Clinton May Trim ‘Investment’ Plans : Spending: Faced with a budget squeeze, he considers curbing or deferring parts of his long-term $113.6-billion domestic program. He also offers to yield on jobs bill.

President Clinton, described as furious that budget constraints threaten to kill his long-term economic plan, is considering delaying or scaling back domestic spending initiatives that form the heart of his economic agenda for 1994, senior Administration officials said Thursday.

The new budget squeeze has prompted the Administration to consider identifying elements of Clinton’s cherished long-term “investment agenda” that it is willing to scale back or defer until future years, according to Leon E. Panetta, director of the White House Office of Management and Budget. That agenda, which is much bigger than the President’s controversial short-term stimulus plan, includes billions of dollars in education, job training, research and public works spending.

Many of those initiatives were included in the 1994 budget that Clinton released last week. If they are curtailed, a number of Clinton’s most important and visible domestic programs could become little more than small demonstration projects, at least for 1994.

The possibility of revisions arose as the White House signaled Thursday that it is prepared to yield in its test of wills with Senate Republicans over the Administration’s $16.3-billion short-term stimulus. Clinton said that he is willing to scale back his jobs package and called on Senate Republicans who have been blocking it to agree to give ground as well.

“I’m willing to compromise so long as we keep the focus on jobs, keep the focus on growth and keep the focus on meeting unmet national needs,” Clinton said. But the President also identified elements of the short-term plan that he wants to preserve, including programs to create summer jobs, funds for highway construction and extra funding for law enforcement and AIDS.

A spokesman for Senate Minority Leader Bob Dole of Kansas, who is leading the Republican opposition, sought to dispel suggestions that a compromise is close. “There’s nothing new. There’s no deal. There’s no compromise in the works,” Dole spokesman Walt Riker said.

Clinton’s troubles with his long-term “public investment” plan, however, are much bigger--and potentially far more damaging to his overall economic package. The investment agenda, embodied in the budget he sent to Congress late last week, calls for nearly $113.6 billion in additional government spending on an array of domestic initiatives over the next four years.

Without those new initiatives, his long-range economic program would be dominated by deficit reduction and largely financed, at least in the short term, by tax increases.

Aides said that Clinton is deeply committed to his investment plan, since it formed the basis for his campaign manifesto, “Putting People First.” It was central to Clinton’s successful political strategy, distinguishing his economic program from Ross Perot’s stark agenda of sacrifice and deficit reduction.

Clinton’s 1994 budget proposal included all of his investment programs. As a result, the Administration’s budget exceeded spending ceilings imposed in a 1990 agreement between Congress and the George Bush Administration for 1994 and 1995.

To preserve funding for his investment initiatives, the White House will have to persuade Congress to make room in the budget by agreeing to offsetting cuts in existing spending programs.

“What you will have is creative tension between old programs and new programs,” said House Budget Committee Chairman Martin Olav Sabo (D-Minn.).

Administration officials stressed that Clinton will fight hard to preserve as much of his investment agenda as possible in the 1994 budget. Aides said that he seems far more committed to those long-term initiatives than he is to the short-term stimulus.

The investment program was central to his presidential campaign--and the stimulus was not. So the White House included Clinton’s entire investment agenda in the budget even though it means that the Administration failed to comply with the budget ceilings established in 1990.

“The President feels very strongly about these investments,” noted one White House official. “And he has been furious about these budget problems.”

But the bitter standoff over Clinton’s short-term stimulus plan has convinced Administration officials that a fight over long-term spending will be nearly impossible to win. And unlike the stimulus dispute, the battle over his investment agenda would force Clinton into a confrontation with powerful committee and subcommittee chairmen of his own party.

“The President intends to make a fight for his investments. . . . He believes very strongly in those investments,” Panetta stressed. “Having said that, I think he recognizes (that) the Administration faces a tough battle.

“One option is to try to push for all of the investments within the (budget) caps, by making some significant savings elsewhere,” he said. “That is one course of battle.

“Another option would be to prioritize the investments and try to fund some of them at a smaller level, recognizing that some of them could increase in later years. Those are the two main options we are now considering.”

Panetta said that if the Administration is forced to narrow its priorities for 1994, the programs it will push hardest will include Clinton’s national service program, which would enable students to earn college tuition through federal service; full funding for Head Start, an educational program for economically disadvantaged preschool youngsters and expanded funding for the federal nutritional program for pregnant women and infants.

Yet the bottom line looks increasingly bleak for Clinton. The new President may emerge with an economic program that, both in the short- and long-term, is merely a shadow of the one he unveiled in February. After declaring victory when lawmakers endorsed his program while passing broad congressional budget resolutions in March, Clinton is now facing the harsh reality that when proposals go to Congress, the devil is in the details.

“It’s going to be very tough. . . . I’m not sure yet how we’re going to do it, we’re just going to have to fight very hard,” noted one senior Administration official.

The budget squeeze on Clinton’s agenda will be relatively small in fiscal 1994, but will expand over time.

For 1994, Clinton’s new investment initiatives total just over $7 billion and they push the budget $5.7 billion beyond existing budget ceilings. To bring the budget down to those ceilings, Clinton will either have to scale back the new initiatives to $1.3 billion or find cuts in existing programs.

Many of the investment programs will grow rapidly in 1995 and beyond, which means that Clinton will find it far more difficult to find room for his new spending. In 1995, Clinton’s plan calls for $23.2 billion of new investments, a figure that pushes the budget $13.7 billion beyond budget caps.

There are not yet any binding budget caps in place beyond 1995 but Congress is expected to eventually extend new spending limits into the late 1990s.

The White House hopes to persuade Congress to set limits for 1996 and beyond that will be high enough to make room for Clinton’s initiatives. If successful, the Administration would be able to fund elements of its plan that might be deferred from 1994 and 1995.

The battleground between the White House and Capitol Hill over the long-term spending programs will be focused on the complex process of congressional appropriations. Clinton will have to fight, virtually line by line, for his investments in the powerful House and Senate Appropriations committees and subcommittees. Those committees are dominated by powerful legislators who are already concerned that the stringent new budget caps offer little room even for their favorite existing programs.

What’s more, Clinton’s 1994 budget excluded some pet projects of powerful members of Congress, congressional staff members said. That almost certainly will prompt critical members of the appropriations committees to vote to modify Clinton’s budget and oppose his initiatives.

In the areas of the budget controlled by the House Appropriations energy and water subcommittee, for example, Clinton’s budget would reduce funding for about a half dozen water projects long protected by key committee members, at least in part to find money for roughly $360 million in new energy- and water-related investment projects favored by the President.

At the Interior appropriations subcommittee, meanwhile, Clinton has asked for $556.5 million in new investments, and slashed $70 million from federal park and wildlife land acquisition funds to help make room. But the land acquisition program is a favorite of the subcommittee, staff members said.

“I don’t know how we are going to find the bread for these new programs,” said one senior House Appropriations Committee staff member.

Times staff writers David Lauter and Michael Ross contributed to this story.

Clinton’s Top Investments

Listed below are the largest individual “investment” spending proposals in President Clinton’s 1994 budget. The investment roster does not include a proposed $2.6-billion extension of unemployment compensation, which is listed separately in the President’s budget.

(millions)

* Head Start: 814 * Food stamps: 585 * Veterans Administration medical care: 534 * Federal-aid highway program: 415 * Medicaid grants for immigrants: 400 * Summer jobs and employment training: 339 * Women, infants and children food program: 320 * Earned income tax credit: 267 * Advanced defense technology development: 260 * All others: 3,083 * Total investment spending for 1994: $7,017 Source: White House