THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Saturday, December 17, 1994 TAG: 9412170021
SECTION: FRONT PAGE: A12 EDITION: FINAL
TYPE: Editorial
LENGTH: Medium: 58 lines
In a speech aimed directly at the economic anxieties of the middle class, President Clinton reminded voters how he won office in the first place. It was an effective address proposing actions sure to be popular.
Unfortunately for the president, it's a speech he should have given a year ago. After November's elections, Clinton can't help but appear to be playing catchup with aggressive Republican proposals to cut taxes and eliminate programs. The opportunity for the country is real reform, the danger is an irresponsible bidding war that will increase deficits.
The president admitted economic recovery has bypassed working Americans whose standard of living has stagnated or declined. He proposed a Middle Class Bill of Rights, essentially the right to a variety of means-tested tax breaks.
Families earning up to $120,000 a year could deduct a wide range of education expenses. Given skyrocketing college costs, this will probably be the plan's most popular feature. Families earning up to $75,000 a year would qualify for an increased $500 income-tax deduction for each child under 13. IRA contributions would be fully deductible for families earning up to $100,000 a year. And the savings could be used not just at retirement but for medical emergencies, college costs and buying a first home. Job-training money would become directly available to unemployed individuals.
By targeting tax breaks at the 95 percent of families earning less than $120,000 a year, Clinton has set the stage for a debate over which party has the well-being of the average worker at heart. Republicans will denounce such comparisons as class warfare, but they could prove politically potent.
Treasury Secretary Lloyd Bentsen claims that half of all tax relief Republicans propose would go to the top 5 percent of families. By contrast, 87 percent of the Clinton cuts will go to middle-class wage earners. He claims the Clinton plan will cut income taxes for a family of four earning $50,000 by 20 percent.
Another debate needs to center on whether either party can afford the bold tax cuts they propose without running up deficits. The president's plan would cost $60 billion over five years. To pay for it, Clinton would cut $76 billion in government spending, largely from the departments of Energy, Transportation and Housing and Urban Development.
Details so far are sketchy, but if painless spending cuts of that magnitude are readily available, why didn't the president make them earlier, without the goad of Republican political success?
Taxpayers will naturally welcome promises of relief, but need to be wary as Republicans and Democrats compete to outdo each other. It's easy to achieve popularity at the expense of red ink. A careful watch on the balance sheet will be needed to assure that cuts in taxes are matched by cuts in spending; otherwise the middle class could wind up not with a bill of rights but a bill to pay. by CNB