WASHINGTON -- President Clinton and the Republican-controlled Congress are squaring off for another battle over elderly health care and tax cuts, and once again, the president serendipitously holds the high cards.
The latest White House economic forecasts say the booming economy will produce an additional $1 trillion surplus for the U.S. treasury over the next 15 years, giving Mr. Clinton much more breathing room in his efforts to cope with anticipated Social Security and Medicare shortfalls, and still enabling him to consider a modest tax cut.
Republicans are already talking about a huge, $775 billion tax cut over 10 years, a politically questionable pitch these days, when voter complaints against federal spending are muted by an era of general economic content.
Republicans and Democrats generally agree now that surpluses should be put in what they call a "lock box" to stabilize the Social Security system against the anticipated future hit resulting from the aging of the baby boom generation. But what to do with the now-mushrooming surpluses beyond that need has resumed the old partisan debate on the size and role of the federal government.
Cutting the debt
Mr. Clinton's next priority, in the flush of the good economic times, is paying off the huge federal debt, whose interest payments gobble up so much of the annual budget. For years, tackling the debt was an article of GOP religious faith, but the Republican leaders in Congress continue to argue that voters know best how to spend their money and shouldn't have to wait for a healthy payback of the remaining surplus.
Buoyed by the latest budget surplus predictions, Mr. Clinton is voicing what not long ago was considered a pipe dream: wiping out the federal debt -- now at $3.6 trillion -- by 2015.
Considering the longtime Republican devotion to that goal, it will be hard for the controlling party in Congress to make a case against doing so. Mr. Clinton's boast that he has now "cut up Washington's credit card," while perhaps premature, makes an attractive sound bite.
Mr. Clinton also is now proposing a new Medicare benefit that will have broad support among the voting elderly: federal payments for prescription drugs, one of their most troublesome expenses. The new plan will have the federal government, starting in 2002, picking up half of a Medicare recipient's prescription costs, up to $2,000 a year, escalating to $5,000 by 2008.
The new benefit will cost most participants in the plan $24 a month, and $44 a month when it reaches the higher figure in six years. Currently, it costs purchasers of private policies that pay some prescription bills about $90 to get the benefit. Single Medicare patients who earn less than $11,000 a year and couples who earn less than $17,000 would pay no premium for prescription drugs under the Clinton plan.
Republicans in Congress who face re-election in 2000 will be hard-pressed politically to argue that a deep tax cut would be a better use of the surplus than this popular new benefit. Their Democratic foes will crow about its enactment if that happens, and blame the incumbent Republicans if it doesn't.
At the same time, the latest bonanza in the surplus should enable Mr. Clinton to agree to enough of a tax cut to undercut the Republicans' allegation that he is an old tax-and-spend Democrat. He is in a position to have the best of both worlds, if he plays his hand as deftly as he has in previous budget fights with the opposition in Congress.
After seeing his grandiose bid for universal health coverage come crashing down in his first term, Mr. Clinton has been incrementally advancing parts of it ever since. In terms of personal responsibility, Mr. Clinton's second term has been a disaster, but whether he can take credit for the economy or not, its health has put him in a strong position to leave behind a legacy of fiscal responsibility -- and help his party in its bid to retain the White House and take control of the House next year.
Jack W. Germond and Jules Witcover write from the Washington Bureau.
Pub Date: 7/07/99