Clinton Decides Against More Spending Cuts, Officials Say

The Clinton Administration has decided not to propose any more spending cuts to counterbalance proposed tax increases in its economic plan--even though the President vowed earlier this week that more cuts were coming, senior Administration officials said Friday.

In the face of growing pressure on Capitol Hill for more and deeper reductions in government spending, White House Budget Director Leon E. Panetta said in an interview that the Administration will stick with its original plan and not draw up a more extensive list of specific cuts.

Asked about major programs that had been thought to be vulnerable, Panetta added that President Clinton will not reconsider his decisions to keep funding NASA’s controversial space station and the superconducting super collider.

Clinton’s budget-cutters studied both projects while the President’s original economic plan was being prepared, and speculation grew in recent days that they might be in jeopardy once again after Clinton said Tuesday that he would seek additional reductions.

Panetta said if Congress wants to propose more cuts, the Administration would be willing to negotiate but will not take the initiative.

“We presented our plan. I think it’s defensible. I think the cuts are defensible. As we have discussions with the Hill and they try to come up with other options, we will be flexible in dealing with them. If they have other ideas, we certainly haven’t closed the door. But I don’t envision us going back and saying: ‘Oh, by the way, here are some more cuts,’ ” he said.

Labor Secretary Robert B. Reich added in a separate interview Friday that the President and his economic team spent “weeks squeezing as hard as we possibly could on defense, non-defense and entitlement programs,” while preparing the Clinton economic program and are holding firm to those decisions.

“I don’t think there is going to be an exercise of a second round of cuts,” Reich said.

Clinton left a different impression on Tuesday, when he told a meeting of the U.S. Chamber of Commerce: “I’m looking for more” cuts. “I am sure, after . . . almost five weeks in office, that there are more cuts coming.”

Clinton’s comments came after an insurrection among Democratic lawmakers forced the White House to agree to delay congressional consideration of the President’s short-term economic stimulus plan, which calls for $30 billion in new spending and tax cuts, until after Congress has a chance to vote on the Administration’s long-term deficit-reduction measures.

The President’s vow to seek more cuts and the change in congressional scheduling reflected growing pressure both from Capitol Hill and the public for deeper cuts in federal spending as part of the economic recovery plan.

Clinton’s package would increase taxes by $274 billion over four years, and reduce spending by $223 billion. Those figures fall far short of the Administration’s initial promise to cut $2 of spending for every $1 in tax increases it proposed--and even missed fulfilling a later pledge to at least meet a 1-for-1 ratio of tax increases to spending cuts.

Furthermore, Administration critics have complained that many of the provisions that Clinton has labeled spending cuts are actually tax increases or increases in federal user fees. Meanwhile, the White House is also counting unspecified administrative reforms in government as spending cuts.

Despite the growing criticism over the shortage of spending cuts in Clinton’s plan, White House officials indicated Friday that the President’s remarks earlier in the week essentially had been made for rhetorical effect. Clinton wanted to underscore the fact that the Administration was open to compromise, they said.

“What the President meant was that we think we are in a pretty good position in terms of the broad public acceptance of our plan, and we think Congress is willing to go forward with the broad framework that we have presented,” a senior White House official said.

“In the course of congressional consideration, the plan is going to change, and we are happy to negotiate if Congress can come up with more cuts,” the official said.

Meanwhile, Reich noted that Clinton wants to make it clear that he will stand by his program--at least long enough to force his Republican critics to present a genuine alternative. That will mean that Republicans who have talked in very general terms about spending cuts will have to be more specific.

“Every time the Republicans complain that there are not enough spending cuts, the President asks: ‘If you have a better idea, then come out with it. What would you cut?’ ” Reich said.

Critics also have complained about the Administration’s decision to propose $100 billion in new domestic “investment” spending over the next four years. Republicans have urged the White House to scale back those new initiatives before it asks the public to accept higher taxes.

But Panetta said the White House is committed to retaining the investment component of the budget and will fight congressional efforts to slash those programs to gain additional savings.

If the Republicans want to debate additional cuts, Panetta said he has long and detailed lists of spending programs that the White House considered cutting and that he will be happy to discuss those cuts with them.

“Boy, do I have lists,” he quipped.

But he added that there are no easy answers, no major spending programs that have not already been reviewed by the White House. And, he said, even the cuts the White House has publicly proposed face tough resistance in Congress despite complaints that the Administration did not go far enough.

The Administration’s proposals to slash a wide range of long-cherished agricultural and rural subsidies, for example, already have met with quiet opposition in congressional committees in which senior Democrats from rural areas hold broad sway.

Killing such big-ticket items as the space station and the super collider could provide additional savings, but Panetta said the President has decided not to do so.

White House and congressional sources indicated earlier in the week that the Administration would not object if lawmakers targeted those projects for spending cuts, but Panetta said Friday that the projects were “thoroughly reviewed by the President.”

With the cooperation of NASA officials, the White House decided to restructure the space station--but not to kill it--in order to live up to Clinton’s campaign promise to keep it alive, Panetta said.

“The President made the decisions, and I don’t think he’s going to change his mind on these issues,” he said.

Clinton himself said Thursday that he supports both the space station and the super collider, although he acknowledged that “they can be debated on the floor of Congress.”

Elsewhere in the budget, however, there are few new alternatives for additional cuts unless Congress is willing to tackle the thorny and politically unpopular issue of reducing benefits for recipients of entitlement programs such as Medicare and Social Security, Panetta said.

But even as the Administration backs away from proposing more spending cuts, Clinton is acknowledging that he probably will have to ask for a second round of tax increases later this year to finance his health care reform package, which is now being prepared by a White House task force headed by First Lady Hillary Rodham Clinton.

The President said he might consider raising taxes on cigarettes and other health-risk products to help finance his plan for health insurance reform, and to pay for universal access to health care for the nation’s uninsured.