First, Let's Soak the Rich

Calling for a sacrifice may win you points in baseball or religion, but in politics it's a riskier proposition. When Bill Clinton used that word in his Inaugural Address, it marked a victory for the deficit hawks among his supporters. This faction of the President's aides, joined by centrist Democrats in Congress, is urging him to take advantage of the new public willingness to accept what Ross Perot calls "shared sacrifice" to balance the budget and revive economic growth.

But as Clinton and his top economic advisers settled into the White House last week and resumed work on the deficit-reduction plan that they have promised to outline by mid-February, they could agree on few cuts in the big spending programs and tax breaks that benefit middle- and upper-income farmers, veterans, real estate investors and other special pleaders, who will not accept sacrifices quietly. The Clinton team approached a consensus on only one point: taxes will have to rise more than the President has publicly admitted. And the sacrificing shall be done mainly by a small and deserving group: the wealthy.

Aides to Clinton emphasize that he has not reached a decision on any of these new levies. As press secretary Dee Dee Myers observed of Clinton in a PBS documentary broadcast last week, "He likes to float things out there to see what the reaction is." These trial balloons are sure to draw heavy fire, but some are sure to survive, according to several sources familiar with the deliberations.

The new President has not been struck by a sudden confiscatory urge; instead, facing deficit projections about $60 billion a year higher than expected, he is being forced to look harder for budget savings. Clinton now promises that his budget plan will cut $145 billion from the deficit by 1996, even as he "invests" $220 billion over the same period in new spending on roads and railroads, job training, education and tax incentives for business. To narrow that gap:

-- He is considering raising the top income-tax rate, now 31%, to 38% for family incomes above $200,000 -- above the rate of 36% that he proposed during the campaign. The 38% top rate, along with an earlier proposal to impose a 10% surcharge on people earning more than $1 million, would raise about $20 billion a year. Going to 40% would add $5 billion more.

+ -- At present, income above $130,000 is not subject to Medicare payroll taxes; removing that cap would bring in $6 billion.

-- Ending the tax exemption on inherited capital gains on stocks, real estate and other property would net about $4 billion.

-- Couples with retirement incomes above $32,000 now pay tax on 50% of their Social Security benefits; applying the tax to 85% of benefits for retirees with income over $100,000 would net nearly $2 billion.

-- Corporate income taxes have yielded far less than expected since the 1986 tax reform, even allowing for the recent recession, so Clinton is considering squeezing companies for an additional $3 billion to $10 billion.