Againt the deal from the right, Sen. Gramm (128K wav)

Againt the deal from the left, Sen. Wellstone (192K wav)

Rep. Archer says this is only the beginning (192K wav)

Rep. Kasich gives power to the people (256K wav)

Sen. Domenici has waited 20 years for this agreement (256K wav)

Rep. Armey says Republicans got what they wanted (288K wav)

Rep. DeFazio warns this deal is too good to be true (384K wav)

Rep. Salmon says it could have been worse (256K wav)

Related Stories:

The Budget: A Look At The Spending Side (7/30/97)

Congress To Vote On Budget, Tax Bills (7/30/97)

Weighing In On The Budget Deal (7/30/97)

Clinton, GOP Leaders Hail Budget Pact (7/29/97)

Explaining The Budget (7/29/97)

How The Deal Affects You: A look at the agreement's tax breaks for families, capital gains and education. (7/29/97)

GOP, White House Say Budget A Done Deal (7/28/97)

Senate, House Approve Historic Budget Plans (6/25/97)

In Focus: The Balanced Budget
If you're looking for more information on the struggle to reach the balanced budget agreement, check out this balanced budget backgrounder.

Take A Stand! Will the deal work? | The Tally


How The Budget Deal Could Affect You

Agreement includes education and child care tax credits, higher cigarette taxes

By Thomas H. Moore/AllPolitics


WASHINGTON (July 28) -- The balanced budget deal, if it becomes law, includes provisions that would affect nearly every American's pocketbook, with a net $90 billion in tax cuts. Moreover, negotiators say it would balance the federal budget by 2002. That's the first time that's happened since 1960s, and could mean lower interest rates that would cut the cost of consumer borrowing.

Keep in mind the difference between a tax deduction and a tax credit. A deduction, such as the charity deduction, allows taxpayers to reduce the amount of income on which they have to pay taxes. Someone making $30,000 per year who donates $2,000 to charity only has to pay taxes on $28,000 of income. The value of the deduction depends on what one's tax rate is.

Tax credits, such as those being discussed for children and education, are much more valuable; they are lopped right off one's tax bill. Someone who owes, for example, $8,000 in taxes and has three children would owe only $6,800 in taxes if the $400-per-child credit becomes law.

Capital Gains


Top tax rate is 28%, 15% for those in lower income brackets.


Top rate would be 20% effective today, July 29, 1997, for investments held between one and five years. Investments held for more than five years would be taxed at a 18% rate beginning in 2001. The corresponding rates for those in lower income brackets would be 10% and 8%.

Child Tax Credits


No tax credits.


$400 per child 16 and younger, rising to $500 in 1999. Begins to phase out for individuals earning $75,000 and couples earning $110,000. Couples with incomes as low as $18,000 can take advantage of the credit, even if they pay no taxes; they'll get a check from the government.

Tobacco Taxes


24 cents per pack.


34 cents per pack in 2000, rising to 39 cents in 2002.

Estate Taxes


First $600,000 of an estate is exempt from taxes.


The amount exempt rises to $1,000,000 over 10 years. The amount exempt rises to $1.3 million immediately for those with family farms or small businesses.

Real Estate


Taxes are deferred on profits on a primary residence when they are reinvested in another home; homeowners can exempt $125,000 in profits one time once they turn 55 years old.


First $500,000 in profits is exempt, and the exemption may be used as often as every two years.



No education credits.


$1,500 a year for the first two years of college, $1,000 per year for each year after that.

The plan also calls for $24 billion in new spending on children's health over five years. It saves $115 billion from Medicare over five years, primarily squeezing the money out of providers but also increasing some premiums. It calls for $14.4 billion in welfare spending that would reinstate benefits to disabled legal immigrants.

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