Budget director says Clinton, Congress will probaby produce a budget
By DOUG WILLIAMSON / Abilene Reporter-News
The chances are pretty good that Congress will pass a budget bill that President Clinton will sign.
White House Budget Director Franklin Raines, speaking on a conference call Wednesday with U.S. Rep. Charles Stenholm, D-Stamford, several Big Country businessmen and a couple of media representatives, said the Senate's bill is closer to the president's liking than the House budget bill.
"The Senate bill has fewer problems than the House bill," said Raines, who has been director of the Office of Management and Budget since September. "The House bill has indexing of capital gains. That is not affordable and will explode in the 'out years.' The House bill also limits access to the dependent care credit."
None of the bills as currently written meets the criteria the president has established, Raines said.
Raines forecasts a significant decrease in entitlement spending.
"We will change the path of growth of entitlement spending, particularly in health care, like Medicare and Medicaid," he said. "With a cap on discretionary spending, it will decline by 10 percent in real terms."
The budget director said some of the legislation, in its current form, is not fair to a family with children, making $18,000-$28,000.
"They ought to have child credits," he said. "I don't understand why they (the Republicans) don't want it.
"Under current law, we have earned income tax credit available to offset taxes - payroll and income - for families earning up to $28,000. In this proposal, you have to take advantage of that first, before the new child credit. We are saying, 'Why not turn that around?'
"These families have tax liabilities under FICA of $1,700-$1,800 per year and income tax liabilities up to $1,200. They are being denied access to tax credit."
Stenholm echoes Raines' concerns, saying that one-third of the families in his district have household incomes of $19,000 or less.
"I don't believe we ought to be calling benefits received 'welfare' if they are working 40-60 hours (a week) for what they have," Stenholm said.
Raines said he has been working in the last few months with Stenholm "hand in hand in the effort to balance the budget. We are making good progress on implementing the budget agreement."
The budget is split into a spending cuts and investments bill and a taxes bill, he said.
"We are a little farther apart on taxes (than on spending cuts)," he said.
Raines also said:
-- Capital gains taxes will be reduced. The indexing of capital gains just will not work.
"Every month you get a credit in your mutual fund, and you buy shares. Every one (of those shares has) to be indexed until you sell. If you combine rate reduction and indexability, you create a massive tax hemorrhage in the 'out years'," Raines said.
-- Estate tax relief is on the horizon.
"We are supporting the bill that would concentrate estate tax relief on family-owned businesses and family farms. The prospect of having to sell the family business or farm is devastating."
-- Help is on the way for parents of college students.
"The president has proposed, and included in (the budget) agreement with the leadership, $35 billion in tax credits for the first two years of college and tax deductions beyond that. The tax credit would be $1,500.
"It is inconceivable that there won't be an education credit in this bill. The $35 billion total is over a five-year period. That's $35 billion of a total of $135 billion in tax cuts," Raines said.
Stenholm said the cost of higher education also must get a closer look.
"At some point in time, we are going to have to apply the same pressures
to institutions of higher learning to reduce their costs as we have in health
care. Education costs are going up more than inflation," he said.