX CUT PROPOSAL DEFEATED

By 17-6, the panel rejected the offering by Sen. Ernest Hollings, D-S.C. It was based on an almost identical measure advanced in December by Sen. Daniel Patrick Moynihan, D-N.Y., as a way of forcing action on the federal deficit.

"This nonsense has got to stop," Hollings said before the vote. "We are wrecking ourselves. We are wrecking our country."

Budget Committee Chairman James Sasser, D-Tenn., said he supported the idea of reducing the tax rate but feared the consequences it would have on the budget deficit.

"We've got to have a way to replace that revenue loss," he said.

Nine Democrats and eight Republicans voted against the tax cut plan, while four Democrats and two Republicans supported it.

Earlier Thursday, the committee rejected four 1991 deficit-reduction plans after the panel's majority Democrats failed to unite behind a single package.

The votes on the deficit plans left the committee floundering in its search for a way to slash at least $37 billion from next year's budget shortfall, which the Gramm-Rudman law requires. The panel's work is expected to continue into next week.

Across the Capitol, the House continued debating a $1.24 trillion budget for next year that provides less for defense and more for domestic programs than President Bush prefers. Final House approval of the Democratic-written plan is expected Tuesday.

The House rejected two Republican-sponsored alternatives. A proposal by Rep. John Kasich, R-Ohio., to freeze military and domestic spending at current levels lost 305-106. A plan by Rep. William Dannemeyer of California featuring the use of gold-backed bonds to reduce the government's debt costs was defeated 354-48.

The Social Security vote was only symbolic. Congress' budget committees set targets for revenue collection, but other committees decide which taxes will be raised and by how much.

But the issue has been sensitive. The White House has accused supporters of the tax cut of ultimately wanting to reduce Social Security benefits.

Some Democrats have supported the proposal because of the attractiveness of offering a tax cut, but others have opposed the plan, arguing that it would simply make the deficit even larger.

The provision would have lowered the 6.2 percent payroll tax to 5.1 percent next Jan. 1. The tax is paid by both wage earners and employers. A family with a median income of $32,000 would save $400 a year. Over five years the reduction would have lowered payroll taxes by $267 billion.

Moynihan and Hollings have complained that the Social Security trust fund is building up huge surpluses each year that make the government's overall deficit appear smaller. Cutting the Social Security tax, and thus reducing that surplus, would force lawmakers to address the shortfall, the senators say.

In defeating the four deficit-reduction proposals, Republicans on the Senate panel did what they have been promising to do for weeks. They have said any budget written solely by Congress will be meaningless because Bush will veto elements he opposes, such as deep defense cuts and tax increases.