House OKs 1% Cut in Funding for Government Agencies

Capping a steady march to a final budget confrontation with President Clinton, the Republican-controlled House approved a spending bill Thursday that would cut funding for all government agencies by 1%--a last-ditch austerity measure designed to help the GOP meet its much-vaunted goal of not tapping Social Security revenues for other uses.

Far more was at stake in the bill--which would finance education, labor and health programs--than just one piece of the sprawling annual budget. The measure is central to Republican efforts to shed the party’s image as hostile to Social Security, education and other social programs. Sidetracking that effort, by contrast, is considered crucial to Democrats’ drive to win control of the House next year.

The bill was approved, 218 to 211, with only a handful of defections from party lines, and the Senate is expected to follow suit as early as today.

But Clinton has promised to veto the bill because of what he has called the “mindless” spending cut in the measure, which would undercut his signature program to hire 100,000 teachers to reduce class sizes.

“I will veto it,” Clinton told a group of educators Thursday, “because I think we need more teachers, more accountability and more investment in education.”

Once the bill clears Congress, Republicans said during House debate, they will have lived up to their promise to produce a budget that avoids drawing on the Social Security surplus for the first time in decades.

“We have brought ourselves today to that day they said we just couldn’t get to,” said House Majority Leader Dick Armey (R-Texas). “Today we are proving we can fund the government without raising Social Security and without raiding taxes.”

Democrats, challenging that claim, brandished a letter from the nonpartisan Congressional Budget Office showing that the spending bills approved by Congress would result in a $17-billion drain on the Social Security trust fund.

At the least, the debate was a tribute to the GOP’s success in redefining the terms of budget debate this year. For months, Republicans said they would gauge their success by whether they stuck to the strict caps set on spending in the 1997 budget-balancing law. But when it became clear they could not meet that goal, they drew a new line: not dipping into the Social Security surplus.

The GOP also has gone on the political offensive by running radio ads in the districts where Democrats are vulnerable, accusing them of pushing for spending that would raid Social Security. Democrats have said that they remain unconcerned, citing polls showing the public still trusts them more than Republicans to handle Social Security.

But in a sign of some Democrats’ nervousness, Senate Minority Leader Tom Daschle (D-S.D.) said his party soon would start airing its own ads that would “tell the truth” about Republican and Democratic records on Social Security.

The rhetorical war is heating up just as the budget debate is heading into its final phase. The labor-health-education bill is the last of 13 appropriation bills needed to keep the government running for the fiscal year that began Oct. 1. Now nearly a month past that deadline, the government is running on temporary spending authority that expires today. The House on Thursday passed a one-week extension of that financing. The Senate and Clinton are expected to go along with the extension.

Clinton’s certain veto of the labor-health-education bill is expected to clear the way for hard bargaining between the administration and GOP leaders over the final terms of this year’s budget.

The measure the House narrowly approved would provide about $95 billion for education, health and labor programs. (An additional $228 billion was provided for such mandatory programs as Medicare and Medicaid, whose spending is not controlled by the annual appropriation process.)

The bill appropriates $5.5 billion more than last year and about $2 billion more than Clinton had requested. Among the agencies benefiting from the GOP version would be the National Institutes of Health, which would receive $2 billion more than Clinton requested, and the Education Department, whose budget would exceed the administration’s request by $300 million.

That made it harder for Democrats and Clinton to attack Republicans with traditional arguments that they are too stingy with popular programs. As a result, much of the debate focused on Social Security and the proposed 1% cut.

The status of the Social Security trust fund has become a central question because both Clinton and Republicans have promised to end the long-standing practice of drawing on trust fund revenue to finance other programs. The government has done that in the past because Social Security has been running a surplus while the rest of the government has run a deficit.

This year, however, the government is expected to run a surplus of $14 billion beyond the trust fund. And the question of whether Republicans exceeded that surplus has become the partisan center of the budget debate--even though most experts say that the issue has little bearing on the solvency of the trust fund. For instance, whether Congress now uses the excess revenue has no effect on current beneficiaries’ checks. And fencing off the trust fund does little to shore up the long-term future of the program.

Still, Democrats gleefully wielded the CBO’s estimate that the bills passed by Congress would drain $17 billion from Social Security revenue. (They did not mention, however, that the CBO also found that Clinton’s budget would tap as much as $15 billion from the trust fund.)

Even as Republicans closed ranks to pass the labor-health-education bill, many expressed reservations about it. Moderates objected to the 1% across-the-board cut. Conservatives objected to the spending increases it would mandate.

But for all the heated emotion of the day’s debate, members of both parties admitted that the remaining budget differences between Clinton and the GOP are relatively small.

“If we could get the political bull gravy out of this debate, we could solve all the remaining problems in about three days,” said Rep. David R. Obey (D-Wis.). “We’re not that far apart.”

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Times staff writers James Gerstenzang, Art Pine and Richard Simon contributed to this story.