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GOP Leaders Press Dole on Tax Cuts

Politics: They see reductions as being needed to spur Kansan's White House bid. Presumptive nominee is said to be weighing a host of choices.

July 24, 1996|JONATHAN PETERSON and RONALD BROWNSTEIN | TIMES STAFF WRITERS

WASHINGTON — Increasingly worried about the November presidential election, leading Republicans called Tuesday for sweeping tax cuts as a way to fire up the White House bid of Bob Dole, as GOP sources said the presumptive nominee had narrowed down his tax-cutting options to two principal choices.

Those "leading contenders" are either an across-the-board tax cut of up to 15%, or a rollback of the tax hikes approved by President Clinton in 1993 and President Bush in 1990. Either option could reduce projected federal revenue by roughly $90 billion a year, according to some estimates.

The tax cuts would be pushed as a way to stimulate economic growth, which Dole maintains has suffered under the Clinton presidency.

Beyond those two choices, Dole is considering a menu of possible other tax cuts, including reducing the levy on capital gains and a potentially costly plan that would make the Social Security payroll tax deductible on federal income taxes, according to Republican sources.

An assortment of GOP heavyweights Tuesday sought to influence Dole toward a dramatic tax reduction, as he nears the key, final decisions on his long-awaited economic program. They argued that taxes have hobbled the economy and leap out as a major, if unexploited, weakness of Clinton. They also blamed the White House for excessive burdens of red tape that reputedly have weighed down the economy.

"This is not just a numbers game," declared House Speaker Newt Gingrich (R-Ga.), at a Capitol Hill conference, which at times resembled a pep rally for the virtues of economic growth. "When the economy grows faster there are more jobs. When the economy grows faster there is more income."

The U.S. economy has grown steadily if modestly throughout Clinton's term in office, with inflation contained around 3% and unemployment falling to unusually low levels. About 10 million new jobs have been added, far exceeding the 8 million Clinton pledged as a candidate.

Nonetheless, the expansion has not been accompanied by substantial gains in income for average workers, and many Americans have some anxiety about their own job security.

While many Republicans believe that Clinton is vulnerable on the issue of growth, they are deeply divided on the best policies to facilitate it. In particular, Dole is being beseeched by some Republicans to focus heavily on tax cuts as a way to spark more ebullient gains in the standard of living. Others, meanwhile, are calling on him to combat the budget deficit, his own long-held approach.

"I don't think any of my friends here would deny that a growth plan that is not credible is worse than not having one," declared Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) one of those who places a much higher priority on cutting the deficit than on cutting taxes.

Despite such concerns, Republican sources said Tuesday that Dole had decided to place a major tax cut at the center of the economic plan he is expected to announce before the Republican National Convention in San Diego next month.

Out of deference to Dole, Republicans Tuesday refrained from insisting on any particular version of a tax cut, preferring to pound at the broader argument that lower taxes would contribute to brisker economic growth.

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