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Clinton budget sets new course Plan reverses Reagan legacy, harks back to '60s

WASHINGTON — WASHINGTON -- There were no bands playing, as on election night, few speeches and little applause, but in a deadly dull, 1,300-page federal budget book sent to Congress yesterday, President Clinton officially began rolling back the Reagan Revolution.

That era was characterized by a massive military build-up, a hold-the-line philosophy on domestic spending and numerous tax cuts, some of which gave the biggest breaks to those in the highest income brackets.

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Mr. Clinton's $1.5 trillion budget sets the nation on a markedly different course. It's an agenda that harks back to the 1960s' War on Poverty and call to national service while also promoting advanced scientific research and high-technology development.

The first post-Cold War budget produced by a Democratic president diverts $10 billion in the coming fiscal year from defense and proposes increasing spending on a host of domestic programs ranging from high-speed rail and job retraining to a variety of anti-poverty programs including Head Start and subsidized abortions for Medicaid patients.

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"Budgets are not just about numbers, they are about people," said White House budget director Leon E. Panetta. "This represents the first step in what I think is a major change in direction for this country. There is more to come."

In building a case for this budget, Mr. Clinton has repeatedly invoked the theme of "shared sacrifice," which his top aides emphasized again yesterday. "We talked about spreading the sacrifice, the contribution across the political spectrum," said Treasury Secretary Lloyd Bentsen.

But Mr. Clinton's budget exempts one class of Americans from this shared national effort. It exempts the poor. Despite his pledge to be a "New Democrat," a theme that pervades nearly every section of the president's budget is income redistribution, the bulwark of traditional liberalism.

Though Mr. Clinton calls for large tax increases, his budget -- like the budgets of his predecessors -- takes in far less revenues than it spends. Although it proposes spending $1.52 trillion, Mr. Clinton's administration expects to collect only $1.25 trillion in taxes and user fees.

Thus, even though the budget deficit for the coming fiscal year has been "cut" from a projected level of $322 billion to $264 billion, Mr. Clinton's four-year projections will still add well over $1 trillion to the national debt.

Simply paying interest on this debt will eat up some $212 billion this year alone -- a figure that continues to rise.

In addition, Mr. Clinton's budget calls for 3.2 percent more spending in the coming fiscal year, higher than the nation's 1.9 percent annual inflation rate. Congress has insisted on deeper spending cuts totaling some $5.6 billion, but federal spending is not being cut, it is being increased.

Critics quick to attack

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Critics were quick to tag this as just another Democratic Party, tax-and-spend budget.

"It's pretty much what they promised," said Senate Republican leader Bob Dole of Kansas. "More taxes, more spending."

But supporters swiftly lined up behind the budget, which they characterized as the proper antidote to the policies of Presidents Ronald Reagan and George Bush.

"I think it's very exciting," said Helen Blank of the Children's Defense Fund, whose particular interest is Head Start.

Mr. Clinton has proposed adding roughly $1.4 billion in spending next year for Head Start and costs related to the program, including expansion of the Head Start summer program.

"This program can make a big difference in childrens' and families' lives," Ms. Blank said. "And this budget is an important step in the right direction for this country."

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Rep. Kweisi Mfume, the leader of the Congressional Black Caucus, called Mr. Clinton's budget "refreshing," and said that the president's emphasis on short-term summer jobs and long-term public works projects was exactly what Baltimore and other cities need most.

"After 12 years of Robin Hood in reverse, it's clear that the urban areas need to be a priority of the federal government," the Baltimore Democrat said. "It's gratifying that the president is doing what he said he would during the campaign."

Those are the Republican-vs.-Democrat battle lines over the budget, outlining a fight that the Democrats, by virtue of their majority in both houses of Congress, will ultimately win. But a review of the budget shows that there is evidence to support both views.

Spending as 'investment'

This president, who refers to most of his spending initiatives under the heading of "investment," calls for adding nearly $700 million, for instance, to a program that provides nutritional food supplements to poor women who are pregnant as well as to their infants and other children.

His stated goal is to ensure that there is money in this program -- called Women, Infants and Children (WIC) -- to help every eligible woman in the country by the end of his first term.

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WIC truly is an investment. According to audits of the program, it saves money because it often spares the government from picking up the frightfully high cost of caring for sickly, premature or low-birth weight babies born to Medicare recipients.

