Senate OKs Blueprint to Balance the Budget : Deficit: Plan, pledging no tax cuts, passes on 57-42 vote. Democrats are rebuffed in bid to shift spending priorities.

The Senate Thursday approved a thick blueprint of spending limits aimed at balancing the federal budget by the year 2002, as Republicans pressed their assault on the deficit.

The Senate plan--in effect a road map to a balanced budget without the details--passed, 57 to 42, after more than 50 unsuccessful Democratic amendments intended to change spending priorities. Three Democrats joined the GOP in the final vote.

But in a pointed departure from House budget guidelines approved last week, the Senate version stopped short of pledging any tax cuts, setting the stage for hard bargaining between the Republican-led chambers in coming days.

“Today the Senate will make a statement and we’ll make history in the process,” declared Senate Majority Leader Bob Dole (R-Kan.), moments before the climactic vote. “We will finally begin to unpile the deficits. We will finally begin to speak for the future. And we’ll do it with one word. Leadership.”

All week long, Democrats tried in vain to alter the budget, complaining that the GOP plan was unfair to the needy, the elderly and other Americans who rely on the government for student aid, health care and other benefits. California Sens. Barbara Boxer and Dianne Feinstein, both Democrats, voted against the measure.

“This budget is the broadest retreat from the American dream I’ve ever seen in my time as an adult,” Boxer said in a last-minute floor speech.

The White House did not find the budget plan to its liking. “We must balance the budget, but there is a right way and a wrong way,” White House Chief of Staff Leon E. Panetta said Thursday night. “The Senate budget is a textbook example of the wrong way.”

President Clinton has said he would compromise on the budget but not if the final plan includes tax cuts for the rich, education cuts and certain reductions in projected Medicare spending.

While many Democrats assailed the Senate blueprint for cutting spending, it actually would allow total outlays to increase during the next seven years but at a more modest, 3% pace instead of the 5% rate that otherwise would be expected. At the same time, the document would overhaul business as usual for much of the government, eliminating activities, slashing costs in many cases and transferring responsibilities to the private sector.

Spending would go down in real terms for science and space, energy, natural resources, transportation, education and training, agriculture, international affairs as well as other areas. However, the nitty-gritty decisions of precisely where the ax would fall within these broad categories remain the province of congressional committees that now face extraordinary pressures to protect pet projects and programs. These committees will work on specific appropriation bills all summer before a final budget is thrashed out.

By a vote of 55 to 44, the Senate amended its plan to open the door for tax cuts but inserted a noteworthy “if.” Tax relief for families would be approved in the future, if a hoped-for dividend of lower interest rates and new growth should emerge as a byproduct of a healthier budget.

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“It’s an important first step but it isn’t the final step by any means,” cautioned Stanley E. Collender, a federal budget expert with the Price Waterhouse accounting firm in Washington. “Without it, you probably wouldn’t get anywhere close to a balanced budget. But with it, there’s still no guarantee.”

Still, Republicans were ebullient that their attack on the deficit has advanced as much as it has and were keenly aware of the possible political rewards if the nation accepts their priorities.

Sen. Pete V. Domenici (R-N.M.) pointed to color photographs of young children that had been set up behind him for the benefit of television cameras. Below each face was a price tag of the projected amount they would pay in a lifetime if the deficit continues on its current course.

“For the first time in 25 years, the grown-up leadership of America is going to say, ‘We’re going to pay our own bills,’ ” said Domenici, chairman of the Budget Committee.

Earlier, House Speaker Newt Gingrich (R-Ga.) made an unusual appearance on the Senate floor, just as Domenici and Dole had paid their respects in the Speaker’s chamber last week when the House passed its own budget plan.

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After the vote, the normally reserved Domenici gleefully presented Dole and Republican members of his budget panel with a set of perfectly balanced scales, a metaphor for the budget.

“Some people don’t think elections make any difference,” he said. “That last election was about a lot. It was about tonight.”

