House, Senate Back GOP Budget Blueprints With Cuts in Taxes

Taking the first big step into the new era of black-ink budgeting, the House and Senate approved Republican spending plans Thursday that would save most of the emerging surplus for Social Security while still making room for much larger tax cuts and Pentagon funding increases than President Clinton proposed.

The back-to-back votes on similar fiscal blueprints stuck closely to party lines in both chambers, with congressional Republicans trying to close ranks for the coming months of battle with Clinton over specific tax and spending bills.

The House’s budget resolution passed, 221 to 208; the Senate’s, 55 to 44. Each calls for fencing off Social Security revenues, ending the current practice of allowing the money to be used for other purposes or cutting taxes.

That major change in budget policy reflects a concerted GOP effort to neutralize Social Security as a political issue and to focus this year’s debate on whether budget surpluses should be used for tax cuts or more government spending.

“We in the Republican Party believe we ought to give that money back to the people who earned it in the first place,” said House Majority Leader Dick Armey of Texas.

Senate Budget Committee Chairman Pete Domenici (R-N.M.) said: “It’s the best budget we’ve produced in an awful long time.”

But House and Senate Democrats seized the opportunity to reprise lines of attack, saying the Republican plans do little to extend the life of Social Security while shortchanging efforts to bolster long-range Medicare funding.

With their budgets, the GOP “fiddles while Medicare and Social Security burn,” said Rep. John Joseph Moakley (D-Mass.).

One thing about the GOP proposals was beyond debate: It puts the party on a collision course with Clinton.

Clinton Sees ‘Missed Opportunities’

Shortly after Thursday’s House vote, the president issued a statement criticizing the GOP budget plans. He categorized the Republican effort as “a series of missed opportunities” that “fails to extend the solvency of Social Security and Medicare, and fails to protect key investments for the American people--from Head Start to clean water to law enforcement.”

The coordinated, early action on the budget by both the House and Senate was the result of an aggressive effort by GOP leaders to impose a cease-fire on their warring factions. Squabbling between House and Senate Republicans last year prevented Congress from enacting a budget resolution for the first time in recent years, and it put the party at a disadvantage in year-end budget talks with Clinton.

Ultimately, GOP leaders will iron out the relatively minor differences between the House and Senate proposals and agree to a single plan. That resolution, which sets revenue targets and spending ceilings for broad categories of federal programs, does not need to be signed by Clinton. But tax and spending bills written later this year will have to comply with the resolution’s guidelines.

The GOP plans do not resolve several contentious issues that threaten to test Republican unity. While Republicans have agreed on how much to cut taxes, they have yet to decide which taxes to cut. However, the budget effectively precludes the GOP from following through on promises to cut income taxes 10% any time soon.

Of the $778 billion in tax cuts that both the House and Senate versions promise over the next 10 years, only $15 billion would come in 2000.

No Specifics on Programs

And while Republicans pledge to adhere to the spending caps set in the 1997 budget-balancing agreement reached with the White House, they do not say precisely which programs would be cut to stay within those strict limits and still make room for promised spending increases in education and defense.

In total, the House plan calls for $1.74 trillion in spending for the fiscal year that begins Oct. 1 and forecasts a surplus of $141 billion. The Senate proposal spends $1.74 trillion and produces a $135-billion surplus.

As approved by the House, the budget would increase education spending to $22 billion in 2000, up from $5.2 billion this year. The Senate version would raise education funding even more, to $24.1 billion.

The House budget also calls for a $10-billion increase for the Pentagon, which would hike defense spending to $288.8 billion. The Senate budget contains the same figure.

To accommodate these proposals, both versions call for cuts in other, largely unspecified areas. Those decisions will have to be made later this year, when Congress drafts annual appropriation bills.

House and Senate Democrats warned that the budget would force punishing cuts in programs that are not GOP priorities, such as environmental protection and urban housing. For such programs, Clinton’s budget office estimates, spending would have to be cut 10% in 2000, rising to 25% in 2004.

The cornerstone of the GOP budget plans is the provision to fence off the Social Security trust fund, which is running a surplus that now can be used for other programs. In fact, the only reason that last year’s budget was the first in three decades to run in the black was because of the Social Security surplus. The rest of the government was still running a deficit.

Even in 2000, the budget would run a $4-billion deficit without using Social Security money; with it, the budget runs a $137-billion surplus.

In his budget, Clinton calls for earmarking 62% of the surplus over the next 15 years for shoring up Social Security. Republicans went him one better: proposing that the entire Social Security trust fund be put off limits. The GOP hopes this will shield the party from a replay of Democratic charges that they want to siphon off Social Security funds to pay for tax cuts.

Democrats still complained that the GOP budget plans do nothing to actually shore up the retirement system and guarantee its solvency for the baby boom’s retirement.

“It provides only false promises of protecting Social Security,” argued Rep. Carolyn B. Maloney (D-N.Y.).

AARP Gives Qualified Backing

But the protections for the program’s growing reserves were enough to win a qualified endorsement from the politically powerful American Assn. of Retired Persons.

Although the GOP plans fence off the Social Security trust fund, they do not adopt Clinton’s proposal to also set aside 15% of coming budget surpluses for Medicare. That was a central focus of attack for Democrats in both the House and Senate.

“Republicans are as wrong about Medicare as they were about impeachment,” said Sen. Edward M. Kennedy (D-Mass.), after the Senate voted down an amendment to eliminate proposed tax cuts and put the money toward Medicare.

In another setback for the White House, the Senate adopted a nonbinding amendment calling on the Senate Finance Committee to consider the recommendations of a bipartisan Medicare commission that recently deadlocked over a plan for solving the program’s long-term funding needs. Clinton opposed the plan because, among other things, it would raise costs for the elderly.

The amendment was approved on a largely party-line vote of 56 to 43. The only two Democrats supporting it--John B. Breaux of Louisiana and Bob Kerrey of Nebraska--served on the Medicare commission.

In the House budget vote, four Democrats voted for the GOP plan: Gary A. Condit of Ceres, Robert E. “Bud” Cramer Jr. of Alabama, Ralph M. Hall of Texas and Virgil H. Goode Jr. of Virginia. Republicans Constance A. Morella of Maryland and Jack Quinn of New York voted against their party’s plan.

In the Senate, Breaux was the lone senator to break party lines, voting for the Republican proposal.

California’s two senators, Dianne Feinstein and Barbara Boxer, joined the rest of the Democratic bloc in opposing the plan. Sen. John McCain (R-Ariz.) was not present for the vote.

2 Democratic Proposals Defeated

Before the House approved the GOP budget resolution, two Democratic alternatives were defeated. One, sponsored by Rep. John M. Spratt Jr. of South Carolina, would have provided a much smaller tax cut than the Republican plan--$116 billion over 10 years--and provided more for domestic spending. It was defeated, 250 to 173.

The other Democratic plan, authored by a coalition of conservative party members known as the Blue Dogs, called for channeling half of future budget surpluses into reducing the national debt, with the rest split between tax cuts and new spending. It was voted down, 295 to 134.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Competing Budget Proposals The competing federal budget plans crafted by President Clinton, the House and the Senate all would spend about $1.7 trillion. But the plans have some key differences in allocating that money.

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Clinton budget House budget Senate budget (All figures in billions) Defense $280.5 $288.8 $288.8 Education $20.8 $22.0 $24.1 International Affairs $16.1 $11.2 $12.5 Agriculture $15.2 $14.3 $14.3

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Source: House and Senate Budget Committees