Senate finance panel's Democrats ready to pass budget with deeper cuts

June 18, 1993|By Karen Hosler | Karen Hosler,Washington Bureau

WASHINGTON -- Senate Democrats, bowing to special interest pressure and voter tax protests, were preparing to push a budget package through the Finance Committee today that cuts spending more deeply than President Clinton proposed, largely at the expense of programs to help the poor.

The committee ended a first day of deliberations after defeating several Republican amendments, and was expected to take up more this morning. Approval of the full package was expected this afternoon on a strictly party-line vote, with all nine Republicans dissenting because they consider the $508 billion, five-year package still too heavy on taxes, especially for small business.

Democratic liberals and Republicans will almost certainly try to amend the measure when it comes to the Senate floor next week, but the biggest fights are likely come behind the closed doors of a House-Senate conference committee that will write the final bill this summer.

Mr. Clinton, eager to move forward a package that contains the broad outlines of what he proposed, is remaining mostly aloof from the Senate deliberations, except to celebrate its progress.

"I think it is a win-win situation if the Senate passes a budget that has $500 billion in deficit reduction, locks the spending cuts away in a trust fund and asks the highest-income Americans to pay their fair share," Mr. Clinton said at a news conference last night where he illustrated the budget outlines with a pie chart.

"I think that's a win-win situation because I think we'll go to conference and we'll get a plan that will meet those criteria and will also be fairer to middle-class people and to the working poor."

Rep. Kweisi Mfume, chairman of the Congressional Black Caucus, said the bill "is virtually doomed" if the conference committee does not report out a measure along the lines of the one passed by the House last month. Without restoring many of the provisions the Senate would remove, said the Baltimore Democrat, "it would be a cold day in hell to expect once again the unanimous support" of the 37 Democratic House members of the black caucus.

The 11 committee Democrats, who battled over the measure during two weeks of private drafting sessions, boasted yesterday of their handiwork, calling the measure a progressive approach to the most serious attempt yet to reduce the nation's ballooning budget deficit.

The Senate Democrats' package would cut spending by one dollar for every dollar in new taxes, according to figures provided by the committee. By comparison, the administration and the House versions would increase taxes by two to three dollars for every dollar in spending cuts, according to congressional estimates.

The Senate package calls for total tax increases of $267 billion, from which about $18 billion in tax credits and incentives is subtracted. Spending cuts total $260 billion, including $100 billion from automatic benefit programs such as Medicare, $50 billion in interest savings and $110 billion in unspecified cuts to federal spending programs that will decided later by Congress.

Sen. David L. Boren, an Oklahoma Democrat who led the charge among Democrats to replace tax increases with spending cuts, called the committee bill "a great improvement" over the House-passed version of Mr. Clinton's program.

About $9 of every $10 in new taxes would be paid by individuals with incomes of $75,000 a year or more and by corporations, the committee claims.

But the major change in the Senate bill -- the elimination of Mr. Clinton's $72 billion energy tax -- comes at the expense of those at the bottom end of the scale.

The broad-based energy tax, which was the target of a lobbying effort by the oil industry and others, was replaced by a 4.3 cent-per-gallon tax increase on gasoline and other motor fuels that would raise $24 billion over five years.

Nearly one-third of the remaining revenue lost from the original energy tax proposal was made up with cuts in the Medicare program for the elderly.

Another $13 billion was found by closing what Democratic Sen. Bill Bradley of New Jersey called tax "loopholes" for business. They were killed along with a $5.3 billion enterprise zone program of tax incentives to encourage businesses to locate in impoverished communities.

To get the rest of the money they needed, the senators reduced by one-third Mr. Clinton's $28 billion program to give working families earning under $30,000 a year an income tax credit. The credits will now apply only to those earning $20,000 a year or less.

Also deleted were Clinton programs to expand the food stamp program, provide immunization for children and create a new Family Preservation program to help troubled families stay together.

"They bowed to the anti-tax movement, but some of these measures take money out of people's pockets just as surely as any tax proposals would," observed Robert Greenstein, director of the liberal Center on Budget and Policy Priorities.

The higher gasoline tax, estimated to cost the average family $29 a year, is the only tax increase in the Senate measure that would affect virtually all middle-income families. But retired couples with total incomes over $40,000 and single people over $32,000 would have to pay income tax on up to 85 percent of their Social Security checks; the top taxable share now is 50 percent.

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