The wealthy
+$161.2 billion
The tax rate for families with incomes above $140,000 a year would rise from 31 percent to 36 percent, while those with incomes above $250,000 would pay 39.6 percent. Estate taxes would rise by 10 percent and the affluent would pay more in Medicare taxes.
A victory for those who think the wealthy have been getting off easy-but if loopholes come back, tax lawyers and CPAs will be the real winners.
B
The elderly
+$32.8 billion
Retired couples with incomes over $32,000 a year and singles with income over $25,000 would pay income tax on 85 percent of their social-security benefits. Premiums for Medicare Part B, which covers doctor bills, would rise 17 percent after 1995.
The richest 22 percent of the elderly would lose-though they have the resources to fight it. Among the winners are working Americans who help subsidize them.
A minus
Corporations
+$85.9 billion
The tax rate for big corporations would rise to 36 percent. Deductions for business entertainment would be cut. Firms would pay tax on executive salaries over $1 million a year; lobbying costs would be taxable.
Foreign corps. are winners–they’d pay only $4.4 billion more, compared with the $45 billion candidate Clinton promised. CEOs, fancy restaurants and Washington lobbyists lose. Adios, three-martini lunch?
B
Energy
+$79.3 billion
A broad tax on energy consumption that equals 7.5 cents on a gallon of gas and 8.25 cents on a gallon of heating oil. The average electric bill would rise $2.25 a month. Middle-income families would pay about $204 a year in new taxes.
Oil and oil-based fuels pay double the rate of other fuels-but the big loser is the middle class, which won’t get the income-tax cut Clinton promised and will pay the lion’s share of this new energy tax. It took nerve.
A
Others
+$23.0 billion
A potpourri of user fees on consumers and business. Biggies include increased charges to importers, banks, barge lines, mining companies and drug firms. Getting a VA mortgage would cost more; so would visiting a national park.
Pushes business and the public toward a pay-as-you-go relationship with Uncle Sam. Some of the changes, like the increased fees for grazing on government land, are definitely EC-environmentally correct. Tree-huggers 1, ranchers 0.
B plus
Investment
-$36 billion
Investment tax credits for all business-temporary for big firms. Owners of small firms get capital-gains cut to 14 percent.
Big biz disappointed, small biz tickled pink. Capital-gains cut and tax credits for R&D turn Silicon Valley into hog heaven.
B minus
Job training
-$4.4 billion
Keeps tax breaks for businesses for employee education, hiring disadvantaged teens; adds new tax credit for apprenticeship.
A modest start for Clinton’s grandiose promises to upgrade the skills of U.S. workers. The deficit hawks win round one.
B
Cities and housing
-$9.7 billion
Tax credits for business investment in urban enterprise zones, low-income housing. Real-estate moguls can write off losses.
Jack Kemp finally wins one. The credits are an easy favor for business.
B minus
The working poor
0$26.8 billion
Raise the earned-income tax credit by 47 percent. Checks go to workers up to $30,000 a year. Offsets energy tax.
Winners are low- and middle-income working parents. Losers are low-income singles. Audacious liberalism.
A
Transportation
+$15 billion
At $10 billion, federal aid for highways and public roads takes the biggest share. Next stop: mass transit at $2.7 billion.
Congress will be pleased by Amtrak’s first big subsidy in a decade; the highway lobby wants even more.
C
Environment/energy
+$17.5 billion
It’ll be easier being green in the Clinton administration: big bucks for cleaning up the water, protecting the national parks, developing renewable energy and conserving the land.
With something for everyone, environmentalists will be green, but not with envy. Porksters will be appeased with $770 million more for rivers and harbors work.
C
Science and technology
+$14.6 billion
Civilian high-tech research is Clinton’s answer to the defense decline: allocates $1.8 billion toward converting from military to commercial uses.
Commits $486 million for pet Information Superhighway"; National Science Foundation gets boost. White elephants like space station and Super Collider are spared.
