Newspaper article The Christian Science Monitor

Bush Hint: Maybe New Taxes BUDGET SUMMIT

Newspaper article The Christian Science Monitor

Bush Hint: Maybe New Taxes BUDGET SUMMIT

Article excerpt

PRESIDENT Bush now has uttered barely audible support for increased taxes. By doing so he may have abandoned his campaign pledge for "no new taxes" and joined the muttering of congressional voices for increasing them.

By indicating a willingness for higher taxes, Mr. Bush has "invigorated" the stalled talks between the White House and Congress over ways to reduce the budget deficit, says Alice Rivlin, a Brookings Institution economist and former director of the Congressional Budget Office (CBO).

If no action is taken, the federal deficit for fiscal year 1991, which starts Oct. 1, could exceed $200 billion when outlays to cover the savings and loan mess are included.

The budget conferees are trying to cut the deficit to $74 billion or less for next year to conform with the Gramm-Rudman-Hollings deficit reduction law.

Bush said Tuesday that "tax revenue increases" must be included in any deficit reduction package. The White House has refused to elaborate on just what form the tax increases will take.

"The president would obviously prefer higher excise taxes (on alcohol, cigarettes, and perhaps gasoline) to higher income taxes," says Stanley Collender, director of federal budget policy at Price Waterhouse. He refers to CBO statistics that show a doubled cigarette tax would raise an extra $2.8 billion in revenue in the first year, and every penny added onto the excise tax on gasoline would provide $1 billion.

The gas tax boost is not politically tenable, says Mr. Collender. "The gasoline tax is a regional problem. California already voted for an increase in state taxes; their representatives will not go along with a federal increase on top of that."

The real push from Congress will be for Bush to support higher income taxes, says Collender. "The Democrats need him to do something on income taxes, though, so he can no longer tag them as `tax and spend.' "

House Speaker Tom Foley refused to claim a political win for the Democrats with Bush's tax announcement. …

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