Clinton is well aware that a middle-class tax cut makes little economic sense. In the short term it will put some cash into voters’ pockets, but a rush to cut taxes also risks driving up interest rates, which would cost consumers in the long run. During the 1992 campaign, Clinton bitterly complained to aides that he had never liked his own proposal for modest tax relief for the middle class.
No matter – the race to pander is on. The Republicans would go further, offering a $500-per-child tax credit to families earning up to $200,000 a year. Clinton’s proposal would cost $60 billion over five years; the Republicans’, $100 billion. Clinton would pay for his tax cut mostly by extending a freeze on discretionary domestic spending from 1998 to the year 2000. He has instructed Vice President Gore to look for further spending cuts that would reduce the deficit. But a White House faction led by senior aide Harold Ickes and Hillary Clinton is likely to oppose cuts that would harm traditional Democratic interest groups.
