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The Budget: Clinton Is A Tiger But He Won't Attack Entitlements


Washington Outlook

THE BUDGET: CLINTON IS A TIGER--BUT HE WON'T ATTACK ENTITLEMENTS

Cutting spending on federal benefits programs isn't very high on Bill Clinton's agenda. That much was clear to anyone who watched Professor Clinton and his teaching assistants defend program after program at a Dec. 13 Bryn Mawr (Pa.) conference on the Future of Entitlements.

That attitude doubtless was a disappointment to the conference's organizer, Representative Marjorie Margolies-Mezvinsky (D-Pa.), who got Clinton to promise to attend the meeting in exchange for casting the deciding vote in support of the President's budget in August.

But Clinton's reluctance to tackle big new entitlement cuts should not be read as backsliding on budget restraint. In fact, the Administration has its hands full keeping the budget in line with the freeze on discretionary spending enacted this summer.

As soon as Clinton returned to Washington, he was besieged by agency heads who have been told that they must cut $20 billion from fiscal 1995 spending requests to meet the budget total of $541 billion. The Pentagon alone must slice $5 billion. And Housing & Urban Development Secretary Henry G. Cisneros submitted a five-year budget that raised spending by $20 billion over the caps. The Secretary needed the money to deliver on a promise to end homelessness.

COAL IN THEIR STOCKINGS. But even the most poignant pleas will likely be turned down. "There are a lot of people, including Cabinet members themselves, who did not understand the implications of a hard freeze for the next five years," says Office of Management & Budget Director Leon E. Panetta. Under the budget deal, discretionary spending in 1998 will be $548 billion, down from $550 billion last year. The heaviest burden will fall on the Pentagon, but domestic departments will also be squeezed hard. Failure to understand the extent of the crunch caused agencies to burst through the ceilings. To make matters worse, Panetta has to find an additional $10 billion in cuts because of lower-than-expected inflation and higher federal pay approved by Clinton.

The result will be coal in a lot of Christmas stockings. During the week ef Dec. 20, after final appeals from Cabinet members, Clinton will start slashing away. Once he has reached the cap, the President will cut some more to provide increased spending for "investments": These favored programs include Head Start, child feeding, job training, high-tech research, education, and crime-fighting. But Congress will certainly try to increase funding for its favorites, setting up another showdown among Democrats.

There will be turmoil over entitlements, too. The big adjustment will be proposed for Medicare and Medicaid, which together account for nearly one-third of mandatory federal spending. They'll be altered chiefly by the President's health-care-reform proposal, which the 1995 budget assumes will be in place a year from now. On the other side of the ledger, welfare reform, which is high on the priority list of Senate Finance Committee Chairman Daniel Patrick Moynihan (D-N.Y.), will require higher spending in the short run.

And to complicate matters further, implementation of a new global trade agreement will cost money. The international pact to reduce tariffs would trim government receipts by $9 billion over five years--a loss that, under budget rules, must be offset by a tax increase or spending cuts.

The White House had hoped the budget struggle, which it won with the reluctant help of Representative Margolies-Mezvinsky and other moderate Democrats, would spare it further unpleasantness over spending for a year or two. But with Congress, and even Cabinet secretaries, just now learning what the fine print means, the prospect of fiscal peace looks as dim as ever.EDITED BY STEPHEN H. WILDSTROM Paul Magnusson, with Susan B. Garland


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