Clinton Prepares for Prime-Time Address on Middle-Class Tax Cut

Strategic Insights -

President Clinton is set to give a prime-time televised address on Thursday evening, amidst growing pressure from Capitol Hill to pass a middle-class tax cut. The president has been preparing for the speech, which will contain "specifics and some news," according to White House press secretary Dee Dee Myers. The administration is facing competition from Republicans, who are proposing a $500 tax credit for each child, and from House Democratic leader Richard Gephardt, who unveiled his own proposal for a tax break for families making $75,000 a year and below.

Key Takeaways:

  • The president's speech will contain a proposal for some type of tax relief for middle-class Americans, but the specifics and funding mechanisms have not been finalized.
  • Clinton is competing with Republicans, who are proposing a $500 tax credit for each child, and with House Democratic leader Richard Gephardt, who has unveiled his own proposal for a tax break for families making $75,000 a year and below.
  • The administration is open to considering Gephardt's proposal, with White House press secretary Dee Dee Myers stating that the president agrees with cutting taxes for middle-income people, but has not committed to a specific plan.
  • Incoming Republican congressional leaders, Senate leader Bob Dole and House Speaker Newt Gingrich, have written to Clinton urging him to recommit to a middle-class tax cut, endorse a balanced-budget amendment, and reform welfare.
  • Sen. Dan Coats, R-Ind., has also written to Clinton, endorsing Republican proposals for a $500 per child tax credit and suggesting funding be made available by placing a 2 percent limit on the annual growth in federal spending.
  • Sen. Phil Gramm, R-Texas, a likely presidential candidate in 1996, is planning to outline his own proposal for a middle-class tax cut, which will include a substantial increase in the child-dependent exemption and be fully funded.

Statistics:

  • Estimated cost of the child tax credit: $135 billion over five years (Sen. Dan Coats, R-Ind.)
  • Estimated savings from a 2 percent spending cap: $540 billion over five years (Sen. Dan Coats, R-Ind.)

Sources:

  • "Clinton to Give Address on Middle-Class Tax Cut," UPI, December 14, 1994.
  • Letter to President Clinton from Senate Republican leader Bob Dole and House Speaker Newt Gingrich, dated December 14, 1994.
  • Letter to President Clinton from Sen. Dan Coats, R-Ind., dated December 14, 1994.
  • Spokesman for Sen. Phil Gramm, R-Texas, confirmation of upcoming proposal, December 14, 1994.