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U.S. CAN BOTH BALANCE BUDGET AND CUT TAXES, PACKWOOD SAYS

Reducing the U.S. budget deficit takes precedence over tax cuts, but it may be possible to achieve both, Republican Sen. Bob Packwood of Oregon said Saturday.

"I think we can balance the budget and have tax cuts," Packwood, chairman of the Senate Finance Committee, said on CNN's Evans & Novak."If I could only do one, the balanced budget would occupy a higher priority than the tax cuts," Packwood said. "I think we can do both."

He said he expects Sen. Pete Domenici, R-N.M., chairman of the Budget Committee, "to give us a budget that is balanced without touching Social Security and without any change in the consumer price index."

The budget would be balanced in 2002, as it would have been under the defeated balanced budget amendment, Packwood said.

"Now, if he can do that without touching Social Security and without any change in the consumer price index, which is clearly overinflated . . . then there is room also for tax cuts," Packwood said.

He said he opposes the $500-per-child tax credit proposed in a House bill. "If you were going to cut taxes, I think that is probably one of the worst ways," Packwood said.

He said he would prefer a tax rate cut to a child credit.

On welfare reform, Packwood said he believes the Senate will pass a measure folding the funding of welfare into block grants to states.

"I bet you we get block grant welfare through the Senate," he said.