Republicans Offer New, Restrained Budget Plan

WASHINGTON — Hoping to rescue their political fortunes from the wreckage of last year’s budget debate, congressional Republicans unveiled a new fiscal blueprint Wednesday that calls for far smaller cuts in taxes and in spending growth than they sought a year ago in the brash early months of the Republican revolution on Capitol Hill.

The new GOP budget, which is expected to be approved today by the House and Senate Budget committees, repeats last year’s calls for eliminating the deficit by 2002, providing a $500-per-child tax credit and otherwise reining in the size and scope of government.

But the new plan takes a more cautious approach than in the past toward scaling back the growth of Medicare, one of the most politically explosive issues for Republican budget warriors last year.

And Republicans also retreated by proposing a net tax cut of $122 billion over six years, down from the $228 billion, seven-year tax cut that the GOP sent to Clinton last year. Thus, if the GOP wants any tax cut other than their $500-per-child credit, it will have to come up with new revenue to pay for it.

The new spending blueprint--the first broad-gauged GOP effort to regroup since budget negotiations with Clinton collapsed in January--reflects some of the lessons Republicans learned from last year’s struggle, which many in the party believe was politically calamitous.

“We’ve got to do it differently this time,” said Sen. Charles E. Grassley (R-Iowa), a member of the Senate Budget Committee. “We want to make sure we don’t make the same mistakes we did last time.”

The new budget will set the terms of the rest of the year’s fiscal skirmishing between Clinton and his GOP rival for the presidency, Senate Majority Leader Bob Dole of Kansas.

“We’re back again with a balanced budget,” said Dole at a press conference called to unveil the plan. “We think it’s one that [Clinton] might be able to accept.”

White House Chief of Staff Leon E. Panetta said, however, that the new budget “seems like more of the same.”

“While there are some signs of movement away from the extreme positions they took last year, they are once again calling for unacceptable cuts” in domestic programs, Panetta said.

Republicans charged that Clinton’s plan to balance the budget postponed or avoided serious deficit reduction. They predicted that a budget agreement is unlikely in this election year.

“It’s such a fundamental difference,” said House Budget Committee Chairman John R. Kasich (R-Ohio). “I don’t think they will give on this.”

The new GOP plan represents the first step in the year’s long fiscal process. The plan is embodied in a budget resolution that sets spending and revenue targets for broad categories of federal activities. Later Congress will draft the spending and tax legislation needed to meet those targets.

The new GOP plan calls for balancing the budget in six years with a cumulative $610 billion in deficit reduction, according to the Senate Budget Committee. Last year, Republicans passed a budget-balancing plan that called for $700 billion in deficit reduction over seven years.

Last year’s budget-balancing plan included the GOP’s signature proposals to revamp Medicare, welfare and Medicaid and to cut taxes for businesses and individuals. But Clinton vetoed that bill. In subsequent negotiations with the White House, Republicans offered to scale back their proposals but the talks collapsed without agreement.

Some Republicans, bruised by that battle, were reluctant to go back for more. But GOP leaders decided to go ahead with another major budget initiative. They made some moderating changes designed in part to make it harder for Democrats to charge--as they did relentlessly last year--that the GOP was trying to cut Medicare so that it could give the wealthy a cut in taxes.

The new budget makes room for only $122 billion in tax cuts--hardly enough to pay for the $500-per-child tax credit, which would go to families earning less than $110,000 a year. Last year’s budget called for a net tax cut of $228 billion, including a capital gains tax cut and estate tax relief.

GOP leaders said that they still expect those tax cuts--and the repeal of the gasoline tax, a central issue in the presidential campaign--to be approved this year. But the tax-writing committees would have to find ways to compensate for the revenue lost by closing tax loopholes or enacting other revenue-raising measures.

On Medicare, Republicans called for net savings of $158 billion over six years--down from the $226 billion in the budget bill vetoed by Clinton. Unlike last year, they did not call for higher medical insurance premiums than Clinton proposed.

Republicans also scaled back their proposed savings in Medicaid to $72 billion over six years, down from $133 billion over seven years in last year’s plan. They call for $53 billion in welfare savings, compared with the $64 billion sought last year.

In a tactical shift, Republicans are dropping last year’s approach of sending Clinton their major tax and budget legislation in one big bill. Instead, they plan to send him three major bills to carry out their budget by August: one including Medicaid and welfare changes, another with Medicare and other entitlement reforms and a third with tax cuts.

Last year, Republicans now say, they made a mistake by allowing Clinton to veto their entire agenda with one stroke of the pen.