"This plan does not include handouts," said Vice President Al Gore. "It reflects our steadfast commitment to give Americans the tools to build themselves a better future."

On the other hand, the Clinton administration budget raises taxes on business, reinforcing a Democratic stereotype succinctly critiqued by Democratic candidate Paul E. Tsongas, who quipped last year, "Democrats like employment. It's just employers they can't stand."

Mr. Clinton's budget also significantly raises the taxes not just of millionaires, but of successful professionals -- and does so in a way that exacerbates the so-called "marriage penalty."

Nevertheless, Mr. Clinton is raising $36 billion in new taxes in the coming fiscal year alone, with much more in the years to follow. Those increased taxes come primarily from three sources:

* Increasing the income tax rate from 31 percent to 36 percent for individuals earning more than $140,000 in adjusted gross income and couples earning more than $180,000.

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* Increasing the top corporate income tax rate from 34 percent to 36 percent.

* Phasing in an energy tax that ultimately will cost a typical family of four earning $40,000 a year just over $200 a year.

In addition, the administration is proposing taxing Social Security recipients on 85 percent of their benefits if they are individuals with incomes above $25,000 or couples with incomes above $32,000.

'Borrowing from future'

"They are paying for what they want, in part, by raising taxes, and that doesn't bother me so much, but they are still borrowing money from future generations of Americans," said Tom Schatz, president of Citizens Against Government Waste.

Aware of the criticisms, Clinton administration economists and budget officials chose not to defend their emphasis on traditional liberal programs on the traditional basis of morality and social good. Instead, they defended this budget with cold economic arguments.

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"We are requesting . . . a shift in the purpose of government," said Laura D'Andrea Tyson, who chairs the president's Council of Economic Advisers. "We do that because we are convinced that the government has been underspending on certain important foundations of economic growth. It has been underspending on civilian research and development. It has been underspending on education and training. It has been underspending on the basic infrastructure that is used to provide the underpinnings for economic prosperity."

To achieve that prosperity, the Clinton administration budget calls for:

HEALTH AND WELFARE: Increasing spending in AIDS research, care and education from $2.1 billion to $2.7 billion. It also will spend up to $400 million for childhood vaccinations and $1.4 billion for women's health.

Following up on promises

TRANSPORTATION: Improving the nation's infrastructure was a frequent theme during the Clinton campaign and the administration's budget proposal follows up on those promises with a 10 percent spending increase for the Department of Transportation, much of it in new funds for highways and bridges.

JOB TRAINING AND EDUCATION: Two other key components of Mr. Clinton's campaign platform were education and job training. The White House is seeking almost $10 billion for job training, an increase of more than 20 percent. The White House also wants a total of more than $500 million for education reform programs.

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DEFENSE: The $10 billion in planned savings over fiscal year 1994 is to be achieved by a combination of factors, including the earlier-than-planned completion the B-2 Stealth bomber. The administration is proposing a cut of about 100,000 military personnel.

ENVIRONMENT: Unlike Mr. Bush, Mr. Clinton never promised to be "the environmental president," but environmentalists still felt blindsided yesterday by the paltry increases requested for both the Interior Department and the Environmental Protection Agency.

KEY PROGRAMS

President Clinton's budget for fiscal 1994 includes these proposals for some key federal programs:

SOCIAL WELFARE

The $641 billion request for the Department of Health and Human Services, the federal government's largest agency, represents a $49 billion increase over this year.

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It includes an extra $1.4 billion for the Head Start program for low-income preschoolers.

Also included is a $310 million increase for the Ryan White Act, which provides care and support services to AIDS victims. In all, the government would spend $2.7 billion on AIDS, up $600 million.

And the proposal calls for a $400 million increase for child immunization, plus an extra $328 million for women's health, primarily breast cancer research and prevention. It calls for spending $2.1 billion on treatment for drug abuse, an 8 percent increase.

DEFENSE

Defense Secretary Les Aspin is touting the first Clinton defense budget as "the first truly post-Cold War budget," but when he released details nearly two weeks ago, he readily conceded it doesn't cut any major weapons system or restructure the military to meet future security needs.

Mr. Aspin crafted $263.4 billion budget for 1994 that slices $12 billion from George Bush's spending plan mainly by accelerating previously planned cuts in active-duty troops, air wings and ships. To show the administration's resolve to keep military readiness high, he refused to make cuts that would slow the current tempo of training and operations.

