President plans tax cuts to woo middle class

In an attempt to pre-empt the Republicans and silence critics in his own Democratic ranks, a beleaguered President Bill Clinton is to make a national prime-time address tomorrow in which he will propose tax cuts for the middle class and set broad policy targets for the last two years of his term.

Decided only after much hesitation, the speech from the Oval Office will be critical in an effort to demonstrate that the Republican mid-term election landslide has not turned Mr Clinton into a lame duck. It will allow him to have his say before the new Republican-controlled Congress assembles on 4 January and launches a salvo of legislative proposals that could consign the President's State of the Union message later that month to virtual irrelevance.

It was far from clear yesterday whether the speech would make the impact Mr Clinton desperately seeks. Without the guarantee of detailed and newsworthy proposals, the major television networks may not even carry it. Even on the tax-cut issue, over which

the President has been closeted with advisers all week, the specifics were still not clear last night.

A tax cut would make good the most notorious unkept promise of Mr Clinton's election campaign, that he would help the middle- and low-income earners who had been "shafted" during the Reagan-Bush era. But he jettisoned it even before he took office, claiming the budget deficit was far worse than expected.

But with Republicans clamouring for even bigger tax and spending cuts of their own, the White House had no choice but to act. The favoured option is a tax credit on children for those earning up to $75,000 (£50,000) or $100,000, costing $40bn to $50bn over five years.

The problem is how to pay for it. Reductions in Medicare and Medicaid, and cutbacks in government that might truncate some departments, are solutions being canvassed.

The Republicans have no such inhibitions. Amid vague talk of sweeping spending cuts, they are calling for a $500 tax credit per child on earnings of up to $200,000 and pressingagain for a cut in the capital gains tax. In all, the "Contract with America" manifesto of House Republicans contains reductions worth more than $200bn.

Hence the risk of a tax-cut bidding war between the two parties, which is already causing jitters on financial markets. Most economists argue that the last thing the surging US economy requires is a fiscal stimulus that would probably increase the deficit, push up inflation, and force the Fed into more severe action on interest rates.

But with the unofficial start of the 1996 campaign just weeks away, political rather than economic considerations are likely to prevail. A tax cut would be another sign of Mr Clinton's lurch to the right - his supporters would say to the centre - as he scrambles to win back the middle ground of America.

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's most starring part
News
news

Watch this commuter wage a one-man war against the Circle Line
News
We are phenomenally good at recognising faces; the study showed that humans have been selected to be unique and easily recognisable
science

Human faces unique 'because we don't recognise each other by smell'

Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
News
A male driver reverses his Vauxhall Astra from a tow truck
news

Man's attempt to avoid being impounded heavily criticised

Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Student
The Guildhall School of Music and Drama is to offer a BA degree in Performance and Creative Enterprise
student

Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Cover Supervisor Preston

£50 - £65 per day: Randstad Education Preston: Cover Supervisor Jobs in Presto...

Modern Foreign Languages Teacher

Competitive Salary: Randstad Education Group: We URGENTLY require qualified an...

IT Portfolio Analyst - Prince2

£45000 - £50000 Per Annum: Clearwater People Solutions Ltd: Our client, a glob...

Project Co-ordinator - Birmingham - Permanant

£20000 - £25000 Per Annum Plus excellent benefits: Clearwater People Solutions...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week