C
Education and training
+$32.3 billion
Clinton’s vision of a retrained work force, more federal aid to education and a national-service and college-loan plan.
Social welfarites reach promised land. But job training has a mixed record; national-service program will start small.
B
Children
+$31.7 billion
Full funding of Head Start and Women, Infants and Children (WIC) nutrition program. Food stamp tab goes up $9 billion.
Investment early in life saves taxpayer money later, although the Head Start program’s not all that it’s hyped to be.
A minus
Health care
+$18.4 billion
More for women’s health, AIDS. Expanded, cheaper inoculations.
A boon for AIDS sufferers and kids. Price-gouging drug makers are losers. Next target: insurance companies.
B
Others
+$24.3 billion
Grab bag of programs including large aid to low-cost housing, anti-crime initiatives and extended unemployment compensation through ‘94.
Supporters of social welfare and urban development stand to gain, but deeper cuts in the deficit might have been money better spent.
C
White House
-$6.6 billion
White House staff drops 25 percent, from 1,394 to 1,044. To help cut perks by $10 million, Clinton grounds half the limo fleet.
Good symbolism, but numbers game will allow later expansion. Air force still flies 22 planes for government big shots.
B
Federal pay and streamlining
-$47.2 billion
Aim is 3 percent administrative cut. Federal pay freeze saves $11.2 billion. Clinton vows to eliminate 100,000 bureaucrats by 1997.
Public-service unions are seething, but they’re far from losers. While freeze is gutsy, Clinton is fudging on overall goal, which is modest considering bloat of the bureaucracy.
B
Defense
-$111.8 billion
Clinton has halved Star Wars, but other billions in cuts still unspecified. A uniformed-service cutback from 1.7 to 1 million looks likely; half of all Trident missiles headed for mothballs.
With more battles ahead over gays, Clinton going slow on budget fights. Pentagon relieved for now that manpower and weapons cuts aren’t deeper. Seawolf submarine spared.
B minus
Agriculture
-$9.9 billion
Clinton hunts and pecks his way through 22 programs. First-ever cap on subsidies to rich farmers will save $610 million.
Farmers feeling loss of legendary political clout, but the president faces tough fight to get past their lobby.
A minus
Veterans
-$4.8 billion
Nibbles at a dozen programs, including education benefits and insured mortgages.
Vets triumph. Shaky over draft status, Clinton caves on VA hospital reform. “Better management” won’t save bucks.
D
Health and Human Services
-$51.6 billion
An assault on Medicare and Medicaid lab and doctors’ fees that may be a preview for the coming health-care overhaul.
Losers may win out: M.D.s and hospitals deftly shift costs onto privately insured patients to offset lower reimbursements.
A minus
Others
-$90 billion
Lower deficit would save $46 billion in borrowing costs. Refinancing the long-term debt saves $16.4 billion. Auctioning broadcast licenses brings in $4.4 billion.
Half of these miscellaneous savings stem from deficit reduction itself. The less the government borrows, the less it spends on interest. If deficit cut holds, each American saves $180 in interest.
B plus
Clinton pormised to cut $1 in spending for every $1 in additional taxes. He didn’t: by 1998, the Clinton plan would rasie almost $2 in new taxes for every $1 in spending cuts. And his proposed cuts in the federal deficit ($473 billion) are actually lower than those George Bush negotiated in 1990 ($482 billion).
CUMULATIVE IN BILLIONS 1994 1995 1996 1997 1998 1994-1998 SPENDING:Increases $15.0 $22.0 $33.0 $39.0 $45.0 Down $168 Decreases $16.1 $35.8 $62.7 $97.5 $109.9 billion TAXES: Increases $49.9 $58.2 $76.3 $97.5 $101.0 Up $305 Decreases $13.0 $17.0 $15.0 $15.0 $17.0 billion NET DEFICIT REDUCTION: $473 billion
