GOP Scrambles to Close Ranks on Budget : Legislation: Senate leaders negotiate with party members who object to cuts in education, Medicare. Specter denounces overall bill as ‘unfair.’

Senate Republican leaders, laying the groundwork for passage of their far-reaching plan to balance the budget in seven years, scrambled Tuesday to overcome the very public objections of GOP moderates and others who believe that they are cutting too deeply into education, Medicare and Medicaid while giving generous tax breaks to businesses and the wealthy.

The latest headache for GOP leaders developed when Sen. Arlen Specter (R-Pa.), a contender for the party’s 1996 presidential nomination, denounced the proposed $245-billion tax cut as “unfair” and called the overall budget bill “bad politics as well as bad publicity.”

In remarks eerily reminiscent of Democratic rhetoric--three days before the scheduled Senate vote--Specter asked:

“How can we justify cuts in Medicare and Medicaid, student aid, job training, low-income energy assistance, workplace safety, Head Start, child immunization and earned-income tax credits while we simultaneously give corporate tax breaks . . . and tax breaks to people in high brackets?”

The tax cuts “jeopardize the ultimate goal of balancing the budget,” Specter said, because the largest spending cuts occur in the later years while tax cuts occur at the start of the seven-year period--and there is “no guarantee” that the savings actually will occur.

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Other moderate Republicans--echoing sentiments expressed by Democrats for weeks now--urged their leadership Tuesday to ease cuts in college student loans and to strengthen federal nursing home standards.

In addition, Republicans from across the political spectrum were still complaining about inequities in the proposed new formula for distributing Medicaid block grants to the states.

Such intraparty contention elated Senate Democrats, who quickly reiterated their intention to try to restore all $43 billion in spending cuts slated for the earned-income tax credit for the working poor, to restore all but $89 billion in Medicare cuts, to restore $125 billion of the $187 billion in spending cuts targeted for Medicaid and to restore $7 billion of the $10.8 billion in spending cuts for student loans.

“This week defines the difference between them and us,” said Sen. John Kerry (D-Mass.), referring to Republicans.

But despite the outpouring of eleventh-hour reservations from among their own ranks, Republican leaders expressed confidence Tuesday that they would resolve enough of those problems to win support from all 53 Republicans and pass the budget--if only because the political stakes for the party are so high. A filibuster is not allowed on a budget bill of this type and only 20 hours of debate are allowed.

“We are going to get 53 votes,” Senate Majority Whip Trent Lott (R-Miss.) said of the Senate’s vote on the budget later this week. “This is an all-hands-on-deck vote. This is a no-byes-granted vote.”

Among those negotiating with the moderates was Budget Committee Chairman Pete V. Domenici (R-N.M.). After a private luncheon of all Republican senators on Tuesday, Domenici told reporters: “I tried to tell the moderates that we needed every one of them.”

Indeed even Specter refused to say flatly that he would oppose the budget bill when it comes to a vote Friday if the size of the tax cut is not reduced. “I’m reserving judgment,” he said after the lunch.

Still, Lott, Domenici and other GOP Senate leaders acknowledged that they will have to make changes in the measure to nail down support from wavering members.

The encyclopedic budget reconciliation bill before Congress this week is the centerpiece of the GOP legislative agenda and includes plans to wring savings from Medicare, Medicaid, welfare, student loans and a host of other federal programs, while cutting taxes for individuals and businesses.

But for all the rhetorical flourishes and back-room machinations, the entire package is likely to be vetoed by President Clinton because he is vehemently opposed to GOP plans to cut spending growth for Medicare and other programs for the needy.

For their part, GOP leaders Tuesday said they were encouraged by recent signs that Clinton may be preparing to yield some ground. They cited Clinton’s statements last week that he might be able to accept the GOP’s seven-year timeline for balancing the budget as well as his suggestion that his 1993 deficit-reduction bill had raised taxes too much.

House Speaker Newt Gingrich (R-Ga.) said that those statements were “good signs that there may be a common ground” whenever the White House and congressional leaders begin to negotiate on the budget. The House is scheduled to approve the giant bill on Thursday.

Among the Republican senators who freely expressed their objections on Tuesday was Olympia J. Snowe of Maine, who said that she opposes proposals to trim more than $10 billion from student loans over the next seven years.

Sen. Kay Bailey Hutchison (R-Tex.) said she would vote against the budget bill unless the funding formula for distributing Medicaid money to states is altered.

Texas ended up a multibillion-dollar loser in the complicated formula used in the bill for allocating money to states for Medicaid, a joint federal and state health care program for poor women and children, the disabled and nursing home residents. Several other states lost out in the formula but none as seriously.

Times staff writers Elizabeth M. Shogren and Jon Peterson also contributed to this story.