Democrats Count Cost Of Backing President's Plan

WHITE HOUSE BUDGET

IT was one of those furiously political Washington weekends, in which the spin was at least as important as the substance.

A last-minute hitch on Friday delayed announcement of a deficit-reconciliation package, and House, Senate, and administration staffers worked all weekend in search of just the right mix of spending cuts and tax increases to win a majority in both houses when they vote later this week. (Budget "war room," Page 6.)

The deal had looked set after conservative Democrats appeared ready to settle for a gasoline-tax hike of 4.3 cents a gallon. Deficit-reduction over the next five years would come in at $490 billion, instead of the $500 billion goal stated like a mantra by President Clinton and his surrogates.

But administration officials countered in lock step: $490 billion is 98 percent of what they wanted, and that's an A-plus in anybody's book.

Then the liberal side sprung a leak: House Democrats particularly concerned with social spending, led by Rep. Henry Waxman (D) of California, would not stand for a reduction of $56 billion in Medicare growth over five years, setting $54 billion as their limit.

Sen. David Boren (D) of Oklahoma, a tough customer who voted for the plan the first time, chimed in with a demand for $30 billion more in Medicare cuts. And Sen. Dennis DeConcini (D) of Arizona dangled the prospect of a "yes" vote - he voted "no" last time - if the administration would go for a lower tax hike on wealthier Social Security recipients.

So, it was back to the drawing board - and looking likely that deficit-reduction would take another small hit. With all Republicans pledged to vote against the plan, and virtually no Democratic votes to spare, the administration can't afford to lose anybody.

"We have been assuming for some time that it would be just as close as it was the first time around - tight as a tick," Deputy Treasury Secretary Roger Altman told reporters at a Monitor breakfast Friday.

The administration's strategy has been to accept whatever the

two houses agree upon and declare victory. Mr. Altman, who has coordinated the administration's public-relations operation, says, in fact, the plan is "already working."

Comparing Mr. Clinton's foray into the conservative domain of deficit-cutting to President Nixon's trip to China, Altman says the financial markets believe the plan is serious, and that's why interest rates have taken such an advantageous downward turn. "The fallen interest rates, which have been so dramatic, have allowed certain industries and the credit-sensitive ones like autos to pick up, so the job-growth rate has picked up," says the Wall Street multimillionaire.

Conversely, he warns, if the plan were to fail, the markets would react negatively and could damage the economy.

Observers of the budget process doubt that any fence-sitting Democratic members of Congress would really allow the president's package to go down in defeat.

"The political risks vary from senator to senator on whether to vote for the package," says Robert McIntyre, director of Citizens for Tax Justice. But, he adds, in the interests of the party: "The overwhelming risk is for the package not to pass."

Take, for example, Sen. Herb Kohl of Wisconsin. Like all Democratic legislators, Mr. Kohl would benefit from being part of a ruling party that has shown it can put together an economic program. And if it came down to his vote making or breaking the deal, Kohl "would have to vote for it," Mr. McIntyre says. "It's not in his interest to see a Democratic president fail."

But Kohl is a first-termer who faces a reelection battle in 1994, and he has stated that he would definitely vote "no" if the gasoline tax were increased by more than 4.3 cents a gallon. With no margin of error, budget negotiators had to take him at his word, and abandoned talk of a hike of between 6 cents and 7 cents.

Ultimately, of course, the import of any senator's vote on his or her reelection chances will depend on how the economy looks in November 1994. Further, Altman says: "I just don't think the American people are interested in more gridlock."

Sen. James Exon (D) of Nebraska, co-author of a letter written last week asking the Senate leadership to consider a "budget-cutting summit" that would supplement cuts made in reconciliation, says voting for the package "might not be the best thing politically in the short run, but sometimes you have to stop moaning about the difficulty, and just do it." Mr. Exon has pledged to vote for the package, as long as it goes along the general lines of what the Senate passed in June. That is where it appears to b e heading.

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