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Clinton Announces Tough Federal Budget for 1995

By James Risen
Los Angeles Times

President Clinton Monday unveiled an austere federal budget for 1995 that calls for elimination of 115 long-established programs, significant reductions in defense and most domestic outlays and only slight increases for the administration's top priorities.

The administration's $1.52 trillion budget is designed to advance the president's agenda within the modest bounds permitted by tough new spending caps, while still meeting the deficit reduction targets included in the economic plan passed by Congress last August.

Yet the funding shifts and program curtailments it proposes are certain to provoke bitter struggles among affected interest groups and their allies in Congress. Liberal Democrats already are accusing Clinton of failing to honor his campaign promises to reverse the effects of 12 years of Republican rule and reinvigorate social spending.

Clinton, speaking to a business group in Houston, said that the new budget demonstrates that "we mean business" about bringing down the federal deficit. "It's the toughest budget on spending cuts that Congress has yet seen," the president declared.

The White House estimates that its budget will leave the government with a deficit of $176 billion next year, down from $235 billion this year. Next year's projected shortfall is far below the $305 billion estimate made a year ago.

The numbers could change yet again: the budget reflects very little of Clinton's health care and welfare reform initiatives, which will be dealt with in separate legislation. Those programs could significantly alter the spending and deficit outlook.

Leon E. Panetta, director of the White House Office of Management and Budget, said that the bulk of the reduction in the projected 1995 shortfall is attributable to passage last year of Clinton's economic plan, which raised taxes and cut spending in an effort to improve the long-term health of the economy.

"This is the most consistent deficit reduction effort in 40 years," Panetta said during a White House news conference. "This is a budget intended to keep the nation, our economic recovery, and the investment strategy the president began last year on track."

Although the president and his lieutenants outlined their budgetary objectives in expansive terms, Clinton's second budget really represents a standstill spending plan for a government caught in an ever-tightening fiscal vise. It proposes a total of $30 billion in cuts in discretionary domestic outlays in 1995, partly offset by $16 billion in new spending on other domestic programs.

For example, to find money for such priorities as the Head Start preschool program, the hiring of 100,000 new police officers and an expanded job training and youth apprenticeship initiative, Clinton wants to reduce funding for mass transit systems by 25 percent, sharply scale back energy assistance for the poor and stop funding construction of public housing units.

Most of the net savings projected by Clinton's budget would come from reductions in the defense budget, as the Pentagon continues to adjust its operations to the realities of the post-Cold War world. Domestic departments, in contrast, would use most of the funds generated by cuts in some of their programs to pay for increases in others.

Clinton has been forced by the spending caps in last year's deficit agreement to draft a budget that calls for a slight decline in total "discretionary" outlays for defense and domestic programs. Discretionary spending, at $542 billion, accounts for roughly a third of the total federal budget.

The remaining two-thirds of the budget, some $976 billion, is allocated to "mandatory" spending: benefits paid under Medicare, Medicaid, Social Security and other entitlement programs and interest on the national debt. Those outlays are not subject to the annual appropriations process and will continue to grow under Clinton's spending plan.

In fact, administration officials said their new budget provides fresh evidence that health care costs are now the main culprit in driving the deficit, underscoring the need for comprehensive health care reform. They said they believed the looming battle over health care reform would dominate the budgetary and economic agendas for 1994.

Since the administration is not proposing any broad new taxes, the budget battle in Congress is expected to be less brutal than last summer's struggle over Clinton's five-year economic plan. Still, the 1995 budget contains a few revenue-raisers: Clinton wants to quadruple the federal cigarette tax to 99 cents a pack to help pay for health care reform and he is proposing $1.5 billion in new fees paid by gun dealers, national park visitors and other users of federal services.