Many Pocketbook Issues at Stake in Budget Fight

Washington’s raging budget battle may seem remote and abstract but its consequences could be quite concrete--affecting such pocketbook matters as the price of sport utility vehicles, the cost of cigarettes, the flow of income supplements to working families and more.

These are among the legions of issues at stake as President Clinton and Congress head into three weeks of tense negotiations over the government’s budget for the new fiscal year.

The partisan rhetoric largely has focused on a question of key political significance--whether Clinton and Congress can produce a budget that abides by their promises not to dip into Social Security revenue to help pay for it. But this issue is of limited practical effect--experts say using some of the revenue would have little impact on the solvency of the retirement program.

Instead, Clinton and Congress soon will be fighting over myriad real-world concerns, such as the issues that involve sport utility vehicles, cigarette costs and payments to the working poor. Other flash points include funding that Clinton wants for hiring new teachers and a litany of GOP environmental policies he opposes.

Clinton moved Thursday to shift the spotlight from budget abstractions to such issues as he attacked the GOP proposal to delay earned-income tax credit payments, an important supplement for millions of low-income working families, and threatened to veto any bill that included such a provision.

“I will not sign a bill that turns its back on these hard-working families,” he said.

Clinton made his comments after he signed a bill to finance the government through Oct. 21. The three-week measure was needed because, with the new federal fiscal year beginning today, Clinton has signed only four of the 13 bills needed to keep the government running. He has threatened to veto several of the others still pending in Congress.

Signs also surfaced Thursday that other Republicans are wary of some of the program cuts sought by GOP leaders. Texas Gov. George W. Bush, the front-runner for the party’s presidential nomination, voiced opposition to delaying the payments to low-income working families. And during debate on a bill to fund a variety of social programs, the Senate voted to accept Democratic amendments adding more than $2 billion in state grants for child care and other services.

Post-Impeachment Mistrust Lingers

It is hardly unusual to find Congress at loggerheads with Clinton and scrambling to meet the new fiscal year deadline. But this year’s disputes seem especially sticky, sources in both parties said.

For one thing, this is the first major face-off between the White House and GOP leaders since Clinton was impeached by the House and acquitted in the Senate. Bitterness and mistrust linger on both sides.

“It’s much harder,” said a senior House Democratic aide. “He’s not in a good mood. They are not in a good mood.”

What’s more, because both sides have insisted that they will not use Social Security revenue for other programs--an effort to end a decades-long practice--it will be much harder for Congress and the administration to resort to a time-tested method of compromising: throwing money at the problem.

“We have never gone through as rigorous a spending session as we are today,” said House Majority Leader Dick Armey (R-Texas).

Here’s the problem: The government is expected to run a $161-billion surplus in fiscal 2000, but $147 billion of that is attributable to excess Social Security revenue. Thus, the bipartisan pledge not to spend Social Security revenue leaves Clinton and the GOP with only $14 billion in surplus to play with.

Republicans have launched a national television advertising campaign accusing Democrats of trying to “raid the Social Security trust fund” to pay for many of the domestic programs Clinton wants. But the Congressional Budget Office reports that, if the Republicans go ahead with all the spending proposals they have on the table, they will end up using at least $18 billion of the Social Security surplus themselves.

That’s why House Republicans are looking at cost-saving proposals such as slowing down the earned-income tax credit payments. The program is a tax credit that goes to families earning from $20,000 to $30,000 a year and is intended as an incentive to get people off welfare and into jobs. In California, about 17.3% of all taxpayers received an average $1,466 under the program for the 1996 tax year.

‘There’s Not Much Taste for This’

The government could save $8.7 billion by making the program’s disbursements monthly, rather than the annual lump sum currently provided. The administration and other critics said that amounts to asking the working poor to make a loan to the government.

The idea may not last long--Bush was not its only critic. A top Senate GOP aide said: “There’s not much taste for this” in the upper house.

Clinton is trying to revive his own ideas on how to help finance domestic initiatives, including a 65-cent-per-pack increase in cigarette taxes. Republicans reject the idea out of hand.

Meanwhile, perennial Republican efforts to obliterate Clinton’s signature programs are back with a vengeance. House Republicans, for instance, have pushed through bills that would abolish Clinton’s Goals 2000 education reform program, end the AmeriCorps program to promote volunteerism and set aside his effort to hire 100,000 teachers to reduce class sizes.

Although the Senate has moved to restore funding in those areas, education remains a marquee issue. Democrats complain that even under the more generous Senate plan, Republicans would eviscerate Clinton’s class-size initiative by replacing it with a grant to states that would allow them to use the money for educational needs other than hiring teachers.

Clinton also is opposing a panoply of policy changes that he considers harmful to the environment, including the effort to block tougher fuel-economy standards for light trucks and SUVs. Those rules are being fought by manufacturers who warn that they would drive up the cost of the vehicles.

It may be difficult for Clinton to overcome the bid to thwart the new fuel standards, however, because it is part of a popular transportation bill packed with home-state projects for lawmakers of both parties.

Similar disputes over domestic spending and the environment have occurred in past budget fights. But this year, Republicans are at odds with Clinton on some unexpected issues, as budget pressures have driven the GOP to push for spending cuts in areas such as national security and space funding that are traditionally favored by Republicans.

For instance, although the GOP has proposed a large overall increase in defense funding, House Republicans also have tried to cut off funding for the F-22 jet fighter. The administration has fought hard against the move and has found powerful allies among Senate Republicans. A compromise is likely that would keep the program alive by allowing continued research and development but would deny funding for production of the plane.

Clinton also asked for $500 million to follow up on the peace agreement reached in 1998 between the Palestinian Authority and Israel at the Wye Plantation in Maryland. The funding was not included in the foreign aid bill produced by a House-Senate conference committee. Clinton has threatened to veto the bill, which includes $2 billion less than he requested for foreign aid.

The administration also strongly opposes House proposals to slash the National Aeronautics and Space Administration budget by $1 billion, to $12.6 billion. The Senate version of the bill restored the money. This is one of many issues where Republicans will have to settle big differences among themselves before they begin to square off with Clinton.

Times staff writer Art Pine contributed to this story.