Tax cuts and Medicare wait as Congress focuses on Gingrich

The 105th Congress, which convenes this week, will face a heaping plateful of proposals that could reform Medicare, lower taxes, change the way Americans bank, and lower their electric bills.

But before legislators get to the main course, they're likely to linger over the ethics controversy swirling around House Speaker Newt Gingrich (R) of Georgia and the charges of campaign fund-raising violations by the White House and Democratic National Committee.

At press time, Mr. Gingrich appeared headed for reelection as Speaker, despite his admission of ethics violations and the open opposition of a handful of House Republicans, including Rep. James Leach of Iowa, chairman of the House Banking Committee.

Gingrich still faces a public hearing before the full ethics committee, which must recommend a punishment by Jan. 17. A censure could cost him the speakership. A milder reprimand would allow him to continue in office.

If lawmakers can get past the bitter partisan warfare over ethics and fund-raising, analysts expect a potentially productive session.

On the legislative agenda, Republicans want to focus on balancing the budget, cutting taxes, and revamping Medicare. Democrats are expected to emphasize campaign-finance reform, education, and the environment.

Many of these issues are holdovers from the last Congress. Among those that senators and representatives will take up in 1997:

The budget. Republicans and President Clinton say they want to balance the federal budget by 2002. The disputes will be over what to trim, how to reform Medicare, and whether a balanced budget can be combined with a tax cut. The president has said he wants to "fix" last year's welfare-reform bill, including help for legal immigrants and some others, but Republicans will probably oppose that.

Congress and the White House will also have to decide whether to change the way the consumer price index is calculated. A panel of economists said last month that the current CPI calculation overstates inflation by 1.1 percent a year, adding to the deficit.

The Senate's first issue may be the proposed balanced-budget constitutional amendment, which fell one vote short in the Senate in the last Congress. This time, the votes appear to be there in the Senate, but the margin may be slimmer in the House.

On tax cuts, Republicans support broad-based reductions, such as their $500-per-child proposal, and a cut in capital-gains taxes. Democrats will push tax credits for college tuition.

Sure to be controversial are the three proposals of a special commission to invest some Social Security funds in the stock market for a higher rate of return in order to keep the system solvent when the baby-boom generation retires.

Campaign-finance reform. Sens. John McCain (R) of Arizona and Russell Feingold (D) of Wisconsin will introduce legislation to ban special-interest money and provide incentives for candidates to abide by voluntary spending caps. But many Republicans oppose those ideas and want to wait until an investigation into White House and Democratic fund-raising practices in the last election is complete before floating new proposals. Democrats will push hard for a bill.

Banking. Mr. Leach supports legislation permitting banks to sell stocks, bonds, and insurance. The Clinton administration reportedly wants to go further, allowing nonbanking corporations to own banks. Lawmakers will also consider proposals to lift court-ordered restrictions on credit union membership, and to force savings and loans to become banks.

Deregulation of electricity. As states move to break up regulated electricity monopolies, Congress wants to get into the act. House Commerce Committee Republicans propose setting a date by which states must deregulate electricity and allow consumers to choose their electricity company the way they now shop for long-distance phone service. Many utilities oppose setting a specific date and are concerned about the debt they have acquired under the current system.

Environment. Congressional Republicans want to amend the Superfund act to repeal provisions requiring businesses to pay for cleaning up waste that was legally dumped before the 1980 law was enacted. Some Republicans also want to ease some requirements in the 1972 Clean Water Act, giving states and localities more flexibility in meeting quality standards.

Republicans are also angry about proposed new Environmental Protection Agency regulations imposing tough new air-quality standards for ozone and smokestack emissions. Many cities and states are in danger of losing federal highway funds if they don't meet the higher standards.

Western lawmakers and conservatives will try again to rewrite the Endangered Species Act, which expired in 1992 but remains in force, to ease requirements on private-property owners. Members of Congress will try again to create a temporary nuclear-waste repository in Nevada, which the state's two senators managed to block in the last Congress.

Defense. Many Republicans want to increase military spending. Republicans will probably also introduce a bill requiring deployment of a national missile-defense system by 2003, which the administration opposes on grounds of cost and ineffectiveness.

Highways. The nation's primary highway law will expire in September. Members from both parties propose increasing spending levels to pay for crucial road, bridge, and public-transit projects in their states. The problem: agreeing how to divide up the pot among the states, always a sticky issue.

Immigration. Look for Rep. Lamar Smith (R) of Texas to again introduce legislation to reduce the number of legal immigrants the United States accepts each year. Liberal Democrats may push for tougher penalties for those who hire illegal immigrants.