It's Not Just a Budget, It's a Campaign Manifesto

"THIS is the perfect political document."

The speaker, deficit hawk Carol Cox Wait, is not being cynical as she speaks of President Clinton's newly unveiled budget proposal for 1997. She is stating a fact: That in the spring of an election year, the president's proposed budget will by definition be more campaign manifesto than road map for governance.

And in this particular presidential season, the political overlay is all the more palpable as the president goes toe to toe over the budget with the man vying for his job in November, Senate majority leader Bob Dole. Such a high-level coming-together of government and presidential politics is unprecedented.

This year's budget rite is also unique for its multiple levels of engagement. The 1996 budget - already halfway into the fiscal year - isn't complete. Lacking some of the hard baselines on which to figure the next budget, the '97 budget becomes all the more nebulous. And, enveloping both years, Mr. Clinton and Mr. Dole are working toward a seven-year plan to the balance the budget by 2002. Call it a three-ring circus, says Clinton budget chief Alice Rivlin.

Still, as Republican congressional leaders prepared to talk budgets with Clinton at the White House yesterday, they could consider some markers the president had laid down for them the day before. He pointedly did not propose a reduction in the capital-gains tax, a GOP goal, and instead changed the rules for some stock sales that would in effect raise taxes on some investors.

Clinton proposed a largely middle-class tax cut of $107 billion over seven years, about half what Republicans want. And he suggested higher spending in areas dear to him - and important to the public, polls say - such as environmental protection, education, and law enforcement.

Clinton also rejected a fundamental Republican goal, to turn control of welfare and Medicaid over to the states.

But the specifics of the 1997 budget proposal, all 2,196 pages of it, take a back seat to the core issue of yesterday's discussions, the 1996 budget. Until Tuesday's 1997 budget unveiling, Republican leaders had changed their tone on fiscal dealings with the White House. Acknowledging that the budget impasse that produced two federal government shutdowns had hurt Republicans more than Democrats, GOP leaders promised greater conciliation as they sought to defuse an election issue.

Indeed, the Republican-led Senate this week passed 79 to 21 a bill to fund dozens of government agencies through the end of this fiscal year, with additional money for education, environmental protection, and job training. The House had earlier passed a similar, though less generous, bill.

But the release of Clinton's 1997 budget seemed to spoil the mood, at least temporarily. House Budget Committee chair John Kasich (R) of Ohio railed against Clinton's "addiction" to big government. Other GOP leaders shook their heads in dismay over Clinton's baldly political budget.

"I could have written the script for [Tuesday] the day before," says Stanley Collender, a budget analyst for Price Waterhouse in Washington who plays down the import of the two parties' public sniping. "This is all about the campaign now."

Despite Tuesday's outburst of rhetoric, the core questions remain for both sides. Do they compromise on the 1996 budget and risk helping each other's presidential campaigns? Or do they hold firm to their positions, get nowhere on a seven-year balanced-budget plan, and spend the campaign trying to convince the public that the other side's to blame? The latter option is likely only to further Americans' disgust with politics in a year when voters are already unexcited by their choices.

This year's White House budget unveiling was unusual in another respect. Clinton, in effect, released two proposals: one based on projections by the executive branch's Office of Management and Budget (OMB) and one based on the economic assumptions of the Congressional Budget Office. Both versions would lead to a balanced budget by 2002, but White House officials offered much more detail of the OMB plan, whose assumptions allowed for more spending.

In the White House press conference, OMB director Rivlin promised "very large cuts" - $300 billion in discretionary, or nonmandatory, spending over seven years - but was not specific. She said cuts in Medicare, the federal health-insurance program for the elderly, would be felt by the providers and not by the beneficiaries.

Some elements exemplified the political nature of the Clinton balanced-budget proposal. He saved almost two-thirds of the budget cuts for the last two years of the plan, which would conveniently fall after a second term in the White House had ended. He also structured tax cuts that would end in 2000, again, the end of a second Clinton term, if he wins it.

"He's creating the illusion that he's making difficult choices," says Ms. Wait, head of the Committee for a Responsible Federal Budget.