Entitlements called key to budget plans

July 31, 1995|By John W. Frec | John W. Frec,Sun Staff Correspondent

BURLINGTON, Vt. -- The United States will never have a balanced budget unless it reins in the cost of Medicaid and other open-ended federal entitlement programs, the chairman of the Senate Budget Committee told the nation's governors yesterday.

Defending congressional efforts to balance the federal budget, Sen. Pete V. Domenici, a Republican from New Mexico, said U.S. leaders must begin making difficult choices based on what the nation can afford.

"This [issue] is for adult politicians -- for grown-up men and women -- to look right into the face of the absurdity that this country is so powerful that it need not worry about whether we can afford what it tells its citizens it will buy for them," Mr. Domenici said. He spoke at the opening session of this year's National Governors' Association summer meeting.

The senator noted that for at least 15 years, the governors have repeatedly called on Congress and the White House to balance the federal budget. But now that the effort is under way, many of the governors are nervous about what a balanced federal budget will mean to their states.

Today, President Clinton and Senate Majority Leader Bob Dole are expected to offer new proposals to break a congressional impasse on welfare reform. But for the governors, Medicaid is a larger issue in Congress' drive for a balanced budget.

Maryland officials who are monitoring this meeting for a vacationing Gov. Parris N. Glendening say, for instance, that they fear proposed reductions in federal Medicaid spending could mean a cumulative loss to the state of $500 million by the year 2001. The state would either have to make up the difference or reduce benefits, tighten eligibility and find more cost-efficient ways of delivering services.

Colorado Gov. Roy Romer, for one, said he fears that if Congress revamps Medicaid but does not require every state to provide at least a basic medical program for the poor, poor people will flock to states that do and away from those that do not.

Florida's Democratic Gov. Lawton Chiles, who served in the U.S. Senate for 18 years, complained the budget was being balanced primarily with savings from entitlement programs that aid the poor and elderly and not from other large pots of money, such as the defense budget.

Mr. Domenici said that the reductions under discussion would not be as harmful as they are being portrayed by opponents and that on a percentage basis they were no greater than reductions any of the governors might make in their own budgets during lean times.

"Contrary to all the talk about how draconian this balanced budget is, your national government will continue to grow at 3.2 percent. It is growing at 5.2 or 5.3 percent. So for the next seven years it will grow annually at 3 percent instead of 5.

"Is that reasonable? I wouldn't think a single one of you would say it is unreasonable," he said.

The governors also were given a sobering lecture by IBM Chairman Louis V. Gerstner Jr. on U.S. schools, which he described as "very, very sick.'

Mr. Gerstner complained that in the dozen years since the watershed report "A Nation at Risk" detailed the problems with the U.S. education system, "There has been a lot of hand-wringing and a lot of speeches and a lot of reports, but not much has changed."

Mr. Gerstner appealed to the governors "to revolutionize" their school systems immediately. His recipe called for a radical restructuring of the school day and school-year calendar, more on-the-job training for teachers, integration of modern technology in classrooms, more emphasis on math and science, and a reward and penalty system to assure performance accountability.

"Until we are prepared to penalize students, teachers and administrators for lack of performance, then the system will fail," he said.

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