Kasich floats $700B tax cut plan

House Budget Committee Chairman John Kasich, R-Ohio, today will unveil a tax cut plan that would set aside $167 billion over five years and $700 billion over 10 years for tax cuts, a Kasich aide said. Kasich will brief House Republican leaders on his proposal later today.

The Kasich aide said the plan would ensure that the budget surplus is not available to legislators to spend on new programs. It would set aside $338 billion for Social Security by paying down the federal debt during the first five years and $700 billion for the program over 10 years.

While Kasich would prefer the Social Security funds be used to help establish private savings accounts to help supplement Social Security, he believes such a proposal would not pass now. The amount set aside for Social Security and debt repayment is equal to the cash surplus projected for Social Security, the aide said.

Kasich wants to outline the proposal to colleagues before discussing whether the tax cut plan would be part of a larger budget reconciliation proposal, the aide said.

But even before House Republicans put the finishing touches on the tax cut plan, Senate Democrats and Republicans are questioning the wisdom of a proposal that could cut taxes by between $500 billion to $750 billion over 10 years.

"It looks like those guys are starting to hyperventilate," Sen. Byron Dorgan, D-N.D., said. While Kasich is now proposing $700 billion in tax cuts, House Speaker Newt Gingrich, R-Ga., has been discussing a tax cut that would exceed $750 billion over 10 years. However, such a plan could require 60 votes in the Senate if it taps the budget surplus or is not part of a larger budget reconciliation proposal.

The reception that type of proposal would receive "would depend on how it's packaged," Senate Republican Conference Chairman Connie Mack of Florida told CongressDaily. He added, however, that budget surpluses might not be able to support such a tax cut during the next five years. There may not be "much support in the short run" in the Senate for that size of a tax cut, Mack said.

Two Senate GOP moderates said they would oppose a tax cut of that size. Environment and Public Works Committee Chairman John Chafee, R-R.I., said: "I'm against it. I'm for paying down the debt." And Labor and Human Resources Committee Chairman James Jeffords, R-Vt., added, "I think it would be reckless to tie us into huge tax cuts when it could result in huge deficits."

Finance Committee Chairman William Roth, R-Del., who has favored generous tax cuts as well as Social Security reforms, Tuesday expressed "enthusiasm" for the concept, but reserved judgment until details are clear.

Democrats were blunt. "Without the Social Security trust fund, there's no surplus for those guys to be talking about," Dorgan said.

Senate Minority Leader Daschle vowed to fight a tax cut plan approaching the size that House Republicans are discussing. Daschle told reporters: "We don't have a tax surplus unless we use Social Security. We are adamantly opposed to that."

He said that type of tax cut would require 60 votes in the Senate. "It's not going to happen," Daschle said, vowing to use all parliamentary tactics to help defeat that legislation.