Budget Pact Outline Nears House Approval

WASHINGTON — The ground-breaking federal budget agreement faced its first major test in Congress on Tuesday as the House moved toward passage of a resolution calling for eliminating the deficit by the year 2002 and providing the first major tax cut since 1981 for families, investors and college students.

The resolution, which embodies the outlines of the deal reached by President Clinton and GOP leaders earlier this month, was expected to pass in the early morning hours today with broad bipartisan support, despite opposition from the House leader of Clinton’s own party, Rep. Richard A. Gephardt (D-Mo.).

Proponents hailed the measure as a triumph of fiscal discipline and a turning point in the long history of failed efforts to eliminate the deficit.

“This is a moment many of us have been waiting for for a long time,” said House Budget Chairman John R. Kasich (R-Ohio). “This is a giant first step toward moving into the next century by stabilizing the fiscal policies of the United States of America.”

As the House debated into the night, GOP leaders and the administration scrambled to meet an unexpectedly tough challenge to their effort to defeat all changes to the budget. They worked to defeat an amendment to increase spending for transportation.

Warning that the budget agreement would be “crippled” by adoption of any amendment, House Speaker Newt Gingrich (R-Ga.) defended the deal. “We have forged a balance which isn’t brilliant,” Gingrich said. “It isn’t perfect. But it’s a huge positive step.”

Most criticism of the budget came from liberal Democrats who complained it cut domestic spending too much, and from conservative Republicans who said it cut too little. Critics from both parties raised questions about whether the plan would in fact balance the budget by 2002.

“I don’t believe this budget is fair,” Gephardt said. “I don’t believe it invests properly in the future of our country . . . and I don’t believe the numbers will work.”

The Senate took up a companion measure Tuesday and is expected to approve it today. The resolution does not need Clinton’s signature and includes no legislative details. But it locks in the basic parameters of the budget deal by setting revenue targets and spending ceilings that will constrain the tax and spending bills that Congress will pass later this year.

The agreement calls for balancing the budget by 2002 by cutting more than $300 billion from projected federal spending over five years. Those savings include $115 billion from Medicare, although the agreement calls for Congress to spend $1.5 billion to protect low-income beneficiaries from expected premium increases.

The budget calls for $135 billion in tax cuts, offset by $50 billion in tax hikes, for a net tax cut of $85 billion. The tax cut is expected to include the GOP priorities of tax cuts on capital gains and large family estates, as well as the tax relief for college expenses sought by Clinton. The resolution allows $32 billion for other White House initiatives, including $10 billion to maintain certain benefits for legal immigrants who stand to lose them this summer under last year’s welfare law.

House debate on the resolution amounted to the first full-dress airing of the plan, and it laid bare deep divisions within the Democratic Party, with Gephardt leading the opposition.

Gephardt, who is considered likely to challenge Vice President Al Gore for the party’s presidential nomination in 2000, launched a pointed attack on the budget, saying it is skewed to benefit the wealthy and unlikely to produce a truly balanced budget because he believed it is based on unrealistically optimistic economic assumptions.

“This is a budget of many deficits,” Gephardt said. “A deficit of principle, a deficit of fairness, a deficit of tax justice, and worst of all, a deficit of dollars.”

But the budget agreement was supported by another Democratic leader: House Minority Whip David E. Bonior of Michigan, who is generally considered more liberal than Gephardt but often faces stiff GOP opposition to reelection back home. Bonior said he announced his support for the deal reluctantly, but that it was more important to fight over the details of the tax and spending legislation later this year.

“I will vote for the balanced-budget agreement today,” he said. “Whether this budget will really work for America’s working families, that’s the battle to come.”

While many Democrats were lukewarm in their support for the deal, GOP leaders celebrated it as a triumph of their party’s long-standing drive to cut taxes and balance the budget.

“To characterize this as anything less than a victory for common-sense conservatism is an exercise in fantasy,” said House Majority Whip Tom DeLay (R-Texas).

But some conservative Republicans complained that the deal does not go far enough to cut taxes and spending, and others said it does not include adequate enforcement mechanisms to guarantee an end to the deficit.

The amendment to restore transportation funding would have provided an additional $12 billion more for highways and mass-transit programs, offset by a 0.4% cut in spending for other programs and in the tax cuts. The measure was backed by the entire Transportation Committee and its chairman, Rep. Bud Shuster (R-Pa.). Many lawmakers said they were afraid of opposing the amendment lest they lose the committee’s support for road projects in their districts when the panel drafts a major highway bill later this year.

“Every freshman is worried that if they vote against Shuster, they won’t get roads built in their district,” said Rep. Ray LaHood (R-Ill.).

But GOP leaders held a late-night party caucus to urge opposition to the amendment. In a letter to Congress, Clinton’s budget chief, Franklin Raines, said that it would “be a breach of the bipartisan agreement and would, therefore, significantly reduce the chances of balancing the budget by 2002.”