Budget Fight: Principles More Than Dollars

THE GOP-led Congress and the Clinton White House have taken small steps toward a budget deal since last month's shutdown of the federal government. The problem is that progress isn't coming fast enough - and another shutdown looms Friday, as Washington's fiscal struggle threatens to become the bureaucratic equivalent of the Hundred Years' War.

Both sides seem weary of their protracted battles. Neither really wants another confrontation - but neither, as yet, has made the concessions needed to cobble a peace pact together.

If the fight were simply about dollar signs, agreement could soon be reached. The totals in both sides' seven-year budget-balancing plans aren't that far apart. But both Republicans and Democrats insist their principles are at stake in the substance of proposals on Medicaid, Medicare, farm subsidies, and other programs.

"There are very important, fundamental policy differences that go below the numbers," insisted a senior administration official at a background briefing for reporters last week.

Medicaid is currently the most visible case in point. Since putting his overall budget plan on the table last week, President Clinton has hit hard at proposed Republican changes to this huge medical program for the poor, a joint federal-state effort that provides benefits to some 36 million Americans.

Not that the White House is defending the Medicaid status quo. Clinton's own plan would reduce projected program spending by $54 billion over the next seven years, while GOP proposals would reduce it by $163 billion.

Instead, the major issue is program eligibility. Congressional Republicans have voted to end Medicaid's status as an entitlement. In other words, the GOP wants simply to allocate states a fixed block grant of money for their Medicaid programs every year, regardless of how many low-income recipients later line up for Medicaid benefits.

Clinton, by contrast, is defending the entitlement concept, saying that every American who qualifies should be able to receive Medicaid help. The White House expects to reduce the size of the program, not through an overall funds limit, but via a "per capita cap" that would limit the amount of per-person Medicaid spending.

GOP spokesmen say that the real issue is giving state governors the flexibility to cover their citizens as they see fit, without interference from Washington.

Furthermore, the Clinton administration has already acquiesced to ending the entitlement status of federal welfare programs, say Republicans, making the Medicaid battle somewhat curious.

Overall, the Democrats just aren't really committed to the hard choices needed to balance the budget, House Speaker Newt Gingrich charged over the weekend. Such an effort is a "moral imperative" to protect future generations, said Representative Gingrich at a fund-raiser for a North Carolina congressman.

Such rhetoric does not appear to portend a quick end to the budget standoff. But differences over Medicaid, Medicare, and other tough issues are in fact not irreconcilable disagreements over principle, says Robert Reischauer, a former director of the Congressional Budget Office now at the Brookings Institution in Washington.

"Virtually all of their differences are resolvable. We're treating a lot of things as matters of principle that should be matters for negotiation," says Mr. Reischauer.

Take Medicaid. One method of compromise might be a combination of Medicaid block grants and entitlement protection for certain at-risk categories of people, such as low-income pregnant women.

The real problem, according to the former CBO head, is that both Clinton and the GOP leadership remain leery of irritating their own hard-line backers. Gingrich in particular could lose the votes of dozens of revolutionary-minded House freshmen with any move towards the budgetary center.

Clinton made "a small, constructive step in the right direction," says Reischauer, by releasing his own seven-year budget-balancing plan last week, however flawed it may be. But neither side seems to be war-weary enough to cave and make a deal.

That could change as Friday's budget deadline approaches. The temporary spending authority that has kept the government open since late November expires at midnight, Dec. 15. Once again, the nation could be treated to the sorry spectacle of designated nonessential bureaucrats on enforced vacation - though there would be fewer of them this time around.

That's because a number of additional, permanent appropriations bills have passed in the interim. November's shutdown idled about 800,000 federal employees, according to the Office of Management and Budget, while a December work stoppage would affect an estimated 350,000.

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