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The 1997 Budget

May 9, 1996 at 12:00 AM EDT


KWAME HOLMAN: Members of the Senate Budget Committee found themselves in a familiar position this morning, ready to battle over matters of spending, taxes, and reducing the deficit. Just two weeks ago, Congress and the President completed work on the 1996 budget, six months into the fiscal year. Now they must finish work on the 1997 budget by October 1st to avoid the government shutdowns and reliance on temporary spending measures that characterize last year’s budget battles.

SEN. JAMES EXON, (D) Nebraska: I think probably if we can use some restraint on both sides, we can move along with this mark up today.

KWAME HOLMAN: The 1997 budget proposal unveiled by Republicans today is once again an attempt to start toward a balanced budget by the year 2002. Committee Chairman Pete Domenici repeated the Republicans’ budget philosophy.

SEN. PETE DOMENICI, Chairman, Budget Committee: The budget I offer today recognizes the simple notion that government cannot simply go on spending our children’s money. It is good medicine for our nation. And it would prevent America’s children from having to swallow the poison pill of mounting federal budget debt, a Medicare system that will go bankrupt in five years and a crushing tax burden on those just starting out in life.

KWAME HOLMAN: Yet, the six-year balanced budget plan is more moderate than the seven-year plan approved by Congress but vetoed by the President last year. It aims at balancing the budget by reducing projected spending, such as $158 billion less for Medicare, $72 billion less for Medicaid, and $53 billion less in projected welfare spending. Those reductions are smaller than Republicans proposed last year. On the tax relief side of their latest plan, Republicans called for giving families a $500 per child tax credit. That accounts for almost all the $122 billion tax cut in the six-year plan, just about half the tax cut Republicans called for last year. However, the Republican budget writers will encourage the tax committees to come up with additional tax cuts if they can identify offsets in spending.

SPOKESMAN: We have not had a chance, as you will understand, to go through this with a fine-toothed comb.

KWAME HOLMAN: Democrats on the Senate Committee had just received copies of the new Republican budget and were reserving judgment. Meanwhile, under the leadership of Chairman John Kasich, the House Budget Committee met this afternoon, with Democrats complaining they still didn’t have the details of the Republican plan.

REP. WILLIAM ORTON, (D) Utah: It would be very helpful if we had the information that the gentleman is referring to. He suggested we look at page 53 in our book. We don’t have the book.

REP. JOHN KASICH, Chairman, Budget Committee: I am giving you tons of information. I’m going to give you an hour and a half to go over all this stuff.

REP. WILLIAM ORTON: Information overload doesn’t do us a lot of good, if you hand it to us–


REP. WILLIAM ORTON: –before we walk–


REP. WILLIAM ORTON: –in, and then–


REP. WILLIAM ORTON: –you refer us to a page that doesn’t exist in the document, Mr. Chairman.

REP. JOHN KASICH: Mr. Orton, Mr. Orton.

KWAME HOLMAN: When he spoke this afternoon, President Clinton knew just a few details of the Republican budget. He didn’t embrace the plan, but he didn’t reject it either.

PRESIDENT CLINTON: It appears to me that we still have significant differences in that they propose big cuts in education and in the environment and to abolish the guarantee of coverage under Medicaid for poor children and the elderly in nursing homes and for families with–family members with disabilities, and I think the Medicare number appears to be still too high. But I think it’s a movement in the right direction.

KWAME HOLMAN: Though most members of Congress have yet to go through the details of the new Republican budget, it was a hot topic in the House of Representatives this morning.

REP. GEORGE MILLER, (D) California: Senior citizens ought to understand that Republicans are back, same old budget, same old ploy, and the same old cuts in Medicare to give tax cuts to the wealthy.

REP. MARK FOLEY, (R) Florida: To be criticized for cutting Medicare once again by the other side is a lie, is a sham, and is distasteful and disgraceful on behalf of the minority party.

KWAME HOLMAN: The full House and Senate won’t take up the new budget for several more weeks, but already there’s evidence that the debate will be stormy and will sound very much like it did last year.

JIM LEHRER: Now a further update by Susan Dentzer, chief economics correspondent for “U.S. News & World Report.” Susan, same old budget, same old argument about to begin again?

SUSAN DENTZER, U.S. News & World Report: In a certain sense, Jim, yes, but I guess I would characterize this new set of budget proposals as really a mix of moderation on some points and same old, I guess some Democrats would use the word extremism on other points. The fact is the news piece mentioned just a moment ago there has been a lot of movement in terms of the numbers being discussed, the size of the tax cuts, at least the Republicans have made an effort to position front and center this per child tax credit, this so-called family tax credit as the centerpiece of their tax proposals, to kind of moderate the rhetoric of last year which suggested they wanted a huge tax cut for the rich which was going to be used, paid for by big cuts on Medicare and Medicaid in particular. They’ve moved very much in the direction of–toward the President on Medicaid reforms. The size of Medicare spending–excuse me–the Medicaid–

JIM LEHRER: Medicaid.

SUSAN DENTZER: –spending numbers, have come–

JIM LEHRER: Medicaid, which is the program for the poor and the disabled, right?

SUSAN DENTZER: That’s right. And those numbers have converged greatly in the President’s direction, also notwithstanding what the President said a moment ago to the effect that the Republicans are still hewing to the insistence that the Medicaid program has to be ended in terms of its federal entitlement nature and transformed into a block grant program, the language in which the Republicans are using to describe their new proposal is much more ambiguous than that. In fact, there might be some sense that they really are talking about something much closer to what the President could sign onto. So you have this moderation to a certain degree, coupled with, I think, some usual suspects that we see in the years past, not the least of which are proposals to kill the Commerce Department and Kill the Energy Department and so on.

