The Joint Committee on Taxation, a research arm of Congress, released a new analysis disputing Bush's claim that his capital gains tax cut would not increase the deficit. The panel projected that the capital gains measure would cost the federal government $15.4 billion over the next five years. Altogether, the President's proposed tax reductions would result in a combined loss of $50.2 billion in revenues over the same period, the committee said.
Under election-year pressure to win rapid congressional approval of his package, Bush and his senior advisers have signaled their willingness to consider amending the 1990 budget agreement so that funds can be shifted from the defense budget to pay for the proposed tax cuts.
So far, Bush has publicly rejected calls for a fund transfer between the defense and domestic sectors. But in his introduction to the 1993 budget, White House Budget Director Richard G. Darman said the Administration would agree to that trade-off if more controversial financing proposals--including cuts in Medicare and other entitlements for affluent Americans--are rejected by Congress.
Many leading congressional Democrats seem to take it for granted that Bush will wind up agreeing to use the "peace dividend" produced by declining defense spending to finance the tax cuts he is seeking.
The President's critics argue that the methods proposed in the White House budget for financing the tax reductions amount to little more than accounting gimmicks that will be quickly dismissed by Congress. In fact, House Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.) quickly rejected Bush's proposal to cut Medicare benefits to help pay for tax reductions, saying neither Democrats nor Republicans would go along with the idea.
House Majority Leader Richard A. Gephardt (D-Mo.) assailed the President's tax and budget proposals in remarks on the House floor. "The program doesn't measure up," Gephardt said. "It has a record-breaking $400-billion deficit, a menu of special-interest tax gimmicks. . . . The President asked us to revive Reaganomics."
MORE JOBLESS BENEFITS: Congress passes a 13-week extension of payments. A16