The Bush Budget: Little Ammunition Offered In Fight on Payroll Tax Cut
WASHINGTON -- President Bush's budget offers little ammunition for shooting down Sen. Daniel Moynihan's arresting proposal to cut Social Security payroll taxes by $55 billion.</br></br>Taken at face value, the New York Democrat's plan would cut taxes for the bulk of Americans -- the folks who make their money by working and who earn less than $50,000 a year. But the only alternatives in the administration budget involve a complex scheme to change Social Security accounting and a package of savings-and-investment incentives that would largely benefit upper-income Americans.</br></br>"They're talking about belches and Moynihan is talking about a tornado," says Republican political analyst Kevin Phillips, who views the Moynihan plan as a manifestation of a "new middle-class tax revolt."</br></br>The Moynihan plan -- to roll back the payroll-tax increase that took effect Jan. 1 and to cut the tax again on Jan. 1, 1991 -- would yield more than half its benefits to families with incomes below $50,000 a year, Congressional Budget Office figures indicate.</br></br>Precise estimates aren't yet available on the capital-gains tax cut and savings incentives proposed by the president. But families with incomes below $50,000 would get less than 10% of the benefits of either a sweetened Individual Retirement Account program, along the lines of the one proposed last year by Sen. Lloyd Bentsen (D., Texas), or a cut in capital-gains taxes like the Bush-backed version the House passed last year, the Joint Tax Committee estimates.