Clinton seems less willing to make cuts

April 12, 1993|By Jill Dutt | Jill Dutt,Newsday

WASHINGTON -- Now that the details of President Clinton's 1994 budget are out for all to see, some analysts believe the president's willingness to cut government spending is on the wane.

"All of the movement since he first unveiled the outlines of his plan in February has been to make the deficit larger at the margin," said Martha Phillips, executive director of Concord Coalition, a Washington group advocating deficit reduction.

Ms. Phillips said the deals Mr. Clinton already has cut -- such as not forcing a vote in Congress to raise fees for ranchers and miners using public lands and exempting ethanol from his proposed energy tax -- may be small in terms of their cost in dollars, but that the psychological costs could be much higher.

"It makes it hard to sell the concept of shared sacrifice when some people are getting out of the sacrifice

part," Ms. Phillips said.

Administration officials, however, defend the Clinton program. "Sure there have been changes, but they've made the package stronger both politically and as a matter or policy," said a senior Treasury Department spokesman. "Yes, some changes were designed to attract support in Congress for the proposal. After all, we are trying to pass the program."

The spokesman added that Mr. Clinton still expects to collect about $73 billion over five years from the new energy tax, even after exempting ethanol and lessening the bite on home heating oil.

Mr. Clinton campaigned on a platform of revitalizing the economy, which he said required cutting the budget deficit and redirecting federal dollars into "investments" such as education, public works, and re

search. Many economists argued that it would be tough to do both at once, and they watched for any sign from the president of which would emerge as the top priority.

But Mr. Clinton's first policy-making step -- appointment in December of economic advisers -- stumped the pundits. He picked a mix of fiscal hawks and doves. That created tension within his inner circle among fierce deficit cutters -- including White House budget director Leon Panetta and his deputy, economist Alice Rivlin -- and those pushing for more spending in targeted areas -- such as Labor Secretary Robert Reich and Laura Tyson, chairwoman of the Council of Economic Advisers.

Mr. Clinton's second step -- outlining his program to a joint session of Congress in February -- set off a feverish rush by lawmakers to cut the deficit. Before Mr. Clinton could detail his own proposals, Congress had adopted a budget resolution requiring $67 billion more in savings over five years than the president had planned.

Then came details of the Clinton plan. In the $1.515 trillion budget for 1994 released last week, administration officials acknowledged that spending under the five-year plan they were proposing would exceed what Congress wanted by $19 billion during the next two years. Moreover, Mr. Clinton had added $6 billion in spending since February, including backing down on a plan to eliminate the Tennessee Valley Authority's fertilizer-research program. The only new savings, Mr. Panetta said, were in defense, where projected cuts rose from $112 billion to $114 billion over five years. Robert Rubin, director of the National Economic Council, said last month that the chief executive had made cutting the deficit a priority and that Mr. Clinton decided that he wanted to cut the deficit in half, as a percentage of gross domestic product, in four years.

Mr. Clinton's economic outline in February would have met that goal. It projected that the deficit would drop from $322 billion this year, or 5.4 percent of GDP, to $205 billion or 2.7 percent in fiscal year 1997.

The president's formal budget fell short of that target, however. New estimates project this year's $322-billion deficit to be 5.2 percent of gross domestic product. But, under Mr. Clinton's plan as now constituted, the deficit would fall only to 2.8 percent of GDP by fiscal 1997, shy of a cut in half.

In addition to restoring funding for the TVA's research program, Mr. Clinton decided to add money back into the veterans' health care budget, primarily to staff new medical facilities that have been built and are ready to open. He also agreed to a one-year delay on consolidating housing programs and restored funding to states like California to help them cover the medical needs of large influxes of migrant workers.

Jeff Faux, president of the Economic Policy Institute, a liberal think-tank in Washington, said fiscal conservatives in Mr. Clinton's inner-circle still have the edge when it comes to the question of how much the government should be spending. The more liberal advisers, however, have the edge on recommending how the money should be spent.

"The totals are more conservative, with more of a bias toward deficit-reduction than job-creation," Mr. Faux said. "But within those totals, you see more of an emphasis on human and competitive investments."

Still, Ms. Phillips said, Mr. Clinton has missed his chance for large and swift cuts in the deficit. "From now on, he'll have to get his deficit reduction like everyone else," Ms. Phillips said. "One inch at a time."

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