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GOP Reconsiders, Might Drop Tax Cut for Balanced Budget

By Eric Pianin and Clay Chandler
The Washington Post

Republicans, vexed by the prospect that voters might blame them for continued stalemate on an agreement to balance the budget, have begun seriously debating a move that would have seemed unthinkable to them just two years ago: dropping their long-standing insistence that any budget deal include a major tax cut.

That debate accelerated after President Clinton's decision this week to abandon an attempt to reduce the cost-of-living adjustment for Social Security and other federal benefits.

Without the hundreds of billions of dollars in higher revenue and reduced spending that would accompany a cut in the COLA, Republicans would find it impossible to achieve their goals of balancing the budget and cutting taxes while adhering to the relatively conservative economic forecasts of the Congressional Budget Office.

While GOP leaders never seriously thought they could enact the entire $200 billion tax cuts proposed by Senate Majority Leader Trent Lott, Miss., and other Republican leaders, now they may be forced to scale back their plan by as much as two-thirds.

Lott said Thursday night that the president's decision would have an adverse ripple effect on a number of tough budget issues confronting Congress and would make it difficult, if not impossible, "to leave some tax money with the working people of this country who pay the bills."

Already, House and Senate GOP budget leaders and their aides have begun preliminary consideration of balanced-budget plans providing as little as $60 billion to $80 billion of tax cuts over five years, according to a well-placed GOP source. Although Republican leaders are still far from a final decision, their passion to pass a big tax cut has begun to wane.

House Majority Whip Tom DeLay, Texas, shocked many of his conservative allies this week by suggesting that Congress put off consideration of a tax cut until late this year, after it finishes work on a balanced-budget deal. Republicans will need support from conservative Democratic "Blue Dogs" to pass a budget with tough savings in Medicare and other government programs, and the Blue Dogs argue that balancing the budget should precede tax cuts.

Short of a dramatic breakthrough such as a change in the cost-of-living adjustment that would bridge policy and spending differences between Republicans and Democrats, top GOP leaders fear there is little hope of salvaging a balanced-budget deal this year.

"I believe chances of getting a negotiated budget between the Republicans and the president are finished," declared Senate Budget Committee Chairman Pete V. Domenici, R-N.M., who until now has been relatively sanguine about prospects for an agreement.