Rangel, Clinton To Clash Over Capital Cash
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
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WASHINGTON — While Rep. Charles Rangel of Harlem has thrown his support behind Senator Clinton’s bid for president, the two New York powerhouses may be headed in different directions when it comes to economic policy.
The Democratic presidential front-runner has said repeatedly that she favors fixing the pricey alternative minimum tax, but skeptical economists say that in proposing a series of domestic spending programs, she is reaching for the same pool of money that Mr. Rangel is
targeting for a repeal of the AMT.
Mrs. Clinton’s emphasis on new programs could set up a clash of priorities with Mr. Rangel, the party’s top tax-writer, who will likely need the backing of a Democratic president to achieve the sweeping tax reform he will soon introduce in Congress.
As chairman of the House Ways and Means Committee, Mr. Rangel has said the elimination of the burdensome minimum tax will be the centerpiece of his bill. A permanent fix, however, costs an estimated $841 billion over 10 years, which Mr. Rangel will likely pay for with some combination of tax increases on wealthy Americans.
Mrs. Clinton appears to be taking some of those same tax hikes to pay for her campaign proposals. To help fund the $110 billion annual cost of her health care plan, for example, she would use revenue generated from rolling back President Bush’s tax cuts for taxpayers earning more than $250,000 a year. And this week she unveiled a $25 billion proposal to provide federal matching contributions for retirement accounts, as well as an $8 billion annual college affordability program. She said both initiatives would be financed with a tax on estates valued higher than $7 million, another option that Mr. Rangel could tap.
Will enough money be left over to pay for an AMT repeal? The Clinton campaign hasn’t said, and tax scholars are unsure.
“To a large extent, they are chasing the same pot of gold,” an economist at the Tax Foundation, Gerald Prante, said.
To be sure, Mr. Rangel is supportive of many of the domestic programs that Mrs. Clinton and her rivals for the Democratic nomination are now proposing. But he has made clear that his chief goal is scrapping the minimum tax, which could hit as many as 23 million Americans next year, even though it was only intended to affect the 155 highest earners when it was enacted in 1969. Its scope has increased because it was never adjusted for inflation.
“There certainly is a trade-off,” the director of the Tax Policy Center, Leonard Burman, said. “If you use a revenue raiser for one program, you can’t simultaneously use it for a second.”
Economists also acknowledge that the complex minimum tax is not conducive to soaring campaign rhetoric, and that since it is a “looming” burden that many taxpayers do not yet feel, the issue does not resonate as strongly with voters.
Just by making glancing pledges to “reform” the AMT, Mrs. Clinton has gone further than her leading Democratic opponents, Senator Obama of Illinois and John Edwards, who made no mention of the issue in the tax plans they released recently. She has offered no detailed plan to pay for that reform, however, and there is little indication that one is forthcoming during the campaign.
“She understands that a part of the fiscal agenda for the next president is to ensure that the AMT does not hit tens of millions of families that it was never intended for, and to do so in a fiscally responsible way,” a senior economic adviser to Mrs. Clinton, Gene Sperling, told The New York Sun. “Certainly, if she were elected president, she would have to sit down with the leadership, including people like Chairman Rangel, and figure out how to put forward a progressive agenda that dealt with this, as well as with universal health care, in a fiscally responsible way.”
Mrs. Clinton said as much earlier this week, telling the Wall Street Journal that she would defer to Mr. Rangel on fixing the minimum tax. “I’m not going to dictate how it should be done because there’s a lot of horse-trading going on here,” she said.
As for Mr. Rangel, he has cautioned the party’s presidential hopefuls to be cognizant of the role of Congress as they craft their economic proposals, concerned that they will end up being locked into campaign promises when they eventually have to negotiate with lawmakers. At the same time, he told reporters last month that he was “not at all” worried that the leading contenders had omitted the AMT from their tax plans.
The bevy of new spending proposals from Mrs. Clinton, combined with her lack of specificity on the minimum tax, have Republicans virtually salivating. “Should we believe the Hillary who wants to raise taxes to spend $440 billion on government-run health care, or the Hillary who wants to let Rangel raise the same taxes to change the AMT?” a spokesman for the Republican National Committee, Danny Diaz, said. “Hillary can’t seem to make up her mind how she wants to spend our money. Hopefully, she’ll never have the chance to try.”
The Republican Party yesterday launched a new feature on its Web site, “Hillary Clinton’s Spend-o-Meter,” which tracks the cost of the former first lady’s campaign proposals. It made its debut at $724 billion, a robust figure that apparently includes the $5,000 “baby bond” initiative that Mrs. Clinton suggested but never formally proposed. She has since backed away from the idea after it became fodder for criticism from her Republican rivals.