GOP House votes historic downsizing Republican majority cuts taxes, spending to balance the budget; Capital gains tax halved; Reductions to affect elderly, disabled, poor, veterans, farm

THE BALTIMORE SUN

WASHINGTON -- The House took a major step last night toward completing the Republicans' revolutionary drive to balance the federal budget by voting to shrink benefit programs that have been in place for decades.

Led by Republican freshmen who had made belt-tightening a top priority in their campaigns last year, the House voted 227-203 in favor of a bill that would scale back programs for the poor, elderly, disabled, students, federal workers, farmers and veterans to help balance the federal budget by 2002.

The House also voted to give $245 billion of the savings back to taxpayers, most of it in a $500-per-child tax credit and a 50 percent cut in the tax on capital gains.

Only 10 of the 233 Republicans defected from party ranks, including Rep. Constance A. Morella of Montgomery County. She said she thought the tax cuts were too large and the plan to squeeze Medicaid, which serves the poor and disabled, by $182 billion is too harsh.

All but four of the 198 House Democrats, and the one independent, voted against the proposal.

Although many Republicans were sobered by the political gamble of taking on such sacred cows as Medicare, Medicaid and agriculture subsidies, they claimed a historic victory over what they described as big-government policies that were ripe for reform.

"We promised that this day would come," Rep. John R. Kasich of Ohio, the chairman of the Budget Committee, said in a closing speech that drew three ovations for his efforts in crafting the proposal. "We said we would finally once and for all end the smoke and mirrors, end the gimmicks, stop the delays and balance the federal budget."

"We've had to walk across some very hot coals," Mr. Kasich added, referring to months of attacks from Democrats and organizations representing groups that were targeted by the spending cuts. "But we've had the courage to do it."

Democrats said there was nothing to celebrate about the GOP proposals, which they say would hurt programs that serve the disadvantaged and the middle class while giving tax breaks to the rich.

"Entire communities will be decimated by crime, abuse and poverty," said Rep. Kweisi Mfume of Baltimore, who joined the three other Maryland Democrats in voting against the measure. "With this bill, we are saying that the Congress has new priorities and that the American people are not one of those priorities."

Yesterday's vote, expected to be followed today by Senate approval of its version of the budget "reconciliation" bill, will set the stage for House-Senate negotiations starting next week. A combined measure will then be sent to President Clinton for a likely veto sometime before Thanksgiving.

After that, the Republican focus will be on finding a compromise with the White House. Mr. Clinton has proposed his own 10-year budget-balancing plan that would also shrink benefit programs and provide tax relief, though less than the Republican seven-year plan.

The final budget will surely be a reversal of the past six decades of Democratic-led policies that have expanded the federal government.

Last night's outcome was not in doubt, but House Speaker Newt Gingrich and his lieutenants spent much of the last week lining up their votes by making adjustments in the bill to satisfy parochial concerns.

Even so, many Republicans voted for the measure after swallowing some major objections. Among the objectors was Rep. Roscoe G. Bartlett of Western Maryland, who said he was unhappy because the bill would lift the current limit on how much money the federal government can borrow to pay its bills.

"I wish we could have at least looked into the possibility of what would happen if we did not increase the debt," Mr. Bartlett said. "I think people want us to have the courage to bite the bullet and put our own house in order."

Other Republicans raised complaints about issues they feared would hurt their constituents, such as the method for determining milk subsidies and a proposal to allow oil drilling the Arctic National Wildlife Refuge.

By contrast, some of the conservative Republican freshmen who were elected on promises to achieve revolutionary change in Washington said they were disappointed that the proposal approved by the House last night did not go far enough.

"We have left some room for improvement in the future," said one of them, Rep. Mark W. Neumann of Wisconsin. "But if we don't get started whittling this government down, it's going to get 10 times harder."

All but four of the 73 GOP freshman voted for the measure that would have been once unthinkable for lawmakers in their first term.

"We were sent here to get the federal government out of our faces -- to stop trying to be America's mother, America's father, America's pastor and America's employer," said Rep. George P. Radanovich, a freshman Republican from California. "We're giving freedom back to the American people to live their own lives," he said.

Mr. Gingrich made clear he considered that desertion from the ranks was unacceptable. And though many House Republicans said privately that they agreed with Mrs. Morella that the proposed tax cuts were too high and some of the spending cuts too deep, all but she and three others resisted supporting a moderate Democratic alternative that offered a middle ground.

The Democratic proposal, supported by Reps. Benjamin L. Cardin of Baltimore and Steny H. Hoyer of Southern Maryland, would also balance the budget by 2002. But it included no tax cuts, leaving more for Medicaid, student loans and the environment.

White House officials and Democratic leaders appeared gleeful yesterday because they believe they caught both Mr. Gingrich and Senate Majority Leader Bob Dole making politically damaging remarks about Medicare.

The Republicans contend that their plan to curb Medicare spending by $270 billion over seven years is intended to "preserve, protect and strengthen" it.

But in a speech Tuesday, Mr. Dole boasted that he had been one of 12 House members who voted in 1965 against creating Medicare.

"I was there, fighting the fight, voting against Medicare, because we knew it wouldn't work in 1965," said Mr. Dole, the leading candidate for his party's presidential nomination.

Also Tuesday, Mr. Gingrich predicted to a different audience that the traditional fee-for-service Medicare program would "wither on the vine because we think people are voluntarily going to leave it" in favor of the new managed care options.

The Republican plan would allow Medicare recipients to remain in the traditional plan. But the House speaker told his audience Tuesday: "We don't get rid of it in Round 1 because we don't think that that's politically smart, and we don't think that's the right way to go through a transition."

Mr. Gingrich insisted yesterday that he was referring to the Health Care Financing Administration, the Baltimore-based agency that administers the traditional Medicare program, not to the Medicare program itself.

But Mr. Clinton's spokesman, Mike McCurry, seized quickly on the opportunity.

"So the reason they're trying to slow the rate of increase in the program, I suppose, is because eventually they'd like to see the program just die and go away. You know, that's probably what they'd like to see happen to seniors, too, if you think about it."

Spending

The bill the House approved last night would shrink the government, cut taxes and balance the federal budget in seven years. Both House and Senate versions would reduce spending by $634 billion by 2002. Below are highlights, with all figures for seven years.

Medicare: Both House and Senate versions would slow growth of Medicare, saving $270 billion. Recipients would pay higher premiums. Payments to hospitals and doctors would be reduced.

Medicaid: Both versions would cut the rate of growth in payments to states by half. The House bill would end the guarantee of coverage for any poor and disabled who qualify; states could restrict eligibility. Savings: $182 billion.

Welfare: Guarantee of payments to poor families and their children would end, saving $102 billion. Both would give states more control of welfare, with less additional money. Most recipients would have to work within two years. Many would be ineligible for welfare after five years. Supplemental Security Income for disabled children would be reduced. House bill denies welfare to unwed teen-agers and children born to welfare recipients.

Taxes: Both House and Senate bills cut taxes $245 billion. Both include a $500-per-child tax credit for families with children and a cut in capital gains taxes. Both expand IRA eligibility.

Tax credit for working poor: Both versions would restrict eligibility of earned income tax credit. House bill projects savings of $23 billion.

Farm programs: Both versions reduce subsidies to farmers, saving $13 billion.

Student loans: Both House and Senate propose saving $10 billion. Interest subsidy for students for first six months after graduation would end. Interest rates on loans to parents would rise.

Environment: Both estimate saving $2 billion. Mining would be expanded on federal land.

Federal employees: Senate and House bills would save $9.8 billion by having federal workers contribute more toward their pensions.

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