$1.52 Trillion Budget Cuts Deficit ... Maybe

THE federal budget President Clinton has submitted for the next fiscal year is not a work of activist government expansion.

Although Mr. Clinton clearly believes in a more activist role for government in American life than did his predecessor in the Oval Office, it does not show in the bottom line of his budget proposal.

The $1.52 trillion that Clinton proposes to spend in the fiscal year beginning next Oct. 1 is 2.36 percent more than the current year's budget. This means that the growth of federal spending is below last year's inflation rate, which was itself less than 3 percent.

Put in different terms:

* The $176.1 billion deficit would be the lowest in six years and the third consecutive decline in the federal deficit - the first such string since Harry Truman was building down from World War II.

* The total federal budget would amount to 21.2 percent of the total size of the gross domestic product. This would be the lowest proportion of government spending to the economy since 1979.

* The deficit, at 2.1 percent of the size of the economy, would be at levels common in the early 1970s, after peaking in 1983 at 6.3 percent.

Not everything is conservative about this budget, however. Clinton proposes a slight further shift away from defense programs and into domestic programs.

His projections rely on his health-care plan - the most expansive social proposal since the New Deal - counting as off-budget. The Clinton proposal mandates a comprehensive set of benefits to be provided universally to Americans. It requires employers to pay 80 percent of the premiums to quasi-governmental health alliances, which in turn pay health-insurance providers.

The Congressional Budget Office is expected to rule this week on whether the Clinton plan will be scored as on-budget or off-budget, as the White House hopes.

If the plan is on-budget, then the cost of the mandates on employers becomes a tax, and the money paid out by the health alliances becomes government spending. The result would show in the budget as a massive expansion of government.

As the administration calculates, passage of the health-care plan would reduce the federal deficit further next year, because of cost cuts in Medicare. The health plan would cut deficits even further in the long haul, the White House argues, because of the cost controls in the plan.

Many of the savings Clinton proposes were offered during the Bush administration, only to be defeated in Congress. Clinton proposes eliminating 115 federal programs for a savings of about $3.25 billion. He would add new or expanded spending of about $15 billion, however, for crime, education, and other initiatives.

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