Senate Approves Budget Cutbacks And Tax Breaks Plan To Balance Budget By 2002 Sets Up Confrontation With Clinton

An exhausted Senate approved a controversial Republican budget early today that promises to erase the deficit by 2002 by limiting programs for the elderly and poor while cutting taxes for upper-income investors and middle-class families.

After three days of contentious debate, and a record 38 roll-call votes Friday, the final 52-47 vote just after midnight left the Senate sharply divided along party lines. No Democrats joined the Republican majority in supporting the bill. William Cohen of Maine was the only Republican to vote against the measure.

In a last-minute procedural maneuver, Democrats succeeded in stripping from the budget many provisions of the GOP welfare reform bill, including the state option to deny benefits to unmarried teenage mothers. These were ruled unrelated to the bill’s purpose of reducing the deficit.

The action means that the House and Senate probably will not be able to roll the welfare bill into the budget bill and instead will have to pass stand-alone welfare legislation.

The Senate budget must now be reconciled with a similar plan passed by the House on Thursday. Republicans promised that their budget - if it survives a confrontation with President Clinton - would lead to an era of stronger economic growth and low interest rates that would benefit all Americans.

“It is a vote … so more Americans can own a house, buy a car and send their children to college,” said Senate Majority Bob Dole, R-Kan. “It is a vote for real, meaningful and fundamental change.”

Throughout the day and night, Democrats tried to reshape the bill with dozens of amendments, mostly to no avail until their victory on the welfare issue. They accused Republicans of taking from the poor to give to the rich, and pushing America toward becoming a class-based society. Republicans shot back that Democrats were using scare tactics to avoid facing the consequences of decades of wasteful spending.

Though the GOP budget faces a presidential veto, Dole called the vote “a defining moment,” a turning point toward reducing the role and scope of the federal government.

Democrats also said it was a defining moment - one they wanted no part of.

“It’s been reported that this is an historic change,” said Democratic Leader Tom Daschle of South Dakota. “We don’t want our fingerprints on it.”

Denouncing the GOP plan as “mean-spirited,” Daschle predicted it would undergo significant changes in any negotiations with President Clinton. But Senate and House Republicans must first resolve hundreds of differences in the details of their proposals, a process that could take weeks.

“The president, once he vetoes it, will be in a much more commanding position to dictate what goes in this bill,” said Daschle. The Republicans lack the votes to override a veto.

However, while Clinton might be able to smooth down the edges of the Republican proposal, it will be very difficult for him to alter its basic structure. Congressional Republicans say they will not accept a watered-down compromise.

Like the House, the Senate bill would reduce projected increases in government spending by about $900 billion over seven years, and cut taxes by $245 billion. About half the savings would come from Medicare and Medicaid, the giant health-care programs for the elderly, disabled and poor. Fashioning a hard-nosed Republican plan that simultaneously calls for tax cuts and a balanced budget was a major challenge for the traditionally cautious Senate.

Budget Committee Chairman Pete Domenici, R-N.M., began the year offering a deficit-reduction “down payment” that stopped short of balancing the budget. Domenici has remained skeptical of tax cuts.

After the Senate defeat of a balanced-budget constitutional amendment, many GOP senators doubted that a plan to eliminate the deficit could pass. They rallied after House Speaker Newt Gingrich, R-Ga., vowed to press ahead anyway, and was joined by Dole.

With Republican moderates holding the key to victory, Dole called for unity - and started cutting deals. Polls showed the public turning against the Republican plan.

“Sure, I’ve had to swallow hard on some things - particularly Medicaid,” said Rhode Island Sen. John Chafee, a leading moderate Republican. “But the driving force to me is getting rid of this deficit.”

Moderates won additional Medicaid funds, an easing of cuts in student aid, and a promise by Dole to support the less-drastic House plan to curb an important tax credit for the working poor.

Democrats said the Senate battle has left Republicans battered and bloodied, and ready to compromise with Clinton. “They made a bet and they bet wrong,” said Sen. Christopher Dodd, D-Conn. “To the extent there’s any movement at all, it will all come in our direction.”

But other observers were skeptical about how far Clinton would get.

Republicans “have set the tone, and whatever the final bill is going to be will reflect that,” said David Certner, a lobbyist for the American Association of Retired Persons.

Here are some of the major elements of the Senate plan, and differences with the House proposal:

Medicare. Both plans would slow growth in the program, saving $270 billion over seven years. Payments to hospitals and doctors would be scaled back, and beneficiary premiums increased. The Senate plan would give beneficiaries a bigger nudge to join cost-conscious managed-care plans, by raising deductibles in traditional Medicare. The Senate plan also has stronger anti-fraud provisions. Democrats managed to defeat a provision to increase the eligibility age for Medicare to 67.

Medicaid. Both plans would turn the program over to the states, limiting federal spending and saving about $170 billion over seven years. The plans differ on how they would allocate Medicaid funds among the states. The Senate plan has stricter requirements for states to provide health coverage to the disabled, pregnant women, children, and poor elderly. It would also retain most federal nursing-home standards.

Tax cuts. The Senate plan redirects a proposed $500-per-child tax credit to families earning less than $110,000 a year, as opposed to $200,000 of family income the House plan. Like the House, the Senate would cut taxes for investors and corporations. Like Clinton, the Senate would create a new tax break to help families defray college costs.

Environment. Both plans would open Alaska’s Arctic National Wildlife Refuge to oil prospecting. The Senate would raise entry fees for national park visitors.

Welfare. Both plans would require beneficiaries to work, and end the legal right to receive benefits under federal law. The House plan would forbid using federal funds to provide welfare checks to teenage single mothers or for children born to welfare recipients. The Senate would leave the decision up to the states.