Clinton Targets Five Agencies to Offset Tax Plan

President Clinton and top Administration officials on Monday staged an elaborate briefing to explain the reductions in government programs that they will seek to compensate for revenue lost because of Clinton’s proposed middle-class tax cut, but they left many questions unanswered.

Clinton said that $20 billion of the $60-billion cost of the tax relief will come from the budgets of five government agencies--Transportation, Energy, Housing and Urban Development, the Office of Personnel Management and the General Services Administration.

But while the heads of all the agencies promised “downsizing” and “streamlining,” many of the specific cuts needed to achieve the $20 billion in savings have not yet been decided.

Also unanswered was how much of the $20 billion will come from onetime savings from selling off public assets, such as the Elk Hills naval oil reserve in California, and how much will come from permanent reductions in ongoing government operations.

In addition, $4 billion in savings from “other” government actions were promised on Monday but were not spelled out.

Flanked by Vice President Al Gore; Alice Rivlin, director of the White House Office of Management and Budget, and the five agency chiefs, Clinton said that the initial $20 billion in savings will grow from an expansion of his “reinventing government” initiative to make government smaller and more responsive.

“We have to change yesterday’s government and make it work for the America of today and tomorrow,” Clinton said at a briefing for reporters. “We propose to stop doing things that government doesn’t do very well and that don’t need to be done by government, and we believe we should increase our efforts where government can make a real, positive difference in the lives of ordinary Americans.”

The revisions include a radical redesign of HUD’s public housing programs for the urban poor, a shift of 40,000 federal air traffic control workers into a semiprivate corporation, sale of surplus uranium to industry, consolidation of grants for transportation projects and the transfer of administrative and personnel tasks performed by the General Services Administration and the Office of Personnel Management to Cabinet agencies or the private sector.

According to figures supplied by the White House on Monday, the revisions will save $10.6 billion at the Energy Department over the next five years, $6.7 billion at Transportation, $800 million at Housing and Urban Development, $1.4 billion at General Services and $30 million at Personnel Management.

Virtually all the proposals require approval by the Republican-dominated Congress, hardly a sure bet in an atmosphere of partisan hostility and zeal to cut government to pay for tax rebates to the public. Republicans already have pledged deeper cuts than the Clinton plan.

Gore described the philosophy guiding the Administration’s plans in this way: “We will stop making so many decisions in Washington that would be better made by state government, local government or individual citizens and we will replace Washington interference with local opportunity.”

The bulk of the savings in Transportation and Housing will come from just such efforts: stripping away government mandates and sending money to states and cities with far fewer strings attached.

“We will increase total transportation investment by cutting red tape and forming dynamic partnerships with cities and states and with the private sector,” said Transportation Secretary Federico Pena. “What we are about is building bridges, not bureaucracy; picking priorities, not pork; moving people, not paper, and, above all, ensuring traveler safety.”

Energy Department officials were hard-pressed to identify specific cuts that would be made, saying that nothing has been formally decided and that Congress would be consulted before certain programs are reduced.

But Deputy Energy Secretary Bill White pledged that the $10.6 billion would be met and said that even greater reductions over five years are possible.

He said that 80% of the reductions would represent cuts in departmental operations and its work force as opposed to simply selling off assets and surplus stocks of highly enriched uranium.

He said that savings of $1.2 billion would be realized in the area of applied research, but did not indicate that any of the department’s research labs like the Lawrence Livermore National Laboratory near Berkeley would be closed.

“We’re going to make our national laboratories more competitive with what you see in the private sector,” White said.

Officials said that turning Elk Hills and related petroleum reserves over to private hands would yield $1.6 billion over the next five years. However, White said he is unsure whether these holdings would be sold outright or leased, explaining that this is a matter on which Congress would be consulted.

Overall, savings in waste management and environmental programs would amount to $4.4 billion, including changes to make the nuclear waste cleanup program more efficient, according to White and others.

In addition, reductions in staffing, operating expenses and overhead for the strategic petroleum reserve program, as well as sales of uranium, would achieve more than $3.4 billion, officials told reporters.

Although many of the numbers sound large, when spread across the scale of the $1.5 trillion a year federal budget and a period of five years, the actual scope of the reductions is small.

At the Department of Transportation, for example, Clinton’s plan would trim spending on infrastructure projects--roads, bridges, airports and railways--by slightly more than 3% over the next five years, about $1 billion from the department’s roughly $25-billion annual infrastructure budget.

The cuts would reduce spending on projects across the country but department officials said that they did not have details on which projects would be reduced and probably will not have such figures until some time next year.

Pena also plans a major reorganization of the department, consolidating several of its agencies and combining about 30 existing grant programs into three new programs. The result of that is supposed to be a more streamlined, and less expensive, department.

Already, Transportation has eliminated about 4,000 positions as part of the Administration’s reinventing government efforts. The department now will try to eliminate several thousand more jobs as part of the reorganization. Officials estimated that the savings will be about $300 million per year.

Separately, the Administration plans to resubmit a proposal that Congress has shot down in the past to put the Federal Aviation Administration’s air traffic control system in private hands. Rather than a federal bureaucracy, the air traffic control system would become a federally chartered corporation.

That plan would not directly save the government money. Some 40,000 workers--air traffic controllers, supervisors and other personnel--would move off the government payroll but the new corporation would also inherit most of the revenue from the existing airline ticket tax. The government should realize some savings, Transportation Department spokesman Richard Mintz said, but more important--because a privately run system would be able to do more for the same amount of money--”you would get better service” for the public and for the airlines.

Times staff writers Robert L. Jackson and David Lauter contributed to this story.

* CHANGES AHEAD FOR HUD: Secretary Cisneros sees new role for embattled agency. A32

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

On the Block

A breakdown of what the President proposed to help pay for his middle-class tax reduction:

* TRANSIT $6.7 billion: Transfers FAA air traffic control system to semiprivate corporation. Consolidates 30 highway, mass transit, rail and airport grants into a single program.

* HOUSING $800 million: Consolidates 60 housing programs into eight. Vouchers would become the basic means of giving housing assistance.

* ENERGY $10.6 billion: Slashes research programs. Turns Naval Petroleum Reserves in Elk Hills, Calif., over to private hands.

* GENERAL SERVICES $1.4 billion: Transfers many of the service functions to other agencies or private sector.

* OFFICE OF PERSONNEL MANAGEMENT $30 million: Scales back agency, transfers many functions to private industry.

WHITE HOUSE WORK SHEET (over five years) Total cuts pledged: $76 billion* Cost to income tax cut: $60 billion Surplus to reduce deficit: $16 billion * Clinton unveiled $20 billion of these cuts Monday