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Sunday, January 21, 1996 - Page updated at 12:00 AM

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Clinton's Budget Proposal Makes Deep Cuts In 7Th Year

Newsday

WASHINGTON - Deep in the fine print of President Clinton's seven-year balanced-budget plan is a little zinger that might surprise supporters impressed by his vow to protect education and environmental programs.

In the seventh year, Clinton proposes even deeper cuts in domestic programs than Republicans are proposing in their balanced-budget plan. By that time, he would be out of office, even if he were elected to a second term.

The $110 billion in cuts in programs subject to annual spending bills, such as education, environment and defense, is the critical element that tips Clinton's plan into balance in 2002. By comparison, Republicans, in their last budget offer, proposed cutting domestic spending by $102 billion in 2002.

The Republican cuts in these programs make up a much smaller proportion of their overall budget cuts than in Clinton's plan. Ironically, the White House has battled Congress for months over the cuts in these programs that would be quickly dwarfed by the ones in Clinton's own budget plan.

Several budget analysts estimated that, assuming defense spending is cut slightly, other domestic programs would face average cuts of more than 30 percent. But even that may leave little for education and environmental programs once such politically popular programs as federal prisons, border control and veterans' health care receive full funding.

"We would be facing some extraordinary budget choices," said Robert Greenstein, executive director of the Center for Budget and Policy Priorities.

This aspect of Clinton's plan has received little scrutiny, but it is one reason talks with congressional Republicans have stalled again.

Last week, after budget talks broke down, Republicans rebuffed the president's entreaties to return to the negotiating table.

"It is a spend-now, save-later budget," said Senate Majority Leader Bob Dole, R-Kan. "Spend now, get re-elected, serve another term, get out of town, and then the ax will fall on anybody who is left."

Clinton would defer about 60 percent of the cuts in annually funded domestic programs until 2001 and 2002. But the Republicans also "backload" 53 percent of the cuts in those areas in the last two years of the plan.

Clinton has frequently reached into his suit pocket and pulled out a letter from congressional economists certifying that his plan would balance the budget in seven years under conservative economic assumptions. This was the Republican demand last year, and Clinton finally produced a plan that met this criterion.

But Republicans complain that Clinton took the easy way out by making most of his cuts in so-called discretionary programs. The budget pie is divided into two main pieces: discretionary spending, which is funded through annual spending bills; and mandatory spending, which involves benefits programs such as Medicare that operate on automatic pilot unless changed by law.

Under the budget rules, any cuts in benefit programs (also known as entitlements) must be specified, so economists can determine whether the policy changes will result in actual savings. But cuts in discretionary programs can simply be asserted, because it is up to future Congresses to decide where to make the cuts.

Spending on benefits programs, however, is the fastest-growing part of the budget, and Republicans say it must be brought under control in order to ensure balance in 2002.

"You can have a budget that has very little entitlement reform in it," said Senate Budget Chairman Pete Domenici, R-N.M. "That is not going to be acceptable, because it doesn't do the fundamental things that keep the budget in line for the future."

Under the Republican plan, cuts in mandatory spending each year either meet or exceed cuts in discretionary spending. In 2002, for instance, benefits programs would be cut by $108 billion, while discretionary programs are cut $102 billion.

Clinton, by contrast, would cut mandatory programs by just $78 billion that year, while the discretionary programs would take a $110-billion hit.

Joseph Minarik, associate director of the White House budget office, has been distancing the president from the plan, saying it was largely drafted by Sen. Tom Daschle, D-S.D.

Moreover, Minarik said, the White House still believes its rosier economic forecasts are more accurate. Thus, he said, the White House expects to add tens of billions of dollars to these programs by 2002.

Copyright (c) 1996 Seattle Times Company, All Rights Reserved.

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