Republicans Look For an Effective Budget Response

FOR 12 years Republican presidents presented their own budgets - only to see them trashed by the Democrats in Congress. Now, even with a Democratic president, the Congressional Democrats will still get a chance to slam a Republican budget - albeit an alternative one drafted by Congressional Republicans.

Last week, the House Republicans on the Budget Committee introduced their own budget, billed as a way to reduce the deficit by $429 billion over five years without the need for new taxes.

"It is going die a quick and ignominious death," predicts Stanley Collender, a budget expert at Price Waterhouse in Washington. Former congressman Bill Frenzel figures the odds are "about 100 percent" that the Republican budget proposals won't get much beyond the Congressional Record.

Even if the Republicans have some good proposals, the Democrats will ignore them, says Mr. Frenzel, now a fellow at the Brookings Institution. "The two parties figure the budget is a good place to show their differences."

That the House Republicans managed to put together an alternative budget is remarkable. The party is split between members who want to be snipers, shooting at the Clinton budget, and members who want to present alternatives. The Senate Republicans expect to present an alternative plan, but not a full budget, this week.

"There really is not a coherent Republican response except to be critical and harp on tax increases," charges James Miller, chairman of Citizens for a Sound Economy and a budget director under President Reagan.

"We'd really like to thank him for that vote of confidence," says Missi Tessier, a spokeswoman for Rep. Robert Michel (R) of Illinois, the House minority leader. Ms. Tessier, however, admits some members from New Jersey are advocating the "Florio strategy." New Jersey state Republicans put most of their efforts into criticizing new taxes imposed by Gov. Jim Florio and were successful at taking over the legislature.

This strategy will be tougher to carry out in Washington because some Republicans may commit political heresy and vote with the Democrats for the Clinton plan. "You'll have some Republicans at the margin ... who can't resist cutting some deals and getting something," says Mr. Miller.

For example, Miller expects some Republicans to support an energy tax. "Some will say, `Well, we need to have some kind of energy tax.' And you know the media gives an enormous amount of attention to a Republican who stands up and says, `Well, they are right and we need a tax increase if we are going to get serious about the deficit.' "

The Republican alternative plan, though, tries to avoid the t-word. "No tax increases," says the accompanying press release issued by Rep. John Kasich (R) of Ohio. "Americans will not be faced with higher costs for heating their homes or driving their cars, nor will senior citizens face higher taxes on Social Security."

Although there are no new taxes, there are new or larger user fees - such as increased Securities and Exchange Commission registration fees ($240 million in new revenues over five years), and a new fee by the Federal Communications Commission on use of radio and other frequencies ($7.2 billion over five years), and extending customs user fees ($2.4 billion over five years).

SOME Republicans, however, are likely to back the direct approach, raising taxes. Sen. John Chafee (R) of Rhode Island said "I'm not against raising taxes if it goes towards reducing the deficit." Miller says the Republicans should unite over a strategy or a set of criticisms which focus on the long-term effects of the Clinton budget. "We Republicans have got to be saying, `Look here are the long-term effects of what you've put in place. They are not going to show up immediately - the market's don't resp ond that quickly. But, towards the end of your administration we are going to get the following kinds of effects.' "

Miller says those effects will be higher inflation and higher interest rates with rising unemployment. He also sees a weakened defense establishment. As Miller sees it, Clinton's $50 billion cut in defense is actually much larger that. This is because Clinton's defense cut is taken from the already-cut level of defense spending in President Bush's last proposed budget. The usual method for calculating a cut would to use as a base the level of defense spending in the previous year's budget plus the impact

of inflation. As a result, Miller says Clinton is masking large the size of the defense cuts.

"If we had done this when I was budget director, the media and everyone else would have been all over us," says Miller.

The House Republicans' approach is to make some Draconian spending cuts, especially those that relate to federal employees. They would eliminate 162,000 federal jobs instead of the 100,000 proposed by Clinton. They would cut 15 percent in spending for both the legislative branch and the entire executive branch, and would freeze cost-of-living adjustments for all federal workers. And, they would raise the federal civil service retirement age from 55 to 62.

Mr. Collender predicts that Rep. Michel won't even get a majority of Republicans to vote for the plan. "It's extreme," he says.

However, Frenzel says it's clear the Republicans don't have much choice. "The Republicans may be stuck on their theology of no new taxes so their cuts have to be very very deep if they are to equal the Clinton program which relies on tax increases," he explains.