Senate Panel Approves Deficit-Cutting Package

The Senate Budget Committee, voting along party lines, Thursday night approved a modified version of President Clinton’s economic plan aimed at cutting an additional $96 billion from the gaping federal deficit over the next five years.

The spending blueprint was approved on a 12-9 vote after a day in which committee Democrats beat back dozens of proposed Republican amendments. A day earlier, the House Budget Committee approved its own version of Clinton’s plan. Both houses hope to give final approval to the budget by the time they leave for their Easter recess in early April.

The Senate committee’s spending plan envisions $1.5 trillion in federal expenditures for the fiscal year beginning Oct. 1.

Next year’s deficit would be $254 billion if Clinton’s proposed economic stimulus package also passes, leaving the nation with a public debt of more than $3.5 trillion. The budget deficit for fiscal year 1993 is projected at $308 billion.

Although the plan claims to reduce the deficit by almost half within five years, budgets in recent years have not lived up to their ambitious promises.

The budget resolution is merely a broad outline of spending priorities. The more difficult work of deciding which programs must be cut, and which taxes raised, falls to other committees with jurisdiction over those areas. That work is not expected to be completed until this summer at the earliest.

Senate Budget Committee Chairman Jim Sasser (D-Tenn.) emphasized that the budget follows the spending priorities set by Clinton, although it would cut spending by an additional $41 billion, largely by stretching out the President’s so-called investment initiatives, which include job training and infrastructure spending.

It also would raise an additional $22 billion in taxes. The committee recommended raising the money by limiting the value of itemized deductions that may be claimed by upper-bracket taxpayers, although its suggestions are not binding on the Finance Committee, which writes tax law.

Much of the additional savings would be accomplished by shifting federal borrowing from long-term debt to shorter-term issues, taking advantage of the recent dramatic plunge in interest rates.

The additional deficit reduction had been added to win the votes of Democrats in both houses who had complained that Clinton had not gone far enough.

Throughout the debate, Republicans charged that the plan was loaded with accounting gimmickry that exaggerated the impact it would have on the gaping deficit. “The American people are not dumb, and woe be to many when they wake up,” Sen. Phil Gramm (R-Tex.) warned early in the three days of deliberation.

Democrats countered that it was a far more honest accounting than had been offered during three Republican administrations. The debate got intensely personal as Sen. Ernest F. Hollings (D-S.C.) replied to Gramm: “I finally woke up about you, senator. I’ve awakened. I know what (the Republicans) are doing. They are the guardians of gridlock.”

A senior Clinton Administration official said the additional size of the deficit-reduction package proposed by the Senate could act as a brake on the economic recovery.

Approval of the Senate plan would involve “taking more of a risk (with the economy) than you would want to take,” said the official, who requested anonymity.

Times staff writer David Lauter contributed to this story.