February 3, 1998 in Nation/World

Clinton Budget In The Black He Calls For New Spending, But With Something Left Over

Robert A. Rankin Knight Ridder
 

Staking a claim for history’s attention, President Clinton proposed Monday to balance the federal budget next year for the first time in 30 years and to open an era of political economy in America after a generation of deficits and debt.

Clinton proposed spending $1.73 trillion in the fiscal year that starts Oct. 1 while still winding up with nearly $10 billion in surplus revenues for the year. Even after paying for new programs to expand child care, aid to education and federal health insurance, Clinton still projected that surplus revenues will pile up in the treasury each year to total $220 billion over five years.

That’s in stark contrast to the preceding decades of red ink.

“This budget marks the end of an era, an end to decades of deficits that shackled our economy, paralyzed our politics and held our people back,” Clinton said as he introduced his plan. “It can mark the beginning of a new era of opportunity for a new American century. Now we’ll have a balanced budget not only next year but as far as the eye can see.”

Clinton’s proposed new spending is based partly on an assumption that Congress will pass legislation policing the tobacco industry. Clinton is proposing a cigarette tax that would rise to $1.50 per pack over 10 years. The administration assumes such a law would generate $10 billion in fiscal 1999 and $65.5 billion over five years.

The president’s budget proposes to spend $27.5 billion of that, with much of it going to pay for his child-care and teacher-hiring plans. The rest would be passed to state governments and other claimants in the tobacco settlement.

“If we don’t get the tobacco settlement, either we’ll have to cut the size of the child care initiative or cut elsewhere or do something else,” Clinton said in a recent interview with National Public Radio. “The most important thing is to keep this economy growing, to keep discipline.”

The president strongly urged Congress to set aside surplus revenues until a bipartisan plan is reached to shore up the long-term finances of Social Security. He will push for such reform in 1999, after congressional elections in November.

By calling to set aside surpluses for now, Clinton rejected Republican appeals to use them to pay for new tax cuts, framing a debate over money that already is starting to dominate politics.

‘Election-year budget’

Republicans attacked Clinton’s budget as a throwback to big-spending, big-government liberalism.

“It’s fair to say that, looking at this budget, the era of big government is back,” said Rep. John Kasich, R-Ohio, chairman of the House Budget Committee. He charged Clinton’s budget is full of “an awful lot of new programs and initiatives. And I just don’t think that’s what the American people want.”

Senate Budget Committee Chairman Pete Domenici, R-N.M., termed the president’s plan “a wonderful election-year budget” packed with programs designed to harvest votes but complained that “in order to do what he’s doing, he has to increase taxes and fees.”

Clinton wants to spend $65.5 billion more than in fiscal 1998. That would be a 3.9 percent increase, almost double the projected 2.1 percent inflation rate but less than the 4.3 percent nominal growth rate expected for the U.S. economy.

Federal spending under Clinton’s plan would be only 20 percent of the U.S. economy, the lowest share since 1974.

Most of Clinton’s budget would sustain traditional programs. Social Security would claim 23 percent of all fiscal 1999 spending. National defense would claim 15 percent; Medicare, 12 percent; interest on the debt, 14 percent.

An activist budget

Nevertheless, Clinton’s budget unquestionably prescribes increased government activism. It puts dollars and details behind a number of new programs the president announced over the past month.

Chief among them is child care. The president proposes to spend $16.1 billion and to grant $5.3 billion in tax breaks to encourage families to use child-care facilities and businesses to provide them.

Expanding federal aid to education is another strong theme. The budget calls for spending $7.3 billion over five years to help states hire 100,000 new teachers and another $5 billion over five years to build more classrooms. It also would expand existing college scholarship programs and aim to cut fees for student loans by reforming credit programs.

In addition, Clinton proposes to expand access to Medicare for those aged 55-65. Currently the federal health insurance program is limited to those over 65.

Clinton would permit those aged 62 to 65 to buy in if they lack employer-based health insurance. So could people aged 55 to 62 if they are displaced from their jobs or if they are retirees whose insurance is canceled by their former employers. The beneficiaries are supposed to cover the full costs of the expanded services by paying $300 a month, but independent analysts have questioned if that’s possible.

