The 12-Minute Makeover

With a re-election campaign looming, an embattled President decided to chuck % his old program and go for broke. On national TV he proposed a multibillion- dollar package of tax cuts, including expanded IRAs for medical bills, education and the purchase of a first home. That evening, an upstart in the opposition party dismissed the proposals as "too little, too late." Later the critic added, "I don't think using the IRAs to finance college loans and health care, as the President proposed, is a good idea."

The year was 1992. The President was George Bush. The upstart was Bill Clinton.

Just about everybody in Washington jumped on the tax-cut bandwagon last week. But Bill Clinton was the only one who had to do a backflip while eating his words. Such are the contortions of political reincarnation. Since his party's dismal showing in the November elections, Clinton has moved deliberately toward the center, and last Thursday night's speech was his most dramatic course correction yet. Clinton made several proposals last week similar to ones he criticized Bush for making when the patrician Texan was trying to save his presidency. The G.O.P. enjoyed the show. Said Haley Barbour, the chairman of the Republican Party: "President Clinton shares with the hummingbird the amazing ability to turn 180 degrees in a wink."

Clinton's tax cuts resemble the dealer incentives that Detroit once offered to win back buyers who had switched to Japanese cars. Clinton's "Middle-Class Bill of Rights" is designed to appeal to voters who supported him in 1992, but this year bolted to the G.O.P. -- or stayed home. As with rebates, however, there is some fine print: Clinton's $500-a-child tax credit would be available only to parents with adjusted incomes between $20,000 and $60,000 who have children under 13. Parents who earned up to $75,000 would get a smaller break, and the full $500 credit would not be available until 1998. His proposal to let parents withdraw money, tax free, from new IRA-like instruments to pay for education, medical care, first homes or elderly care would apply to parents earning up to $80,000; couples earning up to $100,000 would get a smaller deduction. And he would allow couples earning $100,000 or less to deduct as much as $10,000 a year for college tuition; the deduction for couples earning up to $120,000 would be smaller.

To avoid deepening the deficit, Clinton plans to offset the $60 billion in tax breaks with spending cuts worth $76 billion over the next five years. Most of the money -- $52 billion -- comes from simply extending the current law that freezes discretionary spending at current levels. Clinton was less specific about the rest of the cuts. This week Vice President Al Gore is expected to detail plans to save $24 billion by shrinking three Cabinet-level departments -- Energy, Transportation, and Housing and Urban Development -- and all but eliminating the General Services Administration. With the Republicans in control of Congress, Clinton's tax cuts are likely to go nowhere. Under the Contract with America, the G.O.P. wants to extend the $500- per-child tax credit to families with incomes up to $200,000 and make the new IRAs available to all taxpayers. To pay for the tax cuts, the Republicans would probably accept many of Clinton's reductions -- and then slash more deeply at domestic spending as well as Medicare and Medicaid.