clarinews@clarinet.com (BUD NEWMAN) (02/09/90)
WASHINGTON (UPI) -- The already slim chances that Congress will pass Sen. Daniel Moynihan's bill slashing Social Security taxes by $55 billion diminished again Thursday when the top Senate tax writer came out against it. Senate Finance Committee Chairman Lloyd Bentsen, D-Texas, said he would not back the bill by Moynihan, D-N.Y., because he thinks it would drive up both the deficit and interest rates. ``I frankly think that that kind of an increase in the deficit without a replacement of revenue lost would push interest rates up in this country and would encourage a slide in the dollar and I think we'd have serious problems with it,'' Bentsen said in an interview prior to his panel's second hearing this week on Moynihan's bill. House Ways and Means Committee Chairman Dan Rostenkowski, D-Ill., the top House tax writer, had earlier opposed Moynihan's tax cut, calling it ``political junk food.'' Bentsen's opposition, added with that of Rostenkowski, President Bush and the American Association of Retired Persons, the nation's largest senior citizens advocacy group, lessens what had been considered slim chances that Moynihan's bill would pass. Asked about Bentsen's opposition to Moynihan's bill, Senate Democratic leader George Mitchell of Maine said he remains uncommitted while a Democratic task force studies the bill. Findings could be released next week. At Thursday's Senate Finance hearing, Bush's budget director, Richard Darman, testified that passage of Moynihan's bill ``risks creating fiscal policy havoc'' because it would require either big spending cuts or new taxes to offset the cost of the payroll tax cut. ``Accordingly, we must respectfully reject the recent proposal of Senator Moynihan,'' said Darman. Darman said the administration did not want to give up on the bipartisan 1983 Social Security rescue plan, which contained a series of tax increases to ensure that the retirement fund would have enough money to pay benefits to the ``baby boom'' generation when it starts retiring in about 2010. Bush, who urged lawmakers during last week's State of the Union address not to ``mess around with Social Security,'' opposes Moynihan's bill. Also testifying Thursday against Moynihan's bill were Congressional Budget Office Director Robert Reischauer, former CBO Director Alice Rivlin and Charles Schultze, who served as chairman of the Council of Economic Advisers under President Jimmy Carter. Rivlin said Moynihan's proposal to give back the Social Security surplus through tax cuts and return to a pay-as-you-go system with tax increases coming later when benefit costs escalated would increase the deficit, raise interest rates and ``make us more dependend on foreign capital.'' And, she said, it would ``risk turning Social Security from a contributory social insurance system into an incomne maintenance program.'' ``The big payroll tax increase that would be necessary when the baby boomers retire would likely lead to intergenerational conflict, benefit cuts and perhaps conversion of Social Security into a means-tested program,'' Rivlin said. Moynihan said much of the revenue lost by his bill could be made up from deeper defense cuts but it is wrong to use the Social Security surplus to mask the true size of the budget deficit. ``By what right and for how long do we continue to make the budget deficit the peculiar burden of people who get paid by the hour?'' Moynihan said. Moynihan's bill would roll back the Social Security tax increase that took effect Jan. 1, cutting the rate from 6.2 percent to 6.06 percent. It would cut the tax to 5.1 percent next Jan. 1. He said the cut would save a family with a median income just under $400 next year and predicted the lower tax rate, which also affects employers, ``would adjust wages upward.''