Clinton Plan Will Bust, Not Balance, Budget, CBO Says

The Congressional Budget Office declared Monday that President Clinton’s budget, if enacted, would fail to achieve the stated White House goal of balancing the budget in five years and instead would leave a deficit of $69 billion in 2002.

The report prompted some Republicans in Congress to demand that the White House submit a new budget that would make good on its promise to eliminate the deficit.

“They’re getting the rhetoric right, but they ought to come back with the reality,” said House Budget Committee Chairman John R. Kasich (R-Ohio).

An administration spokesman immediately rejected the call for a new budget. Larry Haas, spokesman for the Office of Management and Budget, said that the president’s plan is based on “reasonable and prudent” deficit projections--and includes contingency plans for bigger spending cuts and smaller tax cuts, if its deficit estimates prove wrong.

Despite the latest round of partisan skirmishing, many congressional officials remained hopeful that they could agree on a bipartisan budget-balancing plan this year.

But the new CBO analysis makes clear that any compromise budget first will have to close a large gap between White House and congressional estimates of how much spending has to be cut to balance the budget by 2002.

“This clearly indicates that the president’s budget will have to yield to major changes before a bipartisan deal can be struck,” said Rep. John M. Spratt Jr. (D-S.C.), ranking Democrat on the House Budget Committee.

Democrats argued that the next step should be taken by Republicans, who have not produced a budget of their own this year.

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“I call on my Republican colleagues to forgo further delay . . . and either show us their budget or explain how they would change the president’s budget,” said Sen. Frank R. Lautenberg (D-N.J.), ranking Democrat on the Senate Budget Committee.

The new, more pessimistic deficit estimate was issued by the nonpartisan Congressional Budget Office on the eve of a crucial Senate vote on a constitutional amendment to balance the budget, which has been headed for defeat since last week, when opponents were able to count enough votes to block the measure.

Republicans were hoping the new CBO figures would step up pressure on amendment opponents by dramatizing the need for constitutional discipline to keep the budget in balance.

But Democrats said that vote-switching is unlikely--even if Senate Majority Leader Trent Lott (R-Miss.) modifies the amendment in hopes of winning the one additional vote needed for passage.

“I think it’s going to take more than just fringe cosmetics to deal with the balanced budget differences that we have,” said Senate Minority Leader Tom Daschle (D-S.D.).

With the expected defeat of the balanced budget amendment today, attention is likely to turn to debate over the changes needed to balance the budget.

When the White House released the president’s budget in early February, it said that his plan would eliminate the deficit over five years--and even produce a surplus of $17 billion in 2002.

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But Budget Office Director June O’Neill disputed that claim earlier this year, saying that preliminary estimates by her office indicated that Clinton’s budget would leave a deficit of at least $50 billion in 2002. Now, after a more thorough analysis, the budget office has concluded that the deficit would be even bigger--$69 billion--in the year the White House said it would disappear.

The new analysis also dramatized other criticisms that Republicans have raised: The president’s plan actually would increase the deficit in the short term and would postpone the biggest spending cuts too far into the future to be realistic. According to the budget office , the president’s budget would increase the deficit from $116 billion this year to $145 billion in 1998--even more than the $121-billion deficit the government would run in 1998 if no budgetary changes were made.

What’s more, Kasich said, the budget office estimate shows that 98% of the total deficit reduction would take place in the last two years of the president’s plan.

“The president doesn’t do anything to balance the budget until he and Al Gore leave office,” Kasich said.

Despite his harsh criticism, however, Kasich did not issue an ultimatum for a revised Clinton budget. “We’re not drawing any lines in the sand,” he said.

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Most of the discrepancy between White House and the budget office projections is a result of the more optimistic economic forecasts used by the White House. In addition, the budget office concluded that the president’s Medicare proposals would save less than the White House assumed and that auctioning parts of the broadcast spectrum would raise less revenue than the administration predicted.

The budget office also analyzed the effect of the administration’s contingency plan, which would be implemented if the budget remained out of balance. The plan to impose an across-the-board spending cut in 2002 would trim Medicare spending by $6 billion and Medicaid by $3 billion, while slashing cost-of-living increases for government benefits other than Social Security. The budget office also said the plan would end proposed tax cuts and raise taxes by $24 billion by 2002.