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He sidestepped hard choices on items that the former congressman once criticized as unaffordable, especially a package of six tactical aircraft programs that alone accounts for $7 billion in the 1994 budget.

Both Rep. Ronald V. Dellums and Sen. Sam Nunn -- the House and Senate armed services committee chairmen usually on opposite sides of the budget-cutting debate -- have strong doubts that Congress can defer decisions on these and other weapons programs until next year, given the pressure to wring larger defense savings now to reduce the federal deficit.

They have set their sights on such big ticket items as the Air Force F-22 stealth fighter, Navy A/FX jet, Army RAH-66 Comanche helicopter and Air Force C-17 transport plane, a $24.7 billion program that has been rocked by huge cost overruns, delays and technical problems. Mr. Aspin now agrees that at least one aircraft program may not survive in its present form, but he wants Congress to wait for results of his sweeping "bottom-up review" of major defense programs and future military roles and missions, which will not be done until later this year. Domestic military bases are certain to take a hit this year, but even Mr. Aspin admits the latest round of base closings will only eliminate 15 percent of the military's Cold War infrastructure. But as a consolation to congressional pork barrelers, Mr. Aspin spared most local National Guard and reserve units from the budget ax.

JOB TRAINING AND UNEMPLOYMENT COMPENSATION

The administration's proposed $37.6 billion budget for the Labor Department is a 19.6 percent cut from the current fiscal year's $46.8 billion, but features no significant spending cuts for job training and assistance.

The president's economic recovery program makes job training and assistance a priority, and includes as part of an economic stimulus plan $1.3 billion for summer jobs programs for youth and $657 million to retrain people who are out of work because of military cuts and plant closings.

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Also being sought is $2 billion to continue payments for the federal emergency jobless claims program extended for laid-off workers who have exhausted their state-administered benefits. The eligibility period, which ends Oct. 2, would be extended through Jan. 15, 1994.

The administration also proposed spending $972 million to operate the Job Corps and create 50 new centers, which would serve 50,000 additional young people.

AGRICULTURE

The $63 billion proposed budget for the Agriculture Department raises spending for food stamps and other nutrition programs while making few changes in major farm programs.

Most of the 5.8 percent drop in the 1994 budget is due to lower projected spending for price and income support payments to farmers because of a return to more normal crop yields and weather.

The department projects $12 billion for such programs, down $5 billion from 1993. That spending accounts for 19 percent of the agriculture budget.

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ENVIRONMENT

The budget document shows a spending cut planned for the Interior Department, from $7.5 billion to $7.2 billion. But department officials say that does not reflect their total budget.

The department's overall budget is increasing $529,000, to $9.5 billion in Clinton's proposal, according to Interior budget chief Bob Lamm.

The printed budget includes revenues anticipated from raising grazing fees on federal rangelands and imposing first-time royalties on mining companies that extract minerals from public lands, even though Clinton will not insist Congress retain those figures.

The Environmental Protection Agency's budget is to increase from $6.5 billion to $6.7 billion.

The agency plans to cut Superfund spending overall, with 1994's budget authority going down from $1.6 billion to $1.5 billion. But because of the lag in spending on the Superfund projects from year to year, the actual spending is projected to stay the same, at $1.6 billion.

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EDUCATION

The administration proposed a 6.5 percent increase in funding for local school programs for poor children while recommending a 16 percent increase in administrative spending for the Department of Education.

An extra $400 million would go to programs for the poor. Money given to school districts with large numbers of low-income pupils would increase from $676 million to $700 million.

The overall budget for education proposes a decrease but the 1993 figures include money left over from the two previous years. The agency does not begin spending that money until July.

In higher education, funding for the Pell grant program would increase $300 million, or about 4 percent enough to keep the maximum grant at the current level of $2,300. At the same time, federal dollars for campus-based financial aid programs would decrease by $200 million. Schools use that money to provide smaller loans and grants to students.

LAW ENFORCEMENT

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Grants to state and local governments would be trimmed under a $10.3 billion Justice Department budget, down $206 million from the current fiscal year.

Those grants would be cut by $160 million, a drop of 20.4 percent. The decline reflects a $183 million cut in justice assistance grants, but an increase of $23 million for crime victims funds.

Outlays for prisons and support of inmates while they are in the custody of U.S. marshals would zoom by nearly a half-billion dollars, a 19.4 percent rise.

The Drug Enforcement Administration would get a significant spending boost, up 12.2 percent to $707 million.

