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September 1, 2000, Friday, Late Edition -
Final
SECTION: Section A; Page 1; Column
6; National Desk
LENGTH: 1182 words
HEADLINE: PRESIDENT VETOES EFFORT TO REPEAL TAXES ON
ESTATES
BYLINE: By LIZETTE ALVAREZ
DATELINE: WASHINGTON, Aug. 31
BODY:
President Clinton today vetoed a
Republican-sponsored bill to repeal the federal estate tax and stepped up the
election-year sparring over tax cuts and how best to spend the budget surplus.
In remarks in the East Room of the White House, Mr. Clinton said the
bill "fails the test of fairness and fiscal responsibility" because it is costly
and, according to administration figures, benefits only the wealthiest 2 percent
of the population.
The president accused Republicans of threatening to
hamstring the booming economy by devising a series of tax cuts that he said
would leave little money for Medicare, prescription drug benefits, education and
a host of other programs.
Vice President Al Gore has repeatedly lobbed
the same charge at his opponent, Gov. George W. Bush of Texas, who supports
repealing the estate tax. And in vetoing the bill today, Mr. Clinton adopted the
same sort of language heard from Mr. Gore on the campaign trail.
"I
believe that this latest bill, this estate tax bill, is part of a series of
actions and commitments that, when you add it all up would take us back to the
bad old days of deficits, high interest rates and having no money to invest in
our common future," Mr. Clinton said, echoing Mr. Gore's attacks on Mr. Bush's
tax plans.
The bill "shows a sense of priorities that I believe got us
in trouble in the first place in the 1980's, and that if we go back to those
priorities, will get us in trouble again," he said.
In Congress, Speaker
J. Dennis Hastert of Illinois immediately announced that the House would try to
override the veto as its first order of business when it returned next week.
The effort, which requires a two-thirds majority in both houses of
Congress, is expected to fail in the Senate and may fall short in the House, as
well. Neither Republicans nor Mr. Clinton ruled out the possibility of a
compromise today.
"The death tax punishes families for being
successful," Mr. Hastert said, using the Republicans' preferred term for the
estate tax.
"It punishes farmers. It punishes small business owners. It
punishes those who have not planned ahead with an array of lawyers and
accountants to keep their money in their family," he said.
"Down the
road," he added, "it will punish our young entrepreneurs, who are just starting
their own Internet or high-tech ventures."
Mr. Hastert has said he will
also try to override Mr. Clinton's veto of a bill to give married couples a tax
break, one in a series of bite-size tax cut proposals that Republicans have sent
to the president in recent weeks.
The bill to repeal the estate tax had
drawn broad Democratic support in Congress, especially in the House, where
members recognized its allure to voters. Today, Mr. Clinton was careful not to
dismiss the idea of curbing the estate tax and highlighted his party's
proposals, which the Democrats say will provide more modest tax breaks for a
greater number of people but which Republicans dismiss as having little impact.
"We are not against wealth and we are not against opportunity," Mr.
Clinton said. "If I were against creating millionaires, I have been an abject
failure in my years as president."
The current tax applies to estates
worth more than $675,000, or $1.3 million for a family-owned farm or business,
and by 2006 the limit would rise to $1 million. The Republican plan would have
phased out the tax entirely over 10 years.
Only 2 percent of the
families of those who die pay the estate tax, but Republicans argue that no one
should have to pay the tax, which has a 55 percent top rate.
According
to Congressional and White House estimates, the bill would cost $105 billion in
the first 10 years, as the tax is phased out, and then $750 billion in the
decade after the tax is repealed.
Although recent public opinion surveys
show that the bill has proven popular among voters, Mr. Clinton's advisers say
that is largely because it has been misunderstood. "Of the $750 billion the
repeal costs, one-half -- nearly $400 billion -- goes to the top one-tenth of
one percent of estates," said Gene Sperling, the president's national economic
adviser.
Governor Bush, who has proposed a $1.3 trillion tax cut over 10
years, has endorsed the Republican estate tax repeal,
incorporating it in his own plan. Today, Mindy Tucker, Mr. Bush's press
secretary, accused Mr. Gore of "showing weak leadership" in "standing by while
his administration vetoed a bill that would help so many hard-working Americans
and their families."
Mr. Gore's proposal is more in line with the
Democratic alternatives. Instead of phasing out the estate tax entirely, it
would exempt all estates worth less than $5 million, and the results would be
immediate.
"Most of the benefits under the Republican plan goes to the
extremely wealthy," said Douglas Hattaway, a Gore campaign spokesman.
Since the national conventions, both Mr. Bush and Mr. Gore have jousted
over the scale and wisdom of tax cuts at a time when the country is prospering
economically.
The two have used the debate to underscore the two
parties' traditional political philosophies, a theme House and Senate lawmakers
are also pitching on the campaign trail.
Republicans say the surplus --
money not spent on protecting Social Security -- should be returned to the
taxpayer and not spent by the government. Democrats believe it should be steered
toward education, health care, Medicare and other programs.
"You let the
surplus sit there in this town and people will spend it," Mr. Hastert said at a
recent fund-raiser. "The best thing we can do is take that surplus off the
table."
Setting aside their campaign rhetoric, though, both sides have
inched toward the center, promising to pay down the debt and protect Social
Security. While Democrats are devising their own tax cuts, Republicans are
talking about spending more money on education.
Each party is also
repackaging its ideas. House Republicans, for example, devised a different
approach to tax cuts this year, after Mr. Clinton vetoed their mammoth
tax-reduction bill last year. ("A cannonball that was too heavy to fly," Mr.
Clinton said today.)
They divided the bill into smaller pieces and
portrayed them as common-sense tax breaks for married couples and grieving
families who do not want to break up the family farm to pay the tax man.
The idea of breaking up the bills has proved relatively fruitful, since
it drew Democratic votes and appeared to please voters.
Mr. Clinton
called the approach clever today, but then excoriated the end result, saying it
would still cost too much and do little for low- and middle-income taxpayers.
"Everybody knows there is a lot more hard work to be done, and there are
differences of opinion about what we ought to do and how we ought to do it," Mr.
Clinton said. "That's why we're having another election this year. And that's up
to the American people to decide.
"But I believe that prosperity imposes
its own difficult choices, because there are so many temptations to do things
that seem easy that will have adverse consequences."
http://www.nytimes.com
GRAPHIC: Photo:
President Clinton talked yesterday with John Sumption, a farmer from Frederick,
S.D., after vetoing a bill that would repeal the estate tax. (Susana Raab for
The New York Times)(pg. A24)
LOAD-DATE: September 1, 2000 
