WASHINGTON -- In a sharp challenge to President Clinton, Republican congressional leaders vowed yesterday to quickly end decades of dependence on Social Security surpluses that have helped pay for spending programs and tax cuts.

Concluding weeks of private negotiations, House and Senate Republican leaders announced an agreement on a budget blueprint for 2000 that would also preserve the current spending ceilings.

The plan would delay most of a proposed election-year tax cut until well into the next president's term.

The blueprint, which Republican leaders hope to pass before their Easter recess at the end of the month, is a nonbinding resolution that does not require Clinton's signature and can be approved without any Democratic support.

But it sets down an important guidepost for the year ahead that will govern the Republicans' political and fiscal strategy in their negotiations with the White House over spending, tax cuts and any reforms to two cherished and enormously expensive programs: Social Security and Medicare.

The Republican plan is intended to trump Clinton's proposal for "saving" Social Security by setting aside 62 percent of the budget surplus over the next 15 years while also providing for new defense and social spending and small targeted tax cuts.

Republicans hope their plan will inoculate them against Democratic charges that the Republicans are intent on eviscerating Social Security to pay for big tax cuts.

The president is "running around saying he's the one saving Social Security, but in the first year of his budget, he only saves 58 percent of the Social Security surplus, and he breaks the [spending caps] by $30 billion," said Sen. Pete V. Domenici, a New Mexico Republican who is chairman of the Senate Budget Committee.

"If saving the trust fund and not spending it is the test, we're 100 percent pure, and he's 58 percent pure," Domenici added.

For at least three decades, money left over from Social Security taxes after the recipients have been paid has been used to finance other programs.

A bipartisan proposal has been offered in the House to gradually wean the government from spending the money that is left over from the Social Security payroll taxes.

But Domenici is a leading advocate of the plan adopted by Republican leaders yesterday to quit cold turkey.

To make good on this tight-fisted approach, Republicans will not only have to swallow their desire for speedy tax cuts.

They will also have to squeeze substantial spending from other programs for the next year or two, at which point economic growth is expected to generate budget surpluses from other tax revenue.

Rep. John R. Kasich of Ohio, the House Budget Committee chairman and a Republican presidential hopeful, has been promoting a 10 percent income-tax cut that, under the new Republican plan, would have to be phased in slowly over several years.

But Kasich nevertheless pronounced himself upbeat.

"We can save the major entitlement programs for the elderly, we can transform them so that the baby boomers will have something, we can maintain fiscal discipline, and we can provide historic tax relief," Kasich said.

"I think that's a pretty good package."

That package sounded a bit too good to Senate Minority Leader Tom Daschle, a South Dakota Democrat.

"Is that with or without mirrors?" Daschle asked with a twinkle when he heard Kasich's litany of cheerful predictions.

"I'm very skeptical about their ability to keep all these promises."

White House spokesman Barry Toiv said he would be eager to see the details of the GOP plan. But he said it seemed to lack the specific guarantees included in Clinton's proposal that the Social Security trust fund would remain solvent for at least 15 years.

So far, the Republicans' blueprint has few specifics; those will have to be filled in by the House and Senate budget committees.

Later, the appropriations committees would have to make specific decisions about how the reduced revenue would be allocated.

Other committees would be charged with shaping any tax-cut legislation that results.

Clinton's signature would be required on the tax and spending legislation.

As a fiscal goal, the Republicans' decision to deny the government future access to Social Security surpluses is almost as ambitious as the Republican plan four years ago to end three decades of federal budget deficits.

Thanks to the spending ceilings and the booming economy, the federal budget officially moved into the black last year -- but only because the Social Security surplus was included in the overall pool of government revenue.

If next year's projected Social Security surplus of $137 billion were removed, the budget would produce a $4 billion deficit, unless spending programs were scaled back.

Under the Republican plan, Social Security money left over after paying Social Security benefits would be used to shrink the federal debt.

The goal is to eventually eliminate debt payments.

Clinton also proposed that the surplus money he wants to put aside for Social Security be used in the short term to pay down the federal debt.

Ending the budget raid on the Social Security surplus is a first step toward ensuring that the program will be able to meet the needs of baby boomers, who, beginning around 2013, are expected to draw more in benefits than the payroll tax brings in.

Additional changes in the program -- such as a reduction in benefits or an increase in payroll taxes -- are also likely to be needed.

In trying to outdo Clinton on Social Security, Republicans leaders were forced to put the brakes on their own top priority issue: a major tax cut.

Of a proposed $750 billion tax cut over the next decade, the target for next year would be reduced to $15 billion or less.

But much to the Republicans' consternation, polls show that Americans are more concerned about protecting Social Security than about cutting taxes.

The Democrats had already made clear that any Republican push for a broad tax cut through the use of Social Security money would carry a heavy political cost.

For Republicans, there is some consolation.

Their proposal, they say, will make it harder for Clinton to demand spending on his pet programs out of the Social Security surplus.

Pub Date: 3/05/99