Democrats Split on Entitlements; Budget at Risk

On a day the Clinton Administration denounced a proposed cap on entitlement spending, Democratic leaders scrambled Tuesday to head off defections by party members who want to put such caps to a vote.

To drum up support for his troubled deficit-reduction program, President Clinton arranged to meet with House Democrats today, a week in advance of a crucial vote on this key part of his economic plan. He hopes to shore up support from conservative Democrats, who have escalated their drive to curb fast-rising outlays for such programs as Medicare, Medicaid, food stamps and veterans’ benefits.

Vice President Al Gore, who rallied Capitol Hill backers Tuesday, declared that a proposed ceiling on entitlement programs would be “very arbitrary and potentially bad for the economy.”

“We oppose it unequivocally,” Gore said of the plan being advanced by a centrist coalition led by Rep. Charles W. Stenholm (D-Tex.). House members who oppose caps on entitlement programs say such ceilings might require significant reductions in benefits.

Gore spoke out as the House approached a showdown vote next week on a $340-billion bill that combines one of the largest tax increases in history with savings in some benefit programs.

The measure would raise taxes by $246 billion over the next five years, mostly on the rich, corporations, energy users and higher-income Social Security recipients. It also has about $100 billion in spending cuts, including reduced Medicare reimbursements to doctors and hospitals and lower payments to federal workers and retirees.

Stenholm insisted that his proposal for entitlement caps is fully consistent with the goals of Clinton’s deficit-reduction plan because it requires Congress to take action if the deficit does not go down as projected.

“We believe eventually the President will support us on this,” Stenholm said, indicating that he would seek leadership backing to allow the House to vote on his plan. Without such a vote, he said, he and his allies would try to block consideration of the package endorsed by Clinton.

“Many of us feel strongly that whatever taxes are in this package need to be protected,” said Rep. Timothy J. Penny (D-Minn.). “Entitlements are uncontrolled. There’s a risk that entitlement growth will eat up the tax increases.”

Growing spending for Medicare, Medicaid and a few other entitlement programs, which provide benefits for all who qualify regardless of cost, have been blamed by Stenholm and his allies for raising the deficit.

Those programs are driving up spending despite rigid controls on discretionary outlays for defense, foreign assistance and other government programs that do not involve entitlements. Under controls on those programs, total discretionary spending for each of the next five years cannot exceed the actual amount allocated for the current fiscal year ending Sept. 30.

On the entitlement side of the budget, Medicare outlays alone, for example, have been rising about 10% a year. Medicaid spending, affected by high unemployment, has been going up about twice that amount.

Stenholm’s complicated proposal is to limit the growth of spending on federal benefit programs to increases resulting from inflation or changes in population. Under the plan, Congress and the President would set such a cap for each of 19 budget categories. If spending exceeded the ceiling for any one of them, automatic spending cuts would occur in every program in that category to offset the excess outlays.

If Congress failed to impose caps, however, the plan requires automatic cuts in all entitlement programs--including Social Security benefits--and automatic tax increases to offset the excess spending. The plan requires that 80% of the total come from benefit cuts and 20% from higher taxes.

Stenholm’s plan also requires a three-fifths super-majority to raise the caps on benefit programs. Only a simple majority would be needed, however, under certain circumstances: inflation of more than 7.5%, unemployment above 10%, a poverty rate over 15%, a major natural disaster or U.S. involvement in a war.

House Speaker Thomas S. Foley (D-Wash.) professed neutrality on Stenholm’s proposal despite the Administration’s opposition to it. Foley is trying to preserve Democratic unity in advance of a May 27 vote on the giant budget reconciliation bill, which is vital to Clinton’s economic program.

Despite his efforts, Rep. Martin Olav Sabo (D-Minn.), chairman of the House Budget panel, said Tuesday he also wanted to listen to advocates of entitlement caps, even though he has opposed the concept in the past.

“Entitlements are going up faster than projected,” he said. “The question of how to deal with it is more difficult. . . . In Medicare, we are dealing with payments to individuals, to states, to hospitals and other providers.”

Foley said he wanted to meet with all factions in the party to get their ideas on whether to allow any amendments to the bill. The House Budget Committee is expected to clear the bill Thursday for later action on the floor.