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BENTSEN TAKES ACTION TO CONTAIN BACKING FOR PAYROLL TAX CUT BILL

Senate Finance Chairman Lloyd Bentsen, D-Texas, moved quickly Tuesday to contain the momentum behind Sen. Daniel Patrick Moynihan's payroll tax cut bill and block a split in Democratic ranks in Congress.

In announcing a hearing on Moynihan's proposal to sharply roll back the Social Security payroll tax, Bentsen called the legislation "a kind of fiscal surgery. Like any surgery, this can be dangerous."

"It reminds me of the story about the veterinarian and the taxidermist who opened an office together," Bentsen said. "Their slogan was: 'Either way, you get your dog back.'"

"I want to make sure that when our dogs come home ... they're wagging their tails," he said, voicing concerns about the effect of Moynihan's bill on the long-term strength of the Social Security system.

Earlier, Sen. Fritz Hollings, D-S.C., announced he is co-sponsoring Moynihan's bill, adding that if it goes to the Senate floor, it will pass. Other co-sponsors are Sens. Terry Sanford, D-N.C., and Claiborne Pell, D-R.I.

Bentsen said he didn't know whether his committee would recommend Moynihan's bill. "I don't think that members of the (Finance Committee) have made their minds up on it," he said.

Bentsen, the Democrats' candidate for vice president in 1988, repeatedly stressed the need to cut the federal deficit.

He called the $55 billion to $60 billion the Moynihan payroll tax cut would remove from federal revenues in its first full year of operation "a monumental sum."

Senate Majority Leader George J. Mitchell, D-Maine, has remained aloof about the Moynihan proposal, saying it's worthy of serious study.

Hollings, chairman of the Senate Commerce Committee, praised Moynihan for catching "the administration's hand in the cookie jar." He was referring to the use of Social Security Trust Fund surpluses to balance the general federal budget and disguise the true size of the federal deficit.

At the same time, Hollings announced he was introducing legislation creating a 5 percent value added tax, similar to a national sales tax. Its purpose, Hollings said, is to raise $53 billion a year to finance Moynihan's payroll tax cut and make up for President Bush's proposal to cut the capital gains tax from 28 to 15 percent.

In the current fiscal year, roughly $67 billion in surplus Social Security payroll taxes will reduce the deficit from about $200 billion to $137 billion.

Moynihan has been complaining about this practice for years, warning that if it didn't stop, he would introduce legislation to deal with it.

A more moderate bipartisan legislative approach to the problem was introduced last year by Moynihan and Sen. John Heinz, R-Pa., but was ignored by the Senate's leadership.

The 1989 bill is at the heart of a deal the White House is offering Moynihan. That bill would give the administration another four years to reach the Gramm-Rudman target of a zero deficit. As the law now stands, the deficit must be eliminated by 1993.

In exchange for giving the White House until 1997 to eliminate the deficit, the bill requires the administration to end the use of Social Security Trust Fund surpluses to balance the budget sometime between 1993 and 1997 .

Moynihan said Budget Director Richard Darman told him Monday that Bush will propose something "nearly identical" to Moynihan's 1989 legislation in his budget message next week.

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