GOP ready to reverse budget tide Congress poised to halt 6 decades of Democratic policies; Blind people protest cuts; Clinton is expected to veto measure, be forced to compromise


WASHINGTON -- Ten months after taking over Congress, the Republicans have rolled nearly all the elements of their revolutionary plan to shrink the federal government into one giant bill that is expected to pass both the House and Senate this week.

In a strikingly broad redirection of spending, the Republicans would reverse six decades of Democratic-led policies that have favored a socially activist federal government. They would also put the nation on the path toward a balanced budget by 2002.

"It's cosmic; it defines the differences between the parties," Michael Franc, a congressional analyst for the conservative Heritage Foundation, said of the proposal known as a "reconciliation" bill.

"Many Republican members of Congress will tell you this is what they came to Washington to do."

Both House and Senate versions of the bill would save $634 billion by slowing the growth of benefit programs like Medicare, Medicaid, welfare, agriculture subsidies and student loans.

Federal employees, veterans and other traditionally protected groups would also feel the pinch.

A chunk of the savings would be returned to families and businesses in the form of a $245 billion tax cut.

"It's not the Republican Party's agenda -- it's the agenda of the American people," House Speaker Newt Gingrich said yesterday.

The entire nation, Mr. Gingrich argued, will prosper once the financial markets reward passage of the bill by lowering interest rates.

"People in this country are sick and tired of being told you can't get Washington under control, and that's what we're trying to do," he said.

But opponents say the Republicans are cutting off federal aid and protection to the most vulnerable Americans.

A group of Medicaid recipients, some of them blind and in wheelchairs, rallied outside the Capitol yesterday to protest a sweeping proposal to trim that health care program for the poor and disabled by $182 billion -- 19 percent over seven years -- and turn it over to the states to run.

"People with severe disabilities should be able to choose to live independently and not in nursing homes or worse, in institutions," said Gus Estrella of Tucson, Ariz., who has cerebral palsy.

He spoke at the rally with a voice generated by a computer he obtained through Medicaid. "We must save Medicaid," he said.

The reconciliation bill would eliminate federal guarantees of welfare for poor children and permit restrictions on medical aid for the elderly in nursing homes and the disabled. No longer would there be an assurance that anyone who qualifies for Medicaid benefits would get them.

The Republicans believe most Americans understand that everyone bears the cost of the debt if the nation isn't weaned from its borrowing binge. "For the first time in 30 years, we're going to have the real stuff out there to cut; no smoke and mirrors, none of that crap we're all used to," said Sen. Alan K. Simpson of Wyoming. "If we find our brains plastered all over the sidewalk after the 1996 elections, it's because we didn't explain what we're doing well enough."

Mr. Gingrich has said that the fate of the reconciliation bill would determine whether his forces are a one-term wonder, like the last Republican majority in the House 40 years ago, or settle in to reign over Capitol Hill for a generation.

Jockeying over the measure is already a factor in the 1996 presidential campaign.

Three Republican presidential hopefuls -- Senate Majority Leader Bob Dole and Sens. Phil Gramm of Texas and Arlen Specter of Pennsylvania -- have been staking out positions on the measure to curry approval with key voter groups.

"It's almost bigger than life in terms of political consequences," said Tom Korologos, a Republican lobbyist.

Although much attention was focused at the beginning of the year on the 100-day House whirl through the 10 items Republicans promised to vote on their "Contract with America," Mr. Gingrich used that exercise as a mere warm-up for the more sweeping agenda in the reconciliation bill.

Putting off many of the hot-button social issues that divide his party, like gun control and school prayer, Mr. Gingrich and his troops devoted their energy to developing a program that they say meets the public demands as determined by polls: balancing the budget, "saving" Medicare, cutting taxes and "ending welfare as we know it" -- a Clinton phrase.

What's more, the Republicans have succeeded in getting President Clinton and many of the Democrats to agree with where they're going -- it's simply a question of how fast and how far.

Leon E. Panetta, the White House chief of staff, has declared that the reconciliation bill will be "dead on arrival" at the White House if it passes in its current form.

But Democrats and Republicans seem to be almost eagerly awaiting that veto, expected next month, so they can begin negotiations over a final deal.

Indeed, Mr. Clinton has accepted the premise of a balanced budget in seven years, endorsed the Senate version of welfare reform, proposed his own curbs on Medicare and Medicaid and supported tax cuts.

"There are some differences that do reflect value choices that are very, very different," said Gene Sperling, a senior Clinton aide.

He noted that the president was very unhappy with proposed Republican reductions in Mr. Clinton's key priorities, such as education and a tax-break program for the working poor. "But the framework for an agreement is certainly there," he said.

Even though Republican leaders say they are confident of passing the measure in both the House and Senate, they are still bargaining with dissidents in their own party who oppose some elements.

Accordingly, the Republican leaders agreed to retain the 1988 law that allows the spouse of a nursing-home patient on Medicaid to retain some assets and income.

They also agreed to ensure that states will not be able to force adult children of nursing-home patients to pay the bills.

Mr. Gingrich also promised yesterday that the reconciliation bill would be adjusted to ensure that no one's taxes would rise as a result of a plan to reduce tax breaks for the working poor, through the earned income tax credit.

A key element in the Republican measure is a $500-per-child tax credit for families.

But some poor families might lose more than they gain if the Senate prevails and sharply curbs the earned income tax credit.

House Republicans have also quietly dropped a "Contract with America" plank that would have allowed working Social Security recipients to keep more of the money they earn from their jobs.

The real hard bargaining on taxes won't begin, however, until House and Senate negotiators meet next week to resolve differences between the two reconciliation bills.

House and Senate Democrats plan to offer alternative proposals and amendments this week, but with little hope of success.

They know that their most vital role is preventing the Republicans from being able to override a presidential veto.

" 'Reconciliation' is really a misnomer this year," said the Senate Democratic leader, Thomas A. Daschle. "The only differences being reconciled are between the far-right and the farther-right. The Democrats have been locked out."

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