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Senate puts own stamp on spending GOP majority passes balanced-budget bill after House success

THE BALTIMORE SUN

WASHINGTON -- The Senate voted early today to put its own slightly more moderate stamp on the Republicans' sweeping proposal to balance the budget, cut taxes and diminish the role of the federal government.

A little more than a day after the House passed its version of the measure, the GOP-led Senate voted 52-47 along party lines -- except for moderate Republican William S. Cohen of Maine, who voted with the Democrats -- to approve a bill that would attain many of the same far-reaching changes to a government Republicans call bloated, intrusive and expensive.

"We're sticking to our guns," said Senate Majority Leader Bob Dole of Kansas. "This is going to be a radical change in the way this government has operated," he said.

Democrats scored one major success against the bill, using a parliamentary device to force Republicans to drop a section of the measure that sets policy for the overhaul of the welfare system.

The proposal had already been approved by a large bipartisan majority, 87-12, as a separate bill, which is now pending in a joint conference committee with the House. But GOP leaders had also included the budget package because they were counting on the $66 billion in savings from welfare programs to help balance the budget.

As result of that action, the separate bill will probably have to be approved separately before the budget legislation can go through.

Democrats also joined forces with moderate Republicans to nibble off some of the harshest edges of the enormous proposal regarding Medicare, Medicaid, welfare and student loans. But all senators in the minority party, including Marylanders Barbara A. Mikulski and Paul S. Sarbanes, voted against a bill that they say will hurt many Americans, particularly the poor.

"This bill is extreme; it's mean-spirited; it ravages people in order to reward the wealthy," said Senate Democratic leader Thomas A. Daschle of South Dakota. "And that is wrong. That's not something we can support."

The seven-year proposal would wring nearly $1 trillion from federal spending to eliminate the budget deficit by 2002. Most of the savings would come from squeezing benefit programs such as Medicare, Medicaid, welfare, farm subsidies, student loans and tax breaks for the working poor. States would be required to take over some of those responsibilities with tighter budgets but few or no strings attached.

At the same time, the Senate plan would provide a broad array of tax breaks for families and businesses. Those would include a $500-per-child tax credit; a 50 percent reduction in the tax rate on capital gains; a $5,000 adoption credit; a 20 percent credit on the interest for student loans; an increase in the income limits for tax-free contributions to Individual Retirement Accounts; and an exemption from estate taxes of the first $1.5 million of family-owned businesses and farms.

Despite Mr. Daschle's comments, there were indications yesterday that the Republican drive to overhaul six decades of Democratic-led social policies would succeed in some fashion.

President Clinton, who has been sparring with the Republicans for weeks over the budget plan, sounded an unusually conciliatory note. Though he is expected to veto the Republican measure, Mr. Clinton said yesterday that he saw common ground for an eventual compromise that he said could draw a "huge bipartisan vote."

"The principles [the Republicans] say are important to them -- they're important to me," he told reporters yesterday. "I want to balance the budget. I'm determined to secure the Medicare trust fund. I want a reasonable tax cut targeted to the middle class, child-rearing and education."

"But we need to do it in a prudent way that continues to invest in our people, in our education, our technology, the health care of our seniors, and the future of our children and our environment," Mr. Clinton said.

After the House and Senate measures are combined and sent as one bill to Mr. Clinton for a likely veto next month, Congress will negotiate with the White House on a final measure that could probably be enacted by Christmas.

In another sign of conciliation, the Clinton administration also offered yesterday to accept a short-term increase through mid-January in the cap on how much money the government can borrow to pay its bills. That would give the president enough time to work out a compromise with the Republicans but would not totally relieve the pressure for some kind of action within the next few months.

Because they only have slim majorities in the House and the Senate, Republicans have little hope of overriding a presidential veto. Republican leaders have threatened to withhold approval of a long-term increase in the debt ceiling as a way to force Mr. Clinton to the negotiating table.

Many Democrats have expressed alarm that Mr. Clinton could compromise with the Republicans too soon and give in too much.

"He wants a budget summit, and a lot of us don't think that's the best way to handle this," said Ms. Mikulski, who would like to see Mr. Clinton insist on putting off tax cuts until 1997.

The president also took pains yesterday to separate himself from "liberal Democrats," describing them as a separate faction with whom he might disagree.

"If there are those even in my own party who do not favor a balanced budget at all, then there will come a time when we'll be on different sides of the fence on that," Mr. Clinton said.

At the same time, he added: "Look how much the liberal Democrats have done to move to a dynamic center in the last three years. They voted for deficit reduction, they voted for a very tough crime bill, they voted for an education reform bill that had high standards.

"They are moving," he said. "I believe they will vote for a balanced budget if it's the right kind of one."

Changes that the leadership made as concessions to Senate moderates would:

* Shave $13 billion off the $450 billion Republicans proposed to trim from future spending on Medicare and Medicaid -- with the Medicaid bonuses going to states with Republican senators: $6.5 billion went to Michigan, Tennessee and Texas; California and Maryland, each with two Democratic senators, lost $4.1 billion and $749 million, respectively, in the trade-off.

* Restore $5.9 billion of a $10.8 billion reduction in student loans.

* Reinstate federal standards to protect nursing-home patients from such practices as the use of chemical or physical restraints, but allow states to obtain waivers from such standards.

Another amendment by Sen. John H. Chafee, a Rhode Island Republican, would require states to provide Medicaid coverage for disabled people as defined by the federal government.

Mr. Dole predicted that some of those changes, particularly the Chafee amendment, would run into opposition from Republican governors who want the freedom to make their own rules. But he and House Speaker Newt Gingrich of Georgia predicted speedy agreement on a combined version of the bill that can be sent to Mr. Clinton next month.

Senate bill highlights

The Senate bill would shrink the government, cut taxes and balance the federal budget in seven years. This version and the one the House passed Thursday 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 Senate bill requires states to cover pregnant women, children and poor disabled people. Savings: $170 billion.

Welfare: Under House bill, guarantee of payments to poor families and their children would end. States would get 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. Many of these provisions were stripped from Senate bill by Democrats, but $66 billion of savings from welfare programs remain.

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

eligibility.

Tax credit for working poor: Both versions would restrict eligibility of earned income tax credit. Senate bill projects savings of $43 billion.

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

Student loans: Senate bill would save $4.9 billion, half the House amount.

Environment: Both versions estimate savings of $2 billion. Mining would be expanded on federal land. The Senate bill would raise user fees at national parks.

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

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