Congress establishes goals to achieve balanced budget


WASHINGTON -- After months of struggle and an extraordinary all-night session in the House, the Republican-led Congress yesterday approved a blueprint to dramatically shrink the federal government, cut taxes and balance the budget in seven years.

On nearly straight party-line votes, the House and Senate committed themselves to legislation to impose nearly $1 trillion in spending curbs on health care, welfare and social programs in return for the promise of a sounder economy and tax relief for families and businesses.

"We took some real risks, and we're going to defend it across this land," said Sen. Pete V. Domenici of New Mexico, a Republican veteran of unsuccessful campaigns to cut the deficit.

"We're just asking the American people to reserve their antagonism about these cuts. Let's see how much better America will be when we decide to pay our own bills."

But Democrats complained that the proposed spending cuts are unfair because they fall heavily on the poor, the elderly and students.

They also said the budget cuts would not have to be so harsh if the Republicans were not determined to provide $245 billion in tax relief, some of it to wealthy Americans and businesses.

"The Republican budget lacks a heart, and it has no soul," complained Sen. Jim Exon of Nebraska, ranking Democrat on the Budget Committee. "In a family, you look after each other."

President Clinton's approval is not required for the nonbinding agreement approved yesterday.

The agreement is simply an outline for specific tax and spending decisions that Congress must make this fall and that the president will have the power to veto. Mr. Clinton has already warned that he would veto the budget in its current form.

And after their night of delaying tactics in the House, the Democrats promised that they would keep up the fight all summer to focus attention on Republican plans before they become law in the fall.

"I do hope the American people finally wake up see what we're going to do to them," said Rep. Charles B. Rangel, New York Democrat. "Ultimately, the poor, the sick and the aged are not going to go away."

In the House, where a huge class of tightfisted Republican freshmen was the driving force behind the ambitious plan, the budget blueprint was adopted on a vote of 239-194.

One Republican opposed

All but eight House Democrats voted against the plan. House Republicans were united in support of it, except for Rep. Michael Flanagan of Illinois. He represents a large elderly population in Chicago who would be affected by the proposed health care cuts.

"We're doing it," shouted Rep. Martin Hoke, an Ohio Republican, trying to rally a sense of the moment from his weary colleagues, "for the first time in 25 years. The fact is we're going to have a balanced budget for our children and our grandchildren. Let's celebrate it."

Opposition to tax cuts cost the budget plan bipartisan support in the Senate, where three Democrats who had voted for an earlier version of the budget rejected the final plan. The tally there was 54-46.

"We are eating the dessert before we're taking the caster oil," said Sen. Sam Nunn.

The Georgia Democrat complained that most of the spending cuts outlined in the budget plan would come in later years, while the tax cuts take effect right away.

"The spending cuts are likely to be rolled back in subsequent legislation as the pain begins to be felt," Mr. Nunn said.

Md. delegation split

Members of Congress from Maryland split along party lines, with all four House Republicans favoring the spending plan while the four House Democrats and two Democratic senators opposed the proposal.

It won't be until at least September that details will be known about the most divisive issues: how spending will be cut to produce $270 billion worth of savings in the Medicare program, and how $245 billion worth of tax cuts will be doled out.

But the targeted amount of savings from Medicare is so enormous that Democrats say it is clear that benefits will have to be reduced while premiums and co-payments for the elderly will rise.

Republican strategists are working on a public relations campaign to counter any public outcry and the advertising of interest groups that oppose the plan's spending cuts.

Tax relief is most likely to be granted in the form of credits for families with children -- possibly including those with incomes up to $200,000 a year -- and a 50 percent cut in the tax rate on capital gains.

At the same time, Republicans plan to scrap a tax break for the working poor as part of their austerity program that Democrats ++ say could affect 14 million Americans.

"What was the middle-class squeeze becomes the middle-class squash, and that is something we should not allow to happen," said House Minority Leader Richard A. Gephardt of Missouri.

Action on the budget came amid a highly partisan fight, sparked by Texas Rep. Greg Laughlin's decision this week to switch parties, from Democrat to Republican, for which he was awarded a seat on the influential Ways and Means Committee.

Democrats kept the House busy for an extraordinary all-night session with delaying tactics on a foreign aid bill.

Nearly $1 trillion

The budget plan calls for squeezing spending by nearly $1 trillion over seven years. Nearly half of it would come from restructuring the health care programs of Medicare and Medicaid so they will no longer provide unlimited benefits to all who are eligible.

An additional $190 billion would be drawn from a broad category of domestic social programs, including funds for education, environmental cleanup and the arts.

Welfare programs, student loans, farm subsidies and veterans benefits would contribute an additional $174 billion in savings. Health and retirement benefits for federal employees would be cut by $11 billion.

Those savings, which would not actually cut the overall budget but would slow its growth substantially, are intended to bring federal income and federal spending into balance by for the first time since 1969.

Meanwhile, the belt-tightening will allow the Republican-led Congress to increase defense spending for the first time in a decade. The $58 billion in additional spending would go for weapons procurement and research and development.

"We're making history," declared Rep. John R. Kasich of Ohio, the Budget Committee chairman, who has made balancing the budget a personal crusade. "This is a giant step for saving America."


* Promises to balance the federal budget by 2002.

* Cuts spending below today's levels over the next seven years for education, transportation, environment, foreign aid, science, energy and agriculture.

* Slows spending increases for Medicare from 10 percent a year to 6 percent a year during the next seven years.

* Slows spending increases for Medicaid from 10 percent a year to 4 percent a year over the next seven years.

* Doesn't touch Social Security.

* Instructs tax writing committees to specify up to $245 billion itax breaks.

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