Clinton, Congress Arm-Wrestle Over Details of Budget

CONSIDER the fraction 2/10ths.

In carpentry, it's enough to mean the difference between level and cock-eyed. In budgeting, it's enough to set Congress and the White House against each other.

Armed with freshly penciled calculations, Republicans in Congress have rejected President Clinton's proposal to balance the budget, arguing that his plan is based on "rosy scenario" projections for the growth of the economy and such programs as Medicare and Medicaid. The errors in premise, they argue, will result in persistent $200 billion deficits into 2005, the year the president promises balance.

The administration responds that congressional leaders are splitting hairs - that the Clinton and GOP plans use similar economic forecasts. White House chief of staff Leon Panetta points out, for example, that the president expects the economy to grow at 2.5 percent while Congress expects 2.3 percent growth.

What's going on is a struggle for control of the budget. By promising last week to balance the budget, President Clinton crossed into Republican domain with a plan that is less severe than the GOP proposals. It would take three years longer to erase the deficit and would require less belt-tightening because it would provide a smaller tax cut.

Party politics

The Republicans must reject the president's plan to keep the upper hand, but in doing so they may run into trouble defending some of the sharper spending reductions to sensitive programs that would be necessary to offset hefty tax cuts.

Prior to unveiling his proposal, Clinton "was in an untenable position," says Robert Reischauer, former director of the Congressional Budget Office (CBO). "He was on the sideline throwing rocks at the players on the field. Now he can't be criticized on those grounds.

"The Republicans are in for some very, very tough decisions on deficit reduction," he says.

By as early as Friday the Republicans in Congress could emerge from a House-Senate conference with a joint plan for balancing the budget in seven years. Both chambers passed budget resolutions last month, but GOP leaders are in disagreement over tax cuts.

House Republicans seek $353 billion in revenue relief for families and small businesses, a package that reflects an ideological view that an important part of eliminating the deficit is decreasing the burden of government. But many Republican senators, including powerful Old Bulls such as Budget chairman Pete Domenici (R) of New Mexico and Finance chairman Bob Packwood (R) of Oregon, argue tax cuts should only follow progress toward deficit reduction.

With the White House now in the budget-balancing game, the pressure will be on Republicans to scale back the House tax-cut package. Senate majority leader Bob Dole (R) of Kansas predicted Sunday that the final budget plan would include $230 billion to $270 billion in tax relief.

Although Republicans continue to applaud the White House for agreeing on the need to balance the budget, they fault the president's credibility.

Last Friday, after meeting behind closed doors in Senator Dole's office, House and Senate leaders asked the CBO to analyze the president's proposal from the same basis or "scoring" that Republicans used in their plans. CBO's verdict claims the president's plan will continue to produce $200 billion deficits.

White House at bat

But administration officials say the differences between the underlying White House and congressional economic assumptions are minor, and they are now prepared to be major players in the budget process this summer and fall.

"The president wants to work with Congress," says Lawrence Haas, a spokesman at the Office of Management and Budget. "The fact that OMB and CBO have differences doesn't stand in the way of the White House and Congress working together. The president will have plenty to say about the budget, and will be a powerful influence in the legislative process."

Republicans, for their part, don't reject everything the president has proposed. Senator Domenici sees merit in several White House provisions for scaling back the costs of Medicare and Medicaid, the two health-care programs for the elderly and poor. He also hopes to find common ground on welfare reforms and defense spending.

That's likely. The Clinton and Republican numbers on Medicare, Medicaid, and defense are all relatively close. In 2002, when Republicans promise to reach balance, the president would spend $260 billion on Medicare, while House Republicans would spend $259 billion and Senate Republicans $283 billion.

Meanwhile, many congressional Democrats are scrambling to reassess their roles. Several Democrats implored the president not to unveil his budget so early. They wanted more time to focus the debate on the "Draconian" cuts in the GOP budgets.

But Mr. Reischauer argues that Clinton had no choice.

"The president made the best of a bad situation," he says. "Democrats are in the minority [in Congress] but they forgot they still had the White House. The interests and tactics of the Democrats differ in Congress and the White House."