MEMO: This sidebar appeared with the story:

HIGHLIGHTS OF PRESIDENT CLINTON’S BUDGET

Summary - Spending up 3.9 percent to $1.733 trillion. But revenues are up even more (5.1 percent) to yield a $10 billion surplus at the end of the year - the first in 30 years.

Taxes - Targeted tax cuts of $24 billion over five years - including expanded child-care credits for individuals and businesses providing care facilities; preferences for businesses using energy-efficient equipment; subsidies for school construction; and enhancements for savers. Taxes would be raised on certain corporate profits to make up the difference.

Education, child care - Billions more to hire 100,000 new teachers, expand after-school programs, subsidize new school construction, reduce student-loan fees, expand Head Start and widen access to the Internet. Doubles the number of families receiving child-care subsidies. Starts new block-grant program to local communities to promote early-childhood development. Widens child-care tax credits.

Health care - Expands Medicare to allow those 62 to 64 to pay their way into the system; Medicare also would be available, at a higher price, for those as young as 55 who are laid off or whose companies reneged on promises of coverage. Increases biomedical research by $1.1 billion. Establishes “Bill of Rights” guaranteeing medical access to patients.

Environment - Boosts tax incentives and research spending by more than $1 billion to reduce greenhouse emissions. Promotes energy-efficient factories, buildings, vehicles, and provides more toward research into new technologies. Nearly a 50 percent increase in operation of Endangered Species Act. Establishes Environmental Resources Fund to speed clean-up of lakes, rivers and hazardous wastes.

Defense -Spending virtually unchanged at $271 billion - including $49 billion to update old weaponry. Includes a call by Defense Secretary William Cohen to conduct another round of base-closings to provide more money to update weapons systems.

Agriculture - Establishes $573 million in new user fees for the meat, poultry and egg industries that would be used to finance food inspections.

Research budget would be increased, in part to boost study into food-borne illness. Loan subsidies would go up to help black farmers get credit.

- Scripps-McClatchy

This sidebar appeared with the story: HIGHLIGHTS OF PRESIDENT CLINTON’S BUDGET Summary - Spending up 3.9 percent to $1.733 trillion. But revenues are up even more (5.1 percent) to yield a $10 billion surplus at the end of the year - the first in 30 years. Taxes - Targeted tax cuts of $24 billion over five years - including expanded child-care credits for individuals and businesses providing care facilities; preferences for businesses using energy-efficient equipment; subsidies for school construction; and enhancements for savers. Taxes would be raised on certain corporate profits to make up the difference. Education, child care - Billions more to hire 100,000 new teachers, expand after-school programs, subsidize new school construction, reduce student-loan fees, expand Head Start and widen access to the Internet. Doubles the number of families receiving child-care subsidies. Starts new block-grant program to local communities to promote early-childhood development. Widens child-care tax credits. Health care - Expands Medicare to allow those 62 to 64 to pay their way into the system; Medicare also would be available, at a higher price, for those as young as 55 who are laid off or whose companies reneged on promises of coverage. Increases biomedical research by $1.1 billion. Establishes “Bill of Rights” guaranteeing medical access to patients. Environment - Boosts tax incentives and research spending by more than $1 billion to reduce greenhouse emissions. Promotes energy-efficient factories, buildings, vehicles, and provides more toward research into new technologies. Nearly a 50 percent increase in operation of Endangered Species Act. Establishes Environmental Resources Fund to speed clean-up of lakes, rivers and hazardous wastes. Defense -Spending virtually unchanged at $271 billion - including $49 billion to update old weaponry. Includes a call by Defense Secretary William Cohen to conduct another round of base-closings to provide more money to update weapons systems. Agriculture - Establishes $573 million in new user fees for the meat, poultry and egg industries that would be used to finance food inspections. Research budget would be increased, in part to boost study into food-borne illness. Loan subsidies would go up to help black farmers get credit. - Scripps-McClatchy


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