Clinton Offers Third Budget Plan Would Attempt To Balance Budget In 7 Years Without Deep Social Cuts

President Clinton Thursday gave Republicans the seven-year balanced budget plan they have so long sought. But he refused to sign onto most of the deep cutbacks in social programs that they seek, leaving the two sides no closer to a settlement of their yearlong feud over federal spending.

By sticking with more optimistic assumptions about the economy’s performance, offering a smaller tax cut and pushing larger cutbacks in areas like corporate subsidies often favored by Republicans, Clinton claimed that he can do with $465 billion in spending reductions over seven years what the GOP lawmakers say they need more than $800 billion to do: balance the budget by 2002.

Clinton coupled his third omnibus spending plan of the year with a call for a temporary spending measure to keep the government operating beyond a new deadline of next Friday for another partial shutdown.

The new temporary spending bill would give the White House and GOP leaders until Jan. 26 to strike a deal. Failure to agree on a stopgap measure led to a six-day, partial government shutdown last month.

The president and his senior aides insisted Thursday that both his seven-year balanced budget plan and his temporary spending request were designed to revive sputtering negotiations for a deal. Clinton vetoed the GOP’s seven-year budget plan Wednesday, calling it extreme and dangerous.

“This is what the Republicans have said they wanted,” White House Chief of Staff Leon Panetta said of Clinton’s proposals. “We are doing what the parties say they’re interested in doing,” he said.

“So the question then becomes how do the Republicans respond?”

Judging from GOP leaders’ initial responses, not well.

“This is a tremendous disappointment,” said Rep. John R. Kasich of Ohio, chairman of the House Budget Committee. “They have missed the mark by $400 billion.”

“The administration proposed that we help them fill in the hole in their budget,” said a wry House Majority Leader Richard K. Armey of Texas. “They said, ‘If you bring the smoke and we bring the mirrors, we can make this deficit disappear.’ We said no.”

The president’s new budget proposal does take a few small bows to Republicans.

It calls for $46 billion in welfare cutbacks over seven years, about $8 billion more than Clinton previously sought, much of it to come through embracing a GOP proposal to restrict legal aliens from receiving benefits. The Republican budget calls for $110 billion in welfare cutbacks.

It adopts a potentially controversial reduction in the Consumer Price Index that Republicans have already included in their budget. The 0.2 percentage-point reduction in the inflation measure would mean that Social Security recipients and others would receive about $32 billion less in cost-of-living adjustments over seven years.

It seeks $250 billion in cutbacks in so-called discretionary spending, the money that Congress approves annually to cover everything from paving roads to paying federal workers. But even here, senior White House officials said Clinton will seek to protect education, environmental and law enforcement programs that he has made a trademark of his administration and that Republicans have targeted for steep reductions.

On economic assumptions, the White House continued to insist that it is right to use more optimistic assumptions issued by its own Office of Management and Budget, rather than more pessimistic ones issued by the Congressional Budget Office and used by the GOP.

Although differences between the two agencies’ figures appear small, OMB’s higher growth rates and lower inflation rates allow the president to claim he can reach balance with slightly more than half the cutbacks the Republicans say are needed.

On Medicare, where Republicans may be taking their greatest political risk by arguing that balancing the budget requires a $270 billion reduction in program growth over seven years, the administration continued to insist that all that is needed is $124 billion in reductions.

Clinton continued to call for tax cuts similar to those in the Republican budget. But the size of the cuts being sought by the president shrank slightly Thursday to $98 billion over seven years, compared to the Republicans’ $245 billion. And Clinton’s tax cut proposal was accompanied by new closings of corporate tax loop-holes.

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