A RECONCILIATION IN THE WORKS June 26, 1997 TRANSCRIPT

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A budget reconciliation between the President and Congress may, for the first time in thirty years, lead to a balanced budget. Legislators are now adding details to the five-year balanced budget agreement reached with the President last month.

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ELIZABETH FARNSWORTH: Still to come on the NewsHour tonight, Congress and the budget, and a Richard Rodriguez essay. Kwame Holman looks at the battle in Congress over reconciling the budget agreement.

KWAME HOLMAN: Congress this week is adding details to the broad five-year balanced budget agreement reached with the President last month. The process is called reconciliation because Congress has to reconcile the amount of money it intends to spend with the amount of revenue it expects to collect, and while it's part of the annual budget process on Capitol Hill, this would be the first time in thirty years that reconciliation is expected to lead to a balanced budget.

REP. JOHN KASICH, Chairman, Budget Committee: We are going to balance the budget. The Berlin Wall of big government has fallen. There will be tax cuts, and it's all going to happen because we stuck to principle. We believe in less government; we believe in shifting power, money, and influence from this city, and it's no longer rhetoric, ladies and gentlemen. It's reality.

KWAME HOLMAN: Yesterday, the House easily approved the spending side of reconciliation, with almost all of the Republicans and about a quarter of the Democrats voting for it. The Democrats against were passionate in their opposition.

REP. BOB MENENDEZ, (D) New Jersey: The Republican budget bill weakens protection for workfare workers against race, sex, ethnic, and religious discrimination. It creates a two-tiered workplace, with a permanently disadvantaged underclass. It does not protect legal residents. It endangers children's hospitals and those serving a disproportionate share of the poor and uninsured. It slashes support for 2.7 million disabled people, and it destroys individual rights to recovery for medical malpractice. These are radical changes.

KWAME HOLMAN: As passed, the House bill calls for saving $140 billion over five years, most of it by reducing anticipated spending for Medicare and Medicaid. It includes an increase in Medicare premiums of about $20 a month.

SPOKESPERSON: Mr. Lieberman, aye.

KWAME HOLMAN: The Senate also approved its spending bill by a wide margin yesterday. It too saves $140 billion through reduced growth in Medicare and Medicaid spending and also includes a $20 a month increase in Medicare premiums. But the Senate bill also would require senior citizens earning $50,000 a year or more to pay even higher premiums, and the age of achieving eligibility for Medicare gradually would rise from 65 to 67. A dozen Democrats joined Republicans in approving those added Medicare requirements. President Clinton opposes them, but before those provisions can get to his desk, they will have to survive a Conference Committee with the House, where differences between the two versions of the spending bill will be negotiated.

SPOKESMAN: The chair will recognize the Speaker of the House for one minute.

KWAME HOLMAN: With the spending provisions out of the way, Congress today turned its attention to taxes.

REP. NEWT GINGRICH, Speaker of the House: Yesterday, the House cast a vote for the future by passing the first balanced budget in 29 years. This will give our children and grandchildren lower taxes, lower interest rates, more economic opportunity. Today, we cast a historic vote for America's families by passing the first tax cut in 16 years.

REP. EDWARD MARKEY, (D) Massachusetts: With bleeding palms, yesterday on the floor, look how much we'd like to help those uninsured children, we have no money; look how much it hurts us to cut the Medicare for the elderly, we have no money. And then, after a respectful overnight wait, the tax break fairy shows up on the floor on the Republican side, sprinkling tax breaks across America!

KWAME HOLMAN: As part of their respective balanced budget plans, both Republican-controlled Houses brought tax bills to the floor that include education tax relief, estate tax relief, a reduction in the capital gains tax rate, expanded individual retirement account options, and a $500 per child tax credit. Unlike the Senate plan, the House bill will not extend the per child tax credit to families earning too little to pay taxes. Democrats focused on that provision in calling the Republican-drawn tax bill unfair to the middle class and working poor.

REP. MAXINE WATERS, (D) California: In the state of California, 56 percent of the children do not get the child credit under the Republican bill; that's more than 5.5 million. The Republican tax bill is an outrage. They don't want us to say it, but we're going to say it over and over again. It benefits the wealthiest in this nation.

REP. DONALD MANZULLO, (R) Illinois: Who's the beneficiary of this? It's the people that I represent, the hard-working Americans, the ones earning between thirty and forty thousand dollars a year. It's the 113,000 children in the district that I represent, a good tax bill for hard-working, middle income American families.

REP. CHARLES NORWOOD, (R) Georgia: Now, if you believe that we should have everybody receive $500 per child tax credit, even those who don't pay taxes, be honest enough to call it what you're talking about. You're talking about a welfare program.

SPOKESMAN: I would yield to the gentleman from Texas.

REP. LLOYD DOGGETT, (D) Texas: We are forced back here today to discuss another reconciliation bill [holding sign with word "Wreckconciliation" in red letters]. We're having another big wreck in Congress, even bigger than the one yesterday, and, of course, it is true that the liberals in Washington are causing this wreck, those who are so liberal with the truth that they defy reality.

KWAME HOLMAN: There has been more bipartisan agreement in the Senate. Even Minority Leader Tom Daschle, who proposed his own alternative tax plan, acknowledges there is broad Democratic support for the Republican plan.

SEN. TOM DASCHLE, Minority Leader: We recognize, Mr. President, that we're in the minority. And many Democrats recognizing that worked closely with our Republican colleagues to do the best we could to reflect a better distribution. And many of us will support the final passage if we're not successful in passing this version because we don't want the perfect to be the enemy of the good.

KWAME HOLMAN: The Senate went on to defeat handily Senator Daschle's alternative tax plan and is expected to easily approve the Republicans' bill tomorrow. Meanwhile, the House easily passed its tax bill early this evening. President Clinton already has warned it contains elements unacceptable to him but says he's eager to work with the Congress to make changes.

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