WASHINGTON -- Only hours after Republicans pushed their 10-year, $792 billion tax bill through Congress, President Clinton declared today that "this tax cut will not become law."
Clinton repeated his determination to veto the bill as he left the White House for a trip to Arkansas.The president said he is willing to consider limited tax cuts using projected budget surpluses but only after Social Security and Medicare are safeguarded for the future, public debt is paid down and sufficient levels of spending are ensured for education, defense, environmental protection and other programs.
"That is how we ought to determine the size of the tax cut," Clinton told reporters on the White House lawn. "We are doing it backward. The amount should be determined not by politics, but by arithmetic."
The president ticked off a list of economic milestones achieved during his administration, including the low 4.3 percent jobless rate for July announced today. He also asserted that a tax cut could trigger inflation, which would lead to higher interest rates for mortgages, car loans and credit cards.
"We should not abandon a strategy that is working," Clinton said.
"Because this tax cut will not save and strengthen Medicare, because it will not add a day to the Social Security trust fund, because it will not pay down the debt and pay it off for the first time in 150 years, this tax cut will not become law," he said.
Clinton's declaration came as Congress embarked on its August recess after approving the tax cut Thursday. Republican leaders hope to whip up public support for the bill during the recess before sending it to Clinton.
Many moderate Democrats and Republicans say it would be better to figure out how to devise a smaller compromise tax cut with a chance at becoming law.
"Hopefully, we can come back and do it one more time in a better fashion," said Sen. John Breaux, D-La.
Even with the veto threat, Republicans won an important victory for a bedrock political issue with what would be the largest tax cut since President Reagan's in 1981. The Senate approved the bill Thursday, 50-49, after it cleared the House 221-206. Both the House and Senate adjourned until Sept. 8.
Utah's five members of Congress -- who are all Republicans -- all supported the tax cut bill.
In comments typical of all Utah members, Rep. Merrill Cook, R-Utah, said, "I am proud to stand behind a bill that believes that after Social Security and Medicare are secure, America should get what's left over back."
Sen. Bob Bennett, R-Utah, added, "Because Republicans believe we shouldn't keep more than we need, we return the overpayment to the taxpayer who wrote the check."
And Rep. Jim Hansen, R-Utah, said, "We will save Social Security, strengthen Medicare and pay down the debt. But we can also give America's families back 25 cents of every dollar of the $3 trillion in excess taxes they will pay in the next decade."
Senate Finance Committee chairman William Roth, R-Del., said, "Individuals and families are due a refund, and that is exactly what we do with this legislation. Government is not automatically entitled to the surplus."
With little chance of becoming law, the bill will serve mainly as a defining issue between Republicans and Democrats in the 2000 struggle for control of Congress and the race for the White House.
The bill would trim the bottom 15 percent income tax rate to 14 percent in 2003 and reduce the other rates by 1 percentage point in 2005. Relief from the "marriage penalty" that affects millions of two-income couples would begin in 2001.
The estate tax would be repealed gradually starting in 2003, and capital gains taxes would be cut from 20 percent to 18 percent for most investors retroactive to Jan. 1, 1999. There are breaks for education and health care, expanded IRAs and pensions and a legion of breaks for businesses large and small.
Democrats portrayed the package as primarily favoring the wealthy and business and conservative groups. They said it unwisely uses a third of the next decade's projected $2.9 trillion budget surplus for tax cuts at the expense of safeguarding Social Security and Medicare, repaying the national debt and preventing deep cuts in government spending.
"It is radical, it is risky, and it is reckless," said Sen. Kent Conrad, D-N.D.
Most polls show the public considers cutting taxes a lower priority than ensuring that there is enough Social Security money to handle baby boomer retirements. Nearly half the public thinks wealthy people would benefit most from the tax cuts, according to an ABC News poll of 1,012 adults taken July 28-Aug. 1.
That poll, which had a margin of error of plus or minus 3 percentage points, indicated that about a fourth of the people thought the cuts would benefit everyone equally, while 14 percent said it would benefit middle-income people most, and 6 percent said the poor would benefit most.
Republicans said such polls only demonstrate that they are acting on principle by returning some of the surplus in the form of tax cuts.
"We know it may not be the single most popular thing, but it's the right thing to do," said Rep. David Dreier, R-Calif.
Democrats, however, claimed that the motive for the tax cuts was the GOP's desire to curry the favor of business and conservative political supporters. "A wish list so that every contributor . . . will get a promise," Rep. Charles Rangel, D-N.Y., called it.
The legislation was crammed with dozens of items sought by business lobbyists that total $60 billion over 10 years, according to Democrats. Some examples:
Business and restaurant lobbyists would gain an increase in the deduction for business meals from 50 percent to 60 percent, costing $3.8 billion.
For Silicon Valley firms and other manufacturers, would get a five-year extension of the research and development tax credit, worth $13.1 billion.
For chicken farmers, a new credit for electricity produced from poultry waste, along with a four-year extension of biomass and wind electricity credits, about $534 million.
All Democratic senators and four Republicans voted no: Arlen Specter of Pennsylvania, George Voinovich of Ohio and Olympia Snowe and Susan Collins, both of Maine. The lone absent senator was Republican Mike Crapo of Idaho, who was attending his daughter's wedding but supported the tax cut.
Five Democrats supported the measure in the House and four Republicans voted against.