JIM LEHRER: And they’re still in there.

SUSAN DENTZER: Those are very much still in there.

JIM LEHRER: Kill AmeriCorps, the President’s favorite program, is still in there.

SUSAN DENTZER: That’s right, and big tango is about to take place once again on the President’s Goals 2000 program.

JIM LEHRER: That’s the education program.

SUSAN DENTZER: Which is the education program. And, of course, we fought about that all last year. There’s been a sort of “in your face, I dare you” budgeting element already at play. The President proposed just a few weeks ago when he brought out his budget to actually increase funding for Goals 2000, knowing full well that this would not go over big with the Republicans, he proposed, in fact, a 1/3 increase in spending. Not surprisingly, the Republicans have come back and said no, we want to kill the program altogether, it’s federal intrusion into education, that’s a responsibility left best to states and localities, so we have a replay of those entanglements as well.

JIM LEHRER: What is the–in your opinion, as somebody who’s been watching this thing very carefully–what is the most significant thing that’s in this budget, the most newsworthy thing? Or use any word you want to use to describe it.

SUSAN DENTZER: I think it is, and I don’t want to get really enthusiastic about this, but I, but I think it is the signs that maybe there is some negotiating room, at least in terms of the things that the Republicans have identified as putting forward in the first part of their package. They’re talking now about putting these proposals forward in three steps, the first of which would be proposals on welfare and on Medicaid and on this family tax credit. The family tax credit–

JIM LEHRER: And that would be kind of one–seen as one package, right?

SUSAN DENTZER: Slice number 1–


SUSAN DENTZER: –which they hope to accomplish by the 4th of July. Uh, there is a lot–there are a lot in those proposals which very much reflect what the President also has proposed. And you, you could get–

JIM LEHRER: The differences aren’t that great, are they?

SUSAN DENTZER: The differences in terms of the numbers aren’t that great. The differences in the policies still are and must be hammered out, as I mentioned–


SUSAN DENTZER: –in particular, the finer points of the Medicaid reform plan. Uh, and the nation’s governors need to be brought back into the process on Medicaid reform. They had had an effort to try to come up with a compromise proposal that died miserably aborning several weeks ago. So one doesn’t want to get one’s hopes up greatly but there does seem to be a sense that both sides are tentatively sticking their toes in the water and saying maybe we could cut a deal at least on this aspect of the reforms.

JIM LEHRER: Now then what does the fact that Mike McCurry, the President’s spokesman, declared this thing dead on announcement yesterday–

SUSAN DENTZER: Very similar language to what the Republicans used when the President brought out his budget in March, so that’s–

JIM LEHRER: They called it dead on arrival–

SUSAN DENTZER: Dead on arrival, dead on announcement.

JIM LEHRER: Dead on announcement’s the same thing.

SUSAN DENTZER: Right. I think beyond that, though, Jim, the White House would like the Republicans to come to the table and negotiate partly because the White House figures at this point it’s a winner if there is a budget deal and it is a winner, that is to say, the President is a winner if there is not a budget deal. They think that they can win either way.

JIM LEHRER: Now, why do they think they can win if there isn’t a budget deal?

SUSAN DENTZER: Because they, they fundamentally believe that they won the big rhetorical battles and the big emotional battles, if you will, of last year.

JIM LEHRER: The government shutdowns, all that business.

SUSAN DENTZER: The government shutdown, also cementing, they believe, in the public mind that they stand for tax cuts on work–for working Americans, not for wealthy Americans, on and on and on. You’ve heard the–

JIM LEHRER: Right. So they’re essentially saying, the White House is essentially saying, you want to try that again, let’s do it?

SUSAN DENTZER: Right. Let’s have at it. Let’s go back and talk loudly once more about how the Republicans want to raise premiums paid by Medicare beneficiaries. They would love to have all those fights become quite public again.

JIM LEHRER: As a practical matter, is that going to happen? Are there going to be any–is this just an–is this literally dead on announcement and dead on arrival and they’re going on to other things?

SUSAN DENTZER: I think the White House believes that the Republicans have figured out that the White House wins either way and that, therefore, the Republicans are less inclined than ever and Sen. Dole in particular to get into a face-to-face negotiating posture with the President on this.

JIM LEHRER: So what happens?

SUSAN DENTZER: In that respect then what happens is very much similar to what happened last year. The Appropriating Committees will gear up and do their thing, put out bills. They will probably be larded with a lot of provisions in many cases that the President can’t support. A number of bills will be–appropriations bills will be vetoed. We’ll get to October 1st with the need to put a continuing resolution in place to fund much of government and a reconciliation package of the sort that would have all these other tax changes in it would then go nowhere.

JIM LEHRER: But look at–listen to what you’ve just said. October 1st, that’s about a little over a month before an election between President Clinton and Sen. Dole. I mean, this is–they’re handling dynamite, both sides, are they not?

SUSAN DENTZER: Right. But you can get all that over with very quickly by just agreeing to a continuing resolution and having everybody go back to the campaign trail and continue to fight the rhetorical fights.

JIM LEHRER: Is that kind of what you smell is going to happen here?

SUSAN DENTZER: I would say the odds are more on that side than the odds are on the side of doing some deal, but, as I say, I think if there is a deal at all, it will be on that initial package, in part, recall because the President still does feel some impetus to have to deliver on his promise to reform welfare.

JIM LEHRER: So it’s possible, possible that this may be the last budget story we do for a while?

SUSAN DENTZER: (laughing) Don’t get your hopes up.

JIM LEHRER: Okay. Okay. Thank you very much.

SUSAN DENTZER: My pleasure, Jim.