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Led by Sen. Daniel Patrick Moynihan, Senate Finance Committee Democrats are urging President Clinton to give up the idea of passing a bipartisan tax cut before Congress begins an August recess next Thursday.

The New York Democrat said Friday, "A false sense of urgency brought on by the . . . recess could lead to hasty compromises on issues of importance to Democrats and the American people."

"We're about to balance the budget by cutting Medicare payments to hospitals in New York City, in Buffalo, in Oneonta," he said. "Those Medicare cuts are real.

"The budget is balancing itself," he said. "In 1992, the deficit was $290 billion, which is 4.7 percent of gross domestic product (the standard measurement of the American economy.)

"Right now, I would be willing to bet (the current deficit will be) under $30 billion, or one quarter of one percent of GDP.

"This is no time for a tax cut," he said. "We are in the seventh year of an expansion. We have no inflation and full employment. We are the wonder of the world. This is not the time to start stimulating demand."

Of special concern, the committee Democrats said, is a provision in the House Republican tax bill that would single out for taxation the nationwide portable pension system for higher education, called TIAA-CREF.

The legislation would reduce the pensions of 280,000 retired college teachers and staff, but affect the retirement income of nearly 1.9 million future retirees.

Sen. Alfonse M. D'Amato, R-N.Y., has also complained about this aspect of the House tax bill.

The Democrats' letter to the president was a reverse of 1993, when Clinton was desperately trying to line up Moynihan and other Senate Democrats to support his deficit-cutting tax increases.

Now, the Democrats are fearful that centrist advisers to the president will persuade Clinton to sign a tax bill that could, according to Moynihan, "explode the deficit in 20 years" by cutting revenues by about $1 trillion.

Responding, White House spokesman Michael D. McCurry said, "We're not going to accept a deal just because Congress is going on recess. We'll stick around and wait to get something that the president thinks is in the best interests of the American people.

"We've got a very smart, sensible way to target tax relief on middle income people," McCurry said. "It's preferable to the Republican alternative.

"The president has made it very clear there are aspects about his tax proposal that he thinks must be in a bill that will be acceptable to him, and we're holding fast for those principles."

Moynihan indicated he is suspicious that White House officials have suppressed a midyear fiscal review showing a collapsing deficit. The report would reduce pressure on Clinton to approve tax cuts proposed by the Republicans.

The GOP tax bill would index tax cuts on capital gains -- something Treasury Secretary Robert Rubin has said would needlessly give wealthy investors a double-break on their investments. Investors, he said, already benefit by the increase in value of their stock. Rubin has said a cut in the capital gains tax would have no beneficial effect on the economy.

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