GOP Budget Would Cut Clinton Plan’s Spending, Taxes

In their official rebuttal to President Clinton’s 1999 budget plan, Senate Republicans on Tuesday proposed eliminating many of the White House’s proposed increases in domestic programs and sought to lay the groundwork for modest tax reductions.

The $1.7-trillion spending blueprint unveiled by Budget Committee Chairman Pete V. Domenici (R-N.M.) is generally in line with Clinton’s approach to handling the looming budget surplus, which the Republicans estimated at up to $147 billion over the next five years. But the GOP plan envisions a different use for billions of dollars that could come from a settlement with the tobacco industry.

On another front, the Senate Appropriations Committee approved a compromise plan to send $18 billion to the International Monetary Fund in exchange for stringent reforms at the lending agency. The action marked a tentative step forward for Clinton’s controversial IMF bill, a top White House priority aimed at helping the international agency respond to the Asian financial crisis.

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But the appropriations committee ignored for now administration efforts to commit the United States to paying some of the $1.3 billion this country owes the United Nations.

The budget plan presented by Domenici tracks with Clinton’s recommendation that budget surpluses go toward strengthening Social Security and reducing the $5-trillion national debt, though the Republican proposal differs in some details.

More significantly, the GOP plan would block some of the $113 billion worth of spending initiatives Clinton proposed for the next five years, much of which was to come from a boost in taxes on cigarettes that would be part of a tobacco industry settlement of lawsuits filed by the states.

Among the programs that the GOP would nix are the president’s efforts to hire more teachers and increase subsidies for child care. Tobacco settlement money, under Domenici’s plan, would go exclusively toward stabilizing Medicare.

“Our budget is to be called the Balanced Budget, Medicare and Social Security Preservation Act,” Domenici said.

But New Jersey Sen. Frank R. Lautenberg, the budget panel’s ranking Democrat, said the plan would likely reduce the chances of an agreement on tobacco by restricting use of the settlement money. He and other Democrats intend to offer a series of amendments when the Budget Committee starts debating the budget plan today.

As for tax cuts, the Domenici budget leaves the specifics for later, but it proposes $30 billion in reductions for married couples, people who use child care and others.

That figure is less than some conservatives would like, but Domenici’s plan leaves the door open for bigger tax cuts if proponents can devise a way to pay for them.

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Finance Committee Chairman William V. Roth Jr. (R-Del.), for one, has urged tax cuts of at least $60 billion, to be funded in part from tobacco settlement revenues.

Administration officials praised the areas of common ground and expressed hope that negotiations can bridge the gap.

“We’re pleased they have endorsed some of the key elements of the president’s budget, such as saving Social Security and insisting that tax cuts be paid for,” said White House spokesman Barry Toiv. “We do have a serious problem because their budget squeezes out critical investments in education and children.”

On the IMF issue, Treasury Secretary Robert E. Rubin sent a letter to Appropriations Committee Chairman Ted Stevens (R-Alaska) expressing “grave concerns” with the strict reform language approved by the panel. At the same time, he praised Stevens for moving the money forward.

“We believe that immediate approval of these requests is necessary to provide the IMF with the resources it needs to protect the international financial system--and therefore the U.S. economy--against the risk of new or escalating financial crises of the kind now gripping key East Asian economies,” Rubin said.

Approved as a separate emergency measure was $2.5 billion to pay for troops in Bosnia and the Middle East, as well as disaster cleanup caused by recent flooding, ice storms and hurricanes. California, hit hard by El Nino storms, is expected to receive $180 million to repair damaged roadways, military bases and other facilities, officials said.

“The federal government is a committed partner in helping the state and the people of California recover from the recent floods, mudslides and scores of other disasters that have devastated our state in the past few months,” said Sen. Barbara Boxer (D-Calif.).

Left unaddressed in the Senate was the money owed by the United States to the U.N., a body that is intensely controversial among many conservatives.

House Republicans have said they intend to attach antiabortion measures to funding proposals for the IMF and the U.N., which the White House has suggested could lead to a veto. The abortion issue was the reason a similar effort to fund the two organizations last fall was killed. GOP lawmakers say they have scaled back the severity of their abortion language in an effort to compromise with the White House.