Clinton, GOP See Narrow Differences on Budget

Republicans in Congress grudgingly embraced President Clinton’s $1.7-trillion budget Thursday as a starting point for negotiations that they hope will produce an agreement to eliminate the deficit by 2002.

Republican leaders complained that Clinton did not move boldly enough on politically sensitive issues like curbing Medicare growth, and denounced him for proposing too many new spending programs and not enough tax cuts.

But they left the door open to negotiations with the White House, which could begin as early as next week.

“I do not say this budget is dead on arrival,” said Senate Budget Committee Chairman Pete V. Domenici (R-N.M.). “It’s arrived. It’s alive. This is a very good starting point.”

Indeed, for all the GOP criticism of particular elements and details of the president’s budget, the two sides have never been closer to agreement.

Clinton has embraced the Republicans’ goal of balancing the budget by 2002, has moved in their direction on Medicare savings and has signaled greater willingness to cut taxes.

And Republicans, for their part, essentially have abandoned efforts to wring bigger savings from Medicare and seem to have no stomach for a fight on Clinton’s efforts to expand the education budget.

“Obviously there are going to be differences between the administration and Congress, but on a lot of things there isn’t going to be any argument,” said Stanley E. Collender, a budget expert with Burson-Marsteller, a public relations firm.

If anyone has grounds for complaint about the president’s budget, it may be Democrats in Congress who were reluctant converts to the budget-balancing goal and who bridled when Clinton proposed bigger Medicare savings.

But Sen. Frank R. Lautenberg of New Jersey, ranking Democrat on the Senate Budget Committee, predicted that few Democrats would break ranks. “Those who have some doubts, who are skeptical, will say, ‘Listen, this perhaps is the best we’re going to get,’ ” Lautenberg said. “I think the last thing they want to do is have some internal warfare within the party challenging the president.”

Lautenberg predicted that whether Republicans cut a deal with Clinton will depend on whether they keep their right wing in line.

Indeed, some conservative Republicans already have come out swinging against Clinton’s budget.

“The administration has embarked on a journey to Shangri-La, a mythical place where spending goes up, where the future is of no consequence, where the world is at peace and where budgets magically balance with a wave of the hand,” said House Majority Whip Tom DeLay (R-Texas).

Senate Majority Leader Trent Lott (R-Miss.) offered a more measured response. He criticized the president’s budget for allowing the deficit to rise in the next two years, for shifting rather than cutting Medicare costs and for proposing that the bulk of the painful budget cuts come far in the future, after Clinton leaves office.

“As for the whole budget, well, I suppose that you could say it’s alive but definitely not kicking,” said Lott. But he remained optimistic that a deal could be struck quickly. “We will come up with a budget hopefully within six weeks or so that is supported by the administration and the Congress,” Lott told reporters.

Lott and other GOP leaders have invited Clinton to Capitol Hill next week to discuss the budget and other areas of common concern.

The president’s budget and its reception on Capitol Hill is a vivid illustration of how much the political landscape has shifted over the last two years. After they took control of Congress in 1995, Republicans boldly proposed saving $270 billion in Medicare, ending many entitlements and cutting spending for popular education and environmental programs.

Now they seem unwilling or unable to push for such far-reaching changes. That caution is the legacy of the 1996 campaign, when Republicans were hit hard by Democrats for seeking big savings in Medicare and other social programs.

“We went out and tried to dramatically change the country to deal with entitlements,” said House Budget Committee Chairman John R. Kasich (R-Ohio). “But I think you know that last fall we really got pretty badly demagogued by our opponents.”

The fiscal landscape is also more hospitable to striking a deal. Because of improvements in the economy, budget analysts now are projecting smaller deficits in 2002 than they did a year ago, which means that it will take less-drastic measures to eliminate the deficit.

The president’s budget leaves plenty of room for negotiation, and Republicans found plenty to criticize. They faulted Clinton for creating new programs, like new aid for victims of Alzheimer’s disease, at a time of fiscal constraint. But Domenici conceded that some of the new programs will be hard to fight. “Who is going to oppose adding $14 billion in new entitlements in Medicare when it’s for Alzheimer’s disease?” he asked.

Republicans also challenged the White House claim that the president’s budget would eliminate the deficit by 2002. Using the less-optimistic economic forecasts of the Congressional Budget Office, Republicans said that Clinton’s budget would leave a deficit in 2002 of $50 billion or more.

On taxes, Republicans are determined to push for bigger, broader tax cuts than Clinton has proposed. A top GOP priority is a broader capital gains tax cut than Clinton’s, which would apply only on assets from the sale of a home.

On welfare, GOP leaders adamantly have opposed making major changes in the 1996 welfare law, such as Clinton’s proposal to restore benefits lost by legal immigrants. However, under pressure from the governors of states with large immigrant populations, GOP leaders said that they may consider a block grant or other “transitional funding” for legal immigrants in those states.

Republicans seem receptive to some of Clinton’s education proposals, but with reservations. Republicans on the House Committee on Education and the Workforce wrote to Clinton saying that they “support and share the intent” behind his proposal to allow parents to claim tax credits and deductions for college costs but raised questions about whether it would drive up tuition costs.

They resisted his proposal to provide new aid for school construction, saying that is not a federal responsibility.

Other Republicans expressed doubts about Clinton’s heavy focus on higher education, which does little for the large number of needy people who do not go to college.

Yet such policy disagreements seem far more manageable than the monumental differences over the role of government that split the parties a year ago.

“You’d have to be pretty pessimistic” not to view the situation as more likely to produce a budget agreement than a year ago, said Kenneth Kies, chief of staff of Congress’ Joint Committee on Taxation. “This time, both Republicans and Democrats are going to take a hard look at everything Clinton is proposing.”