Clinton, GOP near deal on tax cut package and $1 boost in minimum wage

By Curt Anderson
THE ASSOCIATED PRESS

WASHINGTON - After months of open partisan warfare over tax cuts, President Clinton and congressional Republicans neared agreement yesterday on a tax relief package that would help people save for retirement, pay for long-term health care and give businesses breaks to offset the costs of a $1 minimum wage increase.

The legislation, expected to cost about $245 billion over 10 years, also would provide a host of new tax incentives to revitalize downtrodden communities and set up a new tax system for U.S. exporters to avert a trade war with the European Union.

Although disagreement remained in some areas, a congenial exchange of letters between Clinton and House Speaker Dennis Hastert, R-Ill., made it clear that both sides expected compromise before Congress adjourns for the year.

"We should also work together to pass tax cuts for middle-class Americans," Clinton told reporters at the White House. "You know, in budget talks, the two sides often wind up talking past each other. It takes a little extra effort to reach across the divide, so that's what I'm trying to do today."

The tone stood on marked contrast to the politically-charged rhetoric surrounding GOP tax cuts such as repeal of the estate tax and relief from the "marriage penalty" tax on two-income couples, both of which the president vetoed earlier this year.

"I agree with you that we should work together in a bipartisan fashion, and I believe this work product is a result of a hard-fought compromise," Hastert told Clinton in a letter.

The speaker removed one key obstacle by assuring Clinton that Republicans would drop several proposed labor law changes as part of the two-year, $1 increase in the $5.15-an-hour minimum wage. Democrats had labeled those provisions unfair to workers, especially a plan to freeze the wage floor for waiters and waitresses, who also earn tips, at $2.13 an hour.

There is broad agreement on many of the tax package's provisions, but Clinton and congressional Democrats also continued to raise objections. In addition, the tax and minimum wage measure is expected to be coupled with separate legislation boosting Medicare payments to health care providers, a measure that has its own difficulties.

"There are a couple of issues that are still, I guess I should say, in controversy," said Senate Majority Leader Trent Lott, R-Miss. "But I believe it will wind up passing by a wide margin."

An outline provided by Senate Finance Committee Chairman William Roth, R-Del., indicates the tax legislation will include provisions to raise individual retirement account annual contribution limits from $2,000 to $5,000 and 401(k) plan contributions limits from $10,500 to $15,000 a year. It also will contain changes to make it easier for businesses to offer pensions to workers.

In a letter to Hastert, Clinton said he favored tax incentives for low-income workers to save money and "meaningful protections" for employees whose companies switch to new pension plans that can reduce benefits for older people.

The legislation also will include tax breaks - long sought by Clinton - to help people with long-term health care costs and the expenses of health insurance.