Senate OKs $1.7-Trillion Balanced ’99 Budget

The Republican-controlled Senate approved a landmark $1.7-trillion balanced budget for 1999 on Thursday night, but only after GOP leaders averted a floor rebellion by promising to seek tax cuts beyond the $30 billion already in their budget blueprint.

The intraparty detente cleared the way for Senate passage of the first budget plan in a generation to show a surplus. The bill passed by a vote of 57 to 41, allowing members to begin a two-week recess.

When Congress returns in mid-April, the internecine GOP dispute over tax cuts will shift to the House, where an even more fractious battle looms.

In its budget resolution, the Senate brushed aside a number of President Clinton’s domestic initiatives. But it agreed to Clinton’s request to set aside the estimated $157 billion surplus over the next five years until Congress decides how to prepare the Social Security program for the retirement of the baby boom generation.

Aided by a booming economy, the balanced budget is a remarkable achievement that only a few years ago seemed like a pipe dream. As recently as 1993, America had a $290-billion deficit that was still growing.

“We look forward to an era of balanced budgets, an era of solid economic growth, an era when we fix Social Security permanently, fix Medicare permanently and we actually put our budget where our mouth is,” said Senate Budget Committee Chairman Pete Domenici (R-N.M.), author of the GOP plan.

It projects that this year--three decades after the country last saw a surplus (of $3 billion)--the federal government’s revenues will exceed its spending by $8 billion.

The looming surpluses are what is whetting anew the GOP’s appetite for tax cuts.

“The American taxpayers have been looking for a commitment from this Congress that we are working for them--to lower taxes for working families and leave them a little more money in their pockets at the end of the day,” said Sen. Rod Grams (R-Minn.), one of five Republicans who had threatened to vote against the party’s budget because of what they considered an insufficient tax cut.

Their ensuing compact with Senate Majority Leader Trent Lott averted an embarrassing defeat for the Mississippi Republican. Had they voted with the 45 Democrats against the GOP budget, Vice President Al Gore presumably would have cast the tie-breaking vote, sending the budget plan to defeat.

As a part of the agreement, Lott and his leadership team vowed to embrace whatever tax cut the House adopts later this spring, according to the five GOP senators. The House tax package is widely expected to be in the neighborhood of $60 billion.

The five Republican tax insurgents are Grams, John Ashcroft of Missouri, Sam Brownback of Kansas, James M. Inhofe of Oklahoma and Bob Smith of New Hampshire.

They said the agreement also puts at the top of the list of tax cuts the eventual abolition of the so-called marriage penalty, which levies a higher income tax from married couples than from unmarried couples who live together.

“Because I was prepared to vote against the current proposal for cosmetic tax cuts, the Senate leadership has reached an understanding with me and the others on a plan for greater tax relief for America’s families,” Ashcroft said. “The tax on marriage puts Washington’s politics at odds with our deepest social values.”

After the House adopts its budget resolution, members from each chamber must meet in conference committee to resolve the differences between the two documents.

In those negotiations, Ashcroft and his allies said Thursday, the size of the House tax cut must serve as the “baseline.” They expressed their hope that the ultimate tax cut will be “in the multiples” of the $30-billion figure in the Senate budget resolution.

Clinton has proposed $24 billion in tax cuts through 2003.

Lott agreed to appoint Grams as a delegate to the Senate-House conference, according to the five senators.

Earlier in the day, Sens. Paul Coverdell (R-Ga.), John McCain (R-Ariz.) and others offered an amendment to the budget resolution that would have cut taxes by $196 billion over five years. But it lost in a 62-to-38 vote, with 17 Republicans joining the 45 Democrats in opposing the proposal.

Conservative Republicans in both the House and Senate have been seething over what they regard as a lack of commitment by their leaders to enact bigger tax cuts, recalling that only a few years ago their leaders had sought tax reductions of $350 billion.

Ashcroft and his allies would not specify how any tax cuts would be paid for, saying simply all cuts would be “offset”--presumably by tax hikes, spending cuts or using the surplus.

But that task will be all the more difficult given the huge highway and mass transit bill just passed by both the Senate and House. The transportation bill contains billions of dollars in spending increases that also must be paid for.

The budget resolution, while nonbinding, sets broad spending and revenue targets for the coming fiscal year, which begins Oct. 1.

The document calls for using any income from tobacco settlement revenues to help shore up the Medicare program, but such a tobacco deal is far from certain.

As part of the budget resolution, the Senate, in a 59-to-40 vote, expressed support for a GOP plan to “sunset” the federal income tax code after 2001--even though Republicans cannot agree on a specific replacement.

“This bipartisan vote for this amendment shows that the Senate has the will and desire” for a simpler tax code, Brownback said.

Democrats were unable to garner majority support for Clinton’s proposals to renovate schools, hire 100,000 new elementary school teachers to reduce class size and provide after-school learning programs.

As a result, Senate Minority Leader Tom Daschle (D-S.D.) charged that “450,000 children will be denied access to safe after-school learning centers . . . 30,000 kids will be denied access to Head Start . . . 6,500 middle schools will not have drug and violence coordinators.”