Conservatives Want More Cuts

Several conservative House and Senate Republicans said Wednesday they will push their leaders to adopt a plan for further large cuts in federal spending to pay for several tax cut measures that could cost up to $600 billion over the next five years.

Sen. John Ashcroft, R-Mo., touted elimination of the so-called marriage penalty, reducing payroll tax and reforming tax rates as his top priorities. "This is a defining moment for our party," Ashcroft said.

Rep. David McIntosh, R-Ind., blasted Senate GOP leadership proposals for $30 billion in tax cuts as "picayune and almost nonexistent." McIntosh said Conservative Action Team members, including Reps. Mark Neumann, R-Wis., Sue Myrick, R-N.C., Sam Johnson, R-Texas, and John Shadegg, R-Ariz., will work on their own balanced budget plan that shrinks spending and cuts taxes to "create a conservative mark."

Among the ideas the group will discuss are cuts in welfare, food stamp and Medicaid and possible termination of the Energy Department.

McIntosh said the group would model its efforts on those made by House Budget Committee Chairman John Kasich, R-Ohio, when he was in the minority. The plan could be out in two weeks.

The move toward an alternative budget reflects a growing concern among conservatives that congressional leaders appear to be taking a too measured response to an agenda this election year. McIntosh said he suggested to Speaker Newt Gingrich, R-Ga., Tuesday that Gingrich's notion of "goals for the generation" is not "inconsistent with actually putting something on the calendar this year."

Meanwhile, Federal Reserve Chairman Alan Greenspan Wednesday urged caution in dealing with any projected budget surpluses, while repeating observations he made last week that the impact of the Asian crisis is the biggest uncertainty for the U.S. economy, the Associated Press reported.

"The exemplary performance of the U.S. economy in 1997 will be hard to match," Greenspan told the House Budget Committee. "The key question going forward is whether the restraint building from the turmoil in Asia will be sufficient to check inflationary tendencies that might otherwise result from continued strength of domestic spending and tightening labor markets."

Greenspan's testimony to the House budget writers came a day after the CBO released an updated forecast projecting an $8 billion federal surplus in fiscal 1998, ending three decades of deficits.

Greenspan praised both the CBO and the administration for using conservative assumptions in making deficit forecasts, but cautioned that even these forecasts could prove wrong. He noted that a year ago both Congress and the administration were making projections for FY97 that turned out to be $100 billion above the actual deficit of $22 billion.

"These uncertainties underscore the need for caution as you move ahead in your work on the 1999 budget," Greenspan said. "There is no guarantee that projected surpluses over the next few years will actually materialize."

Greenspan also told the panel that, given the need to pay Social Security and Medicare costs early in the next century for retiring Baby Boomers, "we should be aiming for budgetary surpluses and using the proceeds to retire outstanding federal debt."