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Clinton Vetoes Republicans’ 792 Billion Dollar Tax Cut

By Edwin Chen and Janet Hook

President Clinton vetoed the $792 billion GOP tax cut Thursday, setting the stage for a high-stakes showdown with Republicans in Congress over tax and spending priorities -- and a ripe political issue for the coming election year.

Speaking in the White House Rose Garden as he administered his long-threatened veto, Clinton urged his GOP adversaries to “work together” with him by devoting most of the budget surplus not to a huge tax cut but to debt reduction and long-term Social Security and Medicare reform -- while settling for a more modest tax cut of about $300 billion.

“We must put first things first,” the president declared.

The White House staged Thursday’s veto ceremony with a festive air, complete with a brass band. The ambience seemed to reflect the belief among administration officials that Clinton again will get the better of his GOP critics.

In 1995-96, Clinton and Republicans were mired in such a prolonged budget impasse that it forced parts of the government to shut down, which the public blamed on GOP recalcitrance. In 1997, a year-end budget deal blew a $20 billion hole in the budget ceilings -- and was widely seen by Republican conservatives as a Clinton victory.

“Republicans feel that in past negotiations they have always come in second place,” said Rick May, former staff director of the House Budget Committee. “They perceive that they do not do a very good job in these negotiations.”

To be sure, the White House and the GOP Congress have reached significant compromises, such as the 1996 welfare reform law, minimum wage increase and expansion of medical insurance coverage.

But the GOP’s deep and visceral distrust of Clinton remains.

As House Speaker J. Dennis Hastert (R-Ill.) put it Thursday: “One of the things we don’t want to do is to get caught in a situation where we’re giving the American people minimum tax cuts for maximum spending.”

While Clinton fervently urged them not to “throw in the towel” and go home, GOP leaders scorned his invitation as an empty gesture.

“Never once has he offered any constructive help,” Hastert said.

Still, senior White House aides said that the standoff may not be quite so intractable.

The GOP plans to draft a Medicare reform bill in the fall, a move that White House Chief of Staff John Podesta said could “begin to open things up” and provide “the framework” for a compromise on an array of issues.

For now, however, Republicans intend to concentrate on passing the 13 annual spending bills in time to adjourn for the year in late October.

If Republicans refuse to negotiate, Clinton is prepared to chastise the GOP-controlled Congress publicly for behaving irresponsibly by quitting instead of doing the public’s business. Such a bully pulpit campaign, so the thinking goes, also could help elect Al Gore president and put Congress back in the hands of Democrats.

The bill that Clinton vetoed, the 26th of his presidency, would have cut inheritance and capital gains taxes, eased taxes on married couples and reduced tax rates for the lowest bracket from 15 percent to 14 percent. The tab was $792 billion over 10 years. Clinton has proposed more targeted middle-class tax cuts totaling about $300 billion.