President to renew push for middle-class tax cut

WASHINGTON (AP) -- President Clinton will propose a package of tightly targeted tax cuts resembling the five-year, $36 billion plan that congressional Republicans rejected last year, a top aide says.

''I think you can expect the president to propose a tax cut in his budget and in his State of the Union'' address, White House chief of staff John Podesta said Sunday on CBS' ''Face the Nation.'' ''I think that it will be about the size that we proposed last year.''

Pushing aside Clinton's relatively modest proposal, the GOP-led Congress passed a 10-year, $792 billion package that included across-the board tax cuts, elimination of the so-called marriage penalty and estate taxes and reduction in capital gains levies.

But that package fell victim to a Clinton veto. The president contended that the Republican measure would eat into a projected budget surplus without making adequate provisions for preserving Medicare and Social Security. He also argued that it gave too much relief to the wealthy.

Podesta said Sunday the fiscal 2001 Clinton tax cut proposal would be similar is scope to last year's package.

''The reason for that is, as we said over and over again last year, that ... we've got an important opportunity now to make investments in Social Security, in Medicare, in modernizing and improving our military, in education, in these other priorities,'' he said.

''But we do think there's room for a tax cut targeted at the middle class, and we'll be putting forward one.'' While it will be similar to the 1999 package, ''I think we may have some new ideas in that regard, Podesta said.

''Most of the net tax cut that we put forward last year went to increasing savings, and we're going to continue with a tax relief in that area so that people can save for their retirement along with extending the solvency of Social Security. That's an important goal that we have,'' he continued.

''But I think we may manage to change the package a little bit to invest in some other important priorities, like expanding health insurance coverage and investing and making sure that the people at the bottom end of the income scale get a fair break in the tax code.''