House GOP Plans $200-Billion Cut : Congress: Package of steep reductions over 5 years would be just first of two designed to accommodate tax cuts, balanced budget. Medicare is one of many targets.

The House Republican leadership plans to unveil a $200-billion, five-year plan for spending cuts by the end of January as the first of two such packages designed to replace revenue lost to sweeping tax cuts and to help achieve a balanced federal budget.

The Medicare program is just one of many candidates for steep cutbacks, said House Budget Committee Chairman John R. Kasich (R-Ohio), who has been designated by House Speaker Newt Gingrich (R-Ga.) as the House point man on spending and deficit reduction.

Kasich said in an interview that the first spending cut package alone will dwarf the deficit reduction proposals to be unveiled in President Clinton’s budget Feb. 6. Clinton is expected to propose $76 billion in spending reductions over five years, largely to compensate for the $60-billion White House plan for middle-class tax relief.

Kasich’s aggressive strategy also seems certain to steal the initiative from Senate Republicans, who so far have not outlined any plans to issue a comprehensive budget of their own. The Senate leadership did not endorse the House GOP “contract with America” during last fall’s election campaign and does not appear to be in as big a rush as the House leadership to push through a radical change in the nation’s economic agenda.

Kasich said his first budget will include an array of spending reductions that he first proposed in a controversial 1993 deficit reduction bill that was defeated by the then-Democratic majority in the House.

Among other things, that legislation called for elimination of agencies like the Interstate Commerce Commission and consolidation of the Commerce and Energy departments, along with killing a series of major defense programs like production of new cargo aircraft. President Clinton successfully lobbied against Kasich’s plan at the time, arguing that it would impose too much deficit reduction and thus would harm the economy.

But overall, Kasich emphasized, his new package will be far larger than the 1993 plan. And, he said, its program slashing will require much greater courage by congressional Republicans than they have ever been asked to muster before.

At a meeting Thursday with Gingrich and Rep. Bill Archer (R-Tex.), chairman of the House Ways and Means Committee, Kasich said he argued that “what we are talking about doing is not impossible, it just requires political will.”

Still, the Budget Committee chairman admitted that his effort to win agreement from other House Republican leaders for the first package of budget cuts has been slow going and may delay the release of his first budget proposal. He is now in the process of negotiating agreements with other Republican committee chairmen on individual spending cuts to be included in his plan. He has yet to deal with the Senate or the White House.

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But Kasich remains optimistic. “There have been a few bumps in the road,” Kasich conceded. “But we are still light-years ahead of where we were even two months ago. This is still just early January. So I think you have to look at it as a glass that’s half full.”

Kasich said he has tried to reassure other Republican committee chairmen that he will impose cuts across the entire federal Establishment and will not single out any one area.

Kasich said that overspending on entitlement programs, which Congress repeatedly has failed to address, will mean painful slashing. He noted that the Republican deficit reduction agenda will require, for instance, the “transformation of Medicare.”

And he said that all of the other major committee chairmen recognize that they will have to accept sweeping spending cuts in major programs under their jurisdiction.

“They all know that and they are all ready to accept significant reductions,” Kasich said. “Our whole party is on a mission.”

The first set of spending cuts, Kasich said, will make room for the tax cuts that House Republicans have promised in their “contract with America.” House GOP leaders estimate that the tax cuts in the contract will cost roughly $147 billion over five years. The Clinton Administration has issued far higher projections, however, apparently intending to show that the Republicans are wildly underestimating the damage their plans could do.

The second set of cuts, to be unveiled later in 1995, will represent a down payment on a constitutional amendment for a balanced budget, which is another provision of the Republicans’ campaign contract.

Estimates of how much it would cost to comply with a balanced-budget amendment vary widely, but the Administration has warned that it could take as much as $743 billion in additional spending cuts over five years. The GOP contract calls for the full implementation of a balanced budget by the year 2002.

Kasich said that he plans to craft a five-year budget resolution in his committee that will identify spending reductions solely to finance the Republican contract. That resolution will call for cuts beginning in fiscal 1995, which is already under way, and will impose reductions in programs already funded under the last Clinton budget.

Among the clear targets are Clinton’s so-called “public investments” in areas like education, job training and health care that have enjoyed spending increases. In a proposed 1995 budget that Kasich issued last spring, he called for paying for tax cuts in part by slashing every one of Clinton’s investment initiatives.

After the first budget resolution is approved, Congress will engage in a “budget reconciliation” to merge the spending and tax plans of the contract, Kasich said.

He said that he then plans to push for a second budget resolution later this year, which would lay out how the GOP would begin to move toward a balanced budget. That would include additional spending cuts for the five-year period beginning in fiscal 1996 and would be packaged in a second budget reconciliation bill.

Such a two-track legislative strategy would be unprecedented. Congress normally only deals with one budget resolution and one reconciliation bill each year.

Kasich’s power over virtually all spending matters in the House is unique in the recent history of Congress and stems largely from his personal relationship with Gingrich. Kasich is one of Gingrich’s closest advisers and best friends.

“I’m the only person that Newt shouts at,” Kasich said. “I’m like his younger brother.”

Kasich also vowed that special interest lobbyists are not going to deter him from pursuing his mission of proposing draconian cuts in the federal Establishment.

“I don’t care what lobbyists say, because I don’t care if I’m here in two years,” he said. “I know that my job is going to make just about everybody angry. But frankly, I think the balanced-budget amendment is going to take care of the lobbyists in Washington.”