Operations as obscure as the Board of Tea Experts or the Swine Health Advisory Committee and as familiar as the Department of Commerce and the Surgeon General’s Office would be wiped out, under the outline approved Thursday. Overall, the Senate plan would terminate more than 100 federal programs, including Clinton’s National Service initiative, the Interstate Commerce Commission, the Office of Technology Assessment, subsidies for Amtrak and dozens of little-known boards and commissions.

Defense spending would remain virtually frozen, as the White House has proposed, while outlays for Medicare, Medicaid and certain welfare programs would continue to rise but at lower rates than before, saving $431 billion in health care alone. Overall, the Senate’s sweeping manifesto of spending priorities known as a budget resolution, would knock slightly less than $1 trillion off the government’s projected expenses by 2002.

In a sign of the balanced-budget mania that now grips Congress, even dissident Democrats scrupulously suggested ways to pay for their proposals and avoid further red ink.

“This debate is about priorities. It’s not about goals,” said Senate Minority Leader Tom Daschle (D-S.D.), adding that everybody agrees on the need for a balanced budget. But the GOP plan, he said, “virtually abandons ordinary Americans, families, students, veterans, seniors and children.”

Yet it is big differences within the GOP itself that will determine the shape of the final budget plan.

Unlike the House budget outline, which includes a $353-billion package of tax relief for families and businesses, the Senate plan calls for a tax package half that size only if an economic dividend materializes. Earlier this week the Senate decisively rejected a bid by Sen. Phil Gramm (R-Tex.) to include the big House tax package in its own budget.

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Including tax cuts in a plan to slash the deficit is “kind of like going on the wagon by starting off chug-a-lugging a bottle of whiskey,” said Sen. Sam Nunn (D-Ga.), one of three Democrats to support the GOP budget resolution. Sens. Charles S. Robb of Virginia and Bob Kerrey of Nebraska were the other Democrats to vote for the GOP plan.

Shortly afterward, Dole declared: “Make no mistake about it. In the final analysis we intend to provide tax relief.”

The House and Senate also differ on spending for Medicare and Medicaid, with the Senate providing larger budgets, and spending on defense, with the Senate providing less. While the Senate would eliminate the Department of Commerce, the House also would place the departments of Education and Energy on Death Row.

In an alternative plan that was voted down, 60 to 39, on Thursday, Democrats would have kept accounting for Social Security separate from the budget-balancing effort.

Times staff writers Melissa Healy and Janet Hook contributed to this story.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Same Destination, Different Routes

Comparing the House-passed and Senate-passed federal budgets, from which a conference committee of House and Senate Budget Committee members will try to forge a compromise.

TOTAL DEFICIT REDUCTION

HOUSE: $1.04 trillion over seven years compared with projected deficits under current policies.

SENATE: $961 billion over seven years.

TAX CUTS

HOUSE: $353 billion over seven years for a $500-per-child tax credit, a 50% reduction in the capital gains tax and a variety of other measures.

SENATE: Nothing now, but the possibility of as much as $170 billion over seven years if the budget, by reducing the government’s borrowing needs, would also reduce its interest payments.

SOCIAL SECURITY SAVINGS

HOUSE: None

SENATE: None

MEDICARE SAVINGS

HOUSE: $282 billion over seven years by reducing the annual growth rate from 10% now to an average of about 5.4%.

SENATE: $256 billion over seven years by reducing growth to an average of about 7.1%.

MEDICAID SAVINGS

HOUSE: $187 billion over seven years by gradually reducing growth from about 10% a year now to 4% in 2002.

SENATE: $175 billion over seven years by reducing growth somewhat more gradually to 4% a year.

DEFENSE SPENDING

HOUSE: $68 billion more over five years than the $25-billion increase that the Administration is seeking over projected spending levels.

SENATE: Nothing beyond the Administration’s $25-billion increase.

AGENCIES ABOLISHED

HOUSE: Commerce, Education and Energy departments, Corporation for Public Broadcasting, National Endowments for the Arts, National Endowment for the Humanities, etc.

SENATE: Commerce Department, Office of Personnel Management, Interstate Commerce Commission, etc.

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Source: Congressional Quarterly, Associated Press