Senator sees support for big spending cuts

March 21, 1995|By New York Times News Service

WASHINGTON -- The chairman of the Senate Finance Committee said yesterday that both Republicans and Democrats on the panel were prepared to make spending cuts "of an immense magnitude" -- up to $700 billion by 2002 -- to erase the federal deficit if both parties will give their political blessing.

The chairman, Republican Sen. Bob Packwood of Oregon, said the committee's members reached a consensus in support of huge budget cuts during a weekend retreat on the Chesapeake Bay, which was also attended by Treasury Secretary Robert E. Rubin.

And he said they also agreed that tax reductions should be postponed either until the deficit has been tamed or until responsible experts can prove that specific tax cuts will not raise the federal debt.

"If there are any spending cuts of any magnitude that are real, we ought to consider -- before we consider tax cuts -- whether or not we would like to use that money to reduce the deficit," Mr. Packwood said in a speech yesterday to the National Association of Manufacturers.

Other Finance Committee members said that big tax cuts were as good as dead in the committee and that procedural obstacles would made it difficult to steer such legislation to Senate passage via other routes.

That appears to put the panel at odds with more conservative Republicans in the Senate and especially the House, where Speaker Newt Gingrich has endorsed a five-year package of business and personal tax cuts totaling $189 billion.

The Finance Committee oversees all tax legislation and most of the mandatory programs, like Medicare and Social Security, that consume 70 percent of federal spending. The annual federal budget must pass through the committee on the way to a floor vote in the Senate. An accord on the deficit among committee members would be a major development, if it sticks.

Opponents are many

But as Mr. Packwood himself said yesterday, the forces working to unglue the agreement were many and strong. As if to prove it, the senator barely finished his plea for shared sacrifice before his audience began peppering him for assurances that a swarm of corporate tax cuts and loopholes would either be enacted or preserved.

The political prospects for the agreement are also cloudy.

Mr. Packwood said yesterday that any budget accord would fail unless the leaders of both parties showed "the courage and the will and a willingness to forgo partisan hammering" over the painful impact of spending reductions.

Mr. Rubin could not be reached for comment on the weekend's proceedings. But other Clinton administration officials viewed a Republican helping hand with trepidation, noting that President Clinton's last package of spending cuts and tax increases, in 1993, passed without a single Republican vote.

Nor is it clear how much support the finance committee's majority of fiscal moderates will get from the Senate majority leader, Bob Dole, who is also a committee member. Mr. Dole's candidacy for the Republican presidential nomination rests in part on his ability to attract conservative support, and conservatives are the principal supporters of the tax cuts that the committee opposes.

One participant in the retreat said yesterday that the 15 or so legislators who attended had nevertheless agreed, almost unanimously, that deficit reduction is "the first, second and third order of priority" in this year's budget.

Now's the time

Another, Sen. Daniel Patrick Moynihan, a New York Democrat, summarized the senators' view on deficit reduction with a single word: "Now. And with great emphasis at this meeting. Now."

Mr. Packwood stressed, as have many Republicans before him, that balancing the budget is not literally a matter of cutting spending, but merely slowing the rate at which spending is growing. Federal spending is expected to rise by a total of about $3 trillion between now and 2002, he said, and restraining that growth to $2 trillion would probably reduce the deficit to zero.

That is much more difficult than it sounds, because both parties have refused to restrain the most expensive program, Social Security. And the programs growing at a breakneck pace, like Medicare and federal pensions, are fiercely protected by beneficiaries or private companies, like health care providers, that profit from them.

House Republicans have also pledged to balance the budget by 2002, but have yet to propose more than a handful of specific spending cuts or reductions in growth. Mr. Packwood proposed few himself yesterday, but he differed from his House counterparts in that he claims to have Democratic support for whatever cuts might be forthcoming.

Mr. Moynihan said committee members had generally agreed that the deficit should be attacked now, with the economy running at full steam and unemployment as low as it is likely to get, rather than later, when an economic slowdown will increase spending on the jobless and the poor. He said now was the wrong time to cut taxes and give an already-hot economy a spending jolt that could ignite inflation.

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