Clinton's Budget Trumpets Black Ink and Blackboards

There's something glimmering on Washington's horizon that hasn't been spotted here since Richard Nixon was president: black ink.

Key Democrats and Republicans believe that, after decades of deficit spending, this year may finally be the moment when Congress and the White House agree to a balanced federal budget.

The whole thing could still easily fall apart. President Clinton and GOP-controlled Capitol Hill have big differences on such budget issues as tax cuts and Medicare spending. Even if a deal is struck, it wouldn't call for red ink to actually stop flowing until 2002 - two years after Mr. Clinton leaves the Oval Office.

But neither side wants a repeat of last year's draining budget battle and government shutdowns. Both say they'll take the newly released White House budget and begin real negotiations.

"I want to work with Congress to begin the final increment of deficit cutting and bring the budget into balance for the first time since 1969," said Clinton yesterday in his budget message.

Overall, Clinton's budget plan calls for the United States to spend a hefty $1.7 trillion dollars in 1998, with a deficit of about $121 billion.

Annual spending would rise to $1.88 trillion by 2002, under Clinton's outline. However, the plan calls for a combination of budget cuts, user fees, and other revenue increases to produce a $17 billion surplus that year.

Who gets tax credits

Budget highlights include a $500 per-child tax credit for low- and middle-income families, a $5,000 tax credit for companies that hire welfare recipients, and a $1,500 tax credit for college tuition.

The 1998 budget calls for a 20 percent increase in education spending, to $51 billion, and $100 billion worth of savings from Medicare over 5 years. The proposal would also spend $20 billion over the next five years to restore some welfare benefits and food stamps to the poor, including legal immigrants to the United States.

Despite policy differences between the president and congressional Republicans, several factors appear to be working in favor of an agreement to balance the budget by 2002:

* The economy continues to be strong. Among other things, this means tax revenues are up and several million people have left the welfare rolls, reducing welfare spending and Medicaid costs. Along with the passage of welfare reform in the last Congress, these trends have caused the Congressional Budget Office to lower its deficit projection for 2002 from $285 billion to $188 billion.

* The political situation is calm. The president is not running for reelection, and 1997 is not a congressional election year. Republicans believe they can hold on to Congress for the next four years, but want to ensure public favor in 1998 by producing a record of achievements they can point to. Having been through two budget cycles, they are more experienced and aware of pitfalls to avoid. By the same token, if a deal is not cut by early fall, the coming election cycle may close the window of opportunity.

* Sen. Trent Lott of Mississippi has emerged as de facto Republican leader. A genial but firm chief, Senator Lott has made it clear he wants to finish the budget process by April 15, the date called for by an often-ignored law. House Speaker Newt Gingrich's ethics difficulties and a recasting of GOP management style in the House have opened up space for others, such as House Ways and Means chairman Bill Archer (R) of Texas, to play a more significant role than in the last Congress. Mr. Archer has already met with the president to discuss budget matters.

Let the negotiations begin

Republican leaders say that rather than passing their own budget and then negotiating with the president, as they did during the past two years, they will use Clinton's proposals as the working document and offer amendments and compromises.

While many Republicans leaders expressed skepticism about possible presidential "gimmicks" to reach balance, Lott sounded conciliatory themes in remarks Wednesday. "I think we have a unique opportunity to come to agreement on [balancing the budget by 2002]." But he cautioned, "There will be a lot of dancing back and forth."

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