Clinton Tax Increases Jeopardize Budget Plan

As Congress gets ready to vote, president finds his $1.5 trillion package with no GOP support and dwindling backing from oil-state Democrats

TX

IT'S high noon for President Clinton's controversial $1.5 trillion federal budget, which he charges is threatened by the powerful "big oil lobby."

The Clinton plan, which includes the largest tax increase in American history, has failed to draw even a whisper of Republican support. Now, on the eve of the first crucial vote in Congress, it is losing Democratic allies as attacks intensify from oil-state senators.

Critics demand that the president scale back his tax increases, including energy taxes, which altogether total $272 billion over the next five years. They also want far greater spending cuts.

The president, sharply rebuffing critics, insists that his proposal will bolster the economy, while helping the working poor, children, and the elderly.

The House of Representatives votes first, probably Thursday. But as the decisive moment nears, Democrats are anxious. Their biggest concern: What if they raise taxes, and the federal deficit fails to fall?

A concerted drive to make the budget more palatable began weeks ago in the House. The effort recently spilled into the Senate, where it quickly gained momentum.

David Boren (D) of Oklahoma and Bennett Johnston (D) of Louisiana, two oil-patch senators, called for wiping out $71.5 billion in Clinton taxes on energy. They immediately got bipartisan help from Sen. John Danforth (R) of Missouri and Sen. William Cohen (R) of Maine.

A day later, two other Senate Democrats, J. James Exon and Bob Kerrey, both from Nebraska, announced their support for the "basic thrust" of the Boren-Johnston alternative.

Then Sen. John Breaux (D) of Louisiana, despite a personal meeting with Mr. Clinton, revealed that he was developing his own alternative to the president's energy tax.

The White House has not flinched. Roger Altman, the deputy treasury secretary, insists that the Clinton budget will survive Congress intact.

Yet compromise is in the air. Over the weekend, Mr. Boren said he would gladly powwow with the administration to reach an amicable settlement. Boren was adamant, however, that any budget must meet three criteria that could be difficult for the White House to accept. It should:

* Be bipartisan. Boren's plan has already drawn Republican support in the Senate, while Clinton's budget has attracted none. Calling this a "critical point in our country's history," Boren spoke of the need to reach out to the GOP.

"This is not a political game," he said. "It's not about whether Democrats can beat Republicans or Republicans can beat Democrats. The time for childish partisan games is past."

* Favor spending cuts over new taxes. Boren notes that the White House plan contains about $1 in spending cuts for every $1 in new taxes. He says the American people think that's not good enough.

The senator recalls that during the 1992 campaign, candidate Clinton vowed that he would achieve $3 in cuts for every $1 in new taxes. The Boren plan has a ratio of $2.20 in cuts for every $1 in new taxes.

* Curtail entitlement spending. Entitlements go up automatically under current law. These programs, which include Social Security, Medicare, Medicaid, and benefit programs for federal retirees, have rapidly grown to 46 percent of all government outlays.

To avoid national bankruptcy, Boren insists that entitlement controls be imposed immediately. That includes a smaller cost-of-living allowance (COLA, minus 2 percent) for any Social Security recipient getting more than $600 a month.

Boren says all of these steps are necessary to stop the uncontrolled growth of the national debt, which is currently $4.2 trillion. Unless drastic action is taken, interest alone on the debt will rise to 25 percent of all federal spending by 2000, Boren predicts.

Mr. Johnston declares that Clinton's energy tax already "is dead" in the Senate. Many analysts agree.

Yet, in the House, which will vote first, Democratic leaders are expected to offer the Clinton package virtually "as is."

Most Democratic members, out of loyalty, may vote for Clinton's tax package, including the energy portion, even though the Senate could kill it.

Republicans are gleeful. A "yes" vote would put more than 200 Democrats on record in favor of higher taxes on gasoline, home-heating fuel, electricity, and other costs that would come out of every American's pocket.

It's just the kind of economic issue Republicans relish for the next election.