The President's Budget

THE good news for President Clinton is that both houses of Congress have passed their versions of the fiscal 1994 budget. Both essentially hit his target of reducing the federal deficit by $500 billion over a five-year period: The House version came in at $503 billion; the Senate version at $499 billion, after a tie-breaking vote from Vice President Gore in the wee hours of Friday morning.

Progress on the budget gives Mr. Clinton a chance to head for the Group of Seven economic summit in Tokyo next week with a useful talking point: The US is moving to restrain its budget deficit, often a point of contention when Washington wants other industrial nations to modify their economic policies, particularly on interest rates, to stabilize currency values and enhance trade.

Yet running the budget through the remainder of its course - reconciliation of the two versions and votes in both houses - will test the president's negotiating stamina and that of congressional leaders. Ironically, interparty gridlock isn't the problem: No Republicans voted for either version. The potential for trouble comes from within the president's own party.

The dispute is over whether tax increases or spending cuts should carry the burden of deficit reduction - and how voters will perceive those differences during next year's congressional elections. The House version breaks down at roughly 55 percent tax increases and 45 percent spending cuts; in the Senate version, 49 percent of the deficit savings comes from tax increases and 51 percent from spending cuts. Those figures reflect differences between the two houses on provisions dealing with the type and sc ope of an energy tax, as well as Medicare benefits, earned-income tax credits for the working poor, food-stamp benefits, and changes to the capital-gains tax.

In the House, Clinton must find a way to hang onto the votes from blocs like the Congressional Black Caucus, already unhappy with his compromise on the Btu tax and his handling of Lani Guinier's nomination to head the Justice Department's civil rights division. In the Senate, six Democrats voted against the budget. According to Sen. David Boren (D) of Oklahoma, at least that many who voted for the budget were "just barely there." Clinton forces have taken solace in some senators who, when they voted agai nst the plan, said they would have voted for it if the president had needed the votes. But that is a thin political reed.

Congress takes up the task of reconciliation after the Fourth of July break. When it does, sticking closer to the Senate version would be the wisest course. It keeps the focus on fiscal prudence by, however marginally, putting the discipline where it belongs: on spending.

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