Spending by various federal agencies for drug control would rise 7 percent, led by a $206 million increase in the Justice Department's spending. Its 1994 proposed budget for the war on drugs is $4.7 billion.

The totals sought for all agencies are $8.3 billion for supply reduction and $4.7 billion for demand reduction.

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TRANSPORTATION

The administration is proposing more than a 10 percent increase over this fiscal year's spending for transportation, most of it for highways and bridges.

Spending would total $40.1 billion, including $28.4 billion for investment in roads, bus transit systems, railroads, airports and maritime development.

Proposals emphasize safety, the environment, new technology and linking different transportation systems.

The budget calls for $1.95 billion for safety programs, a 5 percent increase. Under a new law, states will forfeit federal highway money if they fail to pass laws revoking or suspending licenses of drivers convicted of drug offenses.

COMMUNICATIONS

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Cable television companies would help cover the costs of

regulating their industry under the proposed budget for the Federal Communications Commission.

The $146.1 million set for the commission includes $16.7 million to be raised in cable company fees about 31 cents per subscriber.

The administration has proposed $129.4 million for the FCC's other duties as the regulator of radio, television and telephones. This compares to $128.5 million appropriated for the current year.

COMMERCE

The budget proposal for the Commerce Department calls for a slight increase in spending, from $3.2 billion in the current fiscal year to $3.3 billion in fiscal 1994.

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Commerce Secretary Ronald H. Brown said the budget request will help the department meet its goal of creating "thousands of jobs for the American people" by encouraging economic growth and technological progress.

Funding for the Economic Development Administration, which provides grants to economically distressed areas, would rise to $275.2 million from $222.9 million. Part of the money will be used to help affected areas find alternative uses for military and Energy Department facilities when defense contracts are lost.

International trade programs, including U.S. export promotion, would receive $232.9 million, up from $192.8 million.

The Bureau of Export Administration, which enforces U.S. export laws and grants export licenses for high-technology items with potential military uses, would see its budget cut from $40.5 million to $35.4 million.

Funding for minority business development would jump from $42.6 million to $49.3 million.

HOUSING

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The Department of Housing and Urban Development's proposed billion budget includes $175 million to help residents of public housing fight crime in their neighborhoods.

The program, called Community Partnership Against Crime, is primarily designed to rid public housing projects of drug-related violence.

The overall budget is only about $3 billion more than the current fiscal year's. But the priorities are juggled. More money would go into programs that address the social concerns of public housing dwellers, such as removing lead-based paint and treating children exposed to it.

The budget would cut aid to the homeless by $107 million.

ENERGY

The Energy Department's proposed $19.6 billion budget includes $6.5 billion for environmental restoration and cleanup, $600 million more than the amount allocated for making weapons. The proposed budget is an 18 percent increase over this fiscal year's.

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The blueprint earmarks $5.9 billion to maintain weapons production, including limited underground nuclear testing. But the budget reflects a shift of money from weapons production to civilian energy and environmental cleanup programs.

Proposed spending for energy conservation and development of renewable energy sources such as the wind and sun would be increased by a third to more than $1 billion.

SCIENCE

The budget proposes record spending for federal research and development: a total of $76 billion, with civilian R&D; getting most the boost. The total R&D; spending would exceed 1993's levels by 3 percent.

Most of the new spending is directed at programs designed to move federal research results quickly into the commercial sector, and to help defense-oriented labs cooperate more closely with industry.

Proposed spending includes $11 billion for university research grants from the National Science Foundation, the National Institutes of Health, the Departments of Energy and Defense, and from the National Aeronautics and Space Administration.

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NASA's proposed budget for exploration and research is $7.2 billion. Of this, $2.1 billion is set aside for restructuring the Space Station Freedom program. Clinton told NASA officials earlier this year to find a cheaper way to build and operate the space station, now projected to cost about $30 billion.

VETERANS

Mr. Clinton has proposed spending almost $1 billion more on medical care at VA hospitals and nursing homes around the country, up from $14.5 billion this year to $15.4 billion in 1994.

The proposal would cut $26 million from medical research by the Department of Veterans Affairs and eliminate 743 research employees.

The president also proposes increasing from 1.25 percent to 2 percent the fee charged first-time borrowers for VA-guaranteed home mortgages. The budget would also require veterans who borrow from the fund more than once to make a 10 percent down payment and pay a 2.5 percent loan fee.


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