CLINTON TO PUSH TAX CUTS\$100 billion trim proposed for '97.

Byline: David E. Sanger The New York Times

When he presents his election-year budget to Congress this morning, President Clinton will call for roughly $100 billion in tax cuts over the next five years, fleshing out several of his proposals to benefit the middle class and to close a number of loopholes enjoyed by American business.

With the presentation of the 2,000-page document, Clinton will be putting forth some of his main campaign arguments against Sen. Bob Dole, the presumptive Republican nominee. But there are few surprises in the fiscal 1997 budget proposal, which is drawn from Clinton's last offer to Republicans before negotiations broke down two months ago on the still-unresolved 1996 budget.

The largest share of the cuts will come from a tax credit of up to $500 for families with at least one young child, and a deduction of up to $10,000 for college tuition and other degree programs - proposals that Clinton first made in December 1994.

Under the plan Clinton will submit today, almost all the cuts would peak in the 1999 fiscal year and then disappear the following year, unless the deficit is reduced considerably more than the Congressional Budget Office's projections. Assuming the deficit reduction is not ahead of schedule, taxes would increase again just as the next presidential election cycle begins four years from now.

Clinton's $100 billion in tax cuts is roughly half of the amount proposed by congressional Republicans when the jousting over the 1996 budget came to a temporary end, forcing the federal government to operate on a series of short-term resolutions. The two sides are still far apart on issues ranging from Medicare and Medicaid to welfare overhaul, and the administration's fiscal 1997 proposals will go nowhere, congressional leaders say, until the parallel debate on this year's budget is resolved.

"In the next few weeks, everyone's going to have to make a decision about whether or not to give up on the 1996 budget and just limp along, or try to put something together with Dole," one senior administration official said late Monday. "And until we get past this year's problem, the 1997 budget is just a debating point with the Republicans."

Campaigning Monday in Illinois, ahead of today's primaries in the Midwest, Dole again questioned whether Clinton truly wanted a budget deal this year, or whether he saw political advantage in playing out the stalemate. "Mr. President, if you want a real balanced budget, if you want to make fundamental changes, I'm willing to sit down with you," he said. If an agreement is reached, he said: "You'll get credit. I'll get credit."

White House aides, who were traveling with the president in Louisiana, said Clinton planned to meet Wednesday with House Speaker Newt Gingrich and Dole to discuss several issues, including the budget impasse. However, they said the scheduling of the meeting did not signal a breakthrough in the budget talks.

The presentation of the budget gives the president a chance to flesh out many proposals that are whipped around in campaign speeches, and copies of budget summaries being faxed around Capitol Hill on Monday detailed some proposals for the first time. It would, for example, close a series of highly technical corporate tax breaks that save companies roughly $10 billion a year.

But in the budget proposals, Clinton is continuing to resist Republican efforts to reduce the capital gains tax. Instead, he would end the practice of allowing investors to identify which shares of stock they are selling, which often enables them to pay a lower tax by declaring that they are selling the shares that initially cost them the most to purchase. Under the new rule, they would be required to compute profits based on the average cost of the shares they hold in a specific stock.

Perhaps the most striking statistics in the new budget arise from the one area of agreement between Clinton and the Congressional Budget Office: the slow-growth future of the American economy. Both project 2.3 percent annual growth over the next six years, though the Congressional Budget Office predicts that interest rates will be somewhat higher than the White House does.

Those economic assumptions are the underpinnings of the estimates about when the budget finally will be in balance. But several months ago, June O'Neill, the director of the budget office, conceded that the figures for the distant budget years, after 1998, were based on "straightlining the numbers," or taking the last projection and assuming that each successive year would be the same, and did not take into account what would happen if a fairly severe recession hit in the interim.

Even if those projections are unreliable - and most economists say long-term estimates of the economy's health are unreliable by definition - they are the common ground on which Clinton and Dole will battle over the next eight months.