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House Approves Thorough Bill to Balance the Budget

By John E. Yang and Eric Pianin
The Washington Post
WASHINGTON

The House delivered on the key provisions in the GOP "Contract With America" Thursday, passing a wide-reaching bill intended to balance the federal budget in seven years, cut taxes and make significant changes in such government programs as Medicare, Medicaid and welfare.

The massive 1,754-page measure, which passed on a 227 to 203 vote, represents a fundamental shift in the size and scope of the federal government, reversing the trend of the last half-century by sending costly social spending programs to the states and setting federal budget deficits on a downward slope to zero in 2002.

"It's the most decisive vote on the direction of government since 1933," House Speaker Newt Gingrich (R-Ga.), declared after the vote. "It signals a basic shift toward traditional America of more decentralized government and balanced budgets."

The legislation, known in congressional parlance as the "reconciliation bill," would provide tax credits to most families with children, give the states responsibility for running welfare and the Medicaid health insurance program for the poor and disabled, raise premiums for most Medicare beneficiaries while encouraging them to shift into private health care programs, cut subsidies for students with federally guaranteed loans and virtually eliminate farm subsidy programs. In addition, it would open the Arctic National Wildlife Refuge in northern Alaska to oil and gas exploration and abolish the Commerce Department.

Ten Republicans defected and opposed the legislation while four conservative Democrats backed the plan.

The Senate, meanwhile, moved toward certain passage of its version of the GOP budget after voting 53 to 46 to defeat a Democratic amendment that would have scaled back the proposed savings in Medicare from $270 billion to $89 billion, to avert the bankruptcy of the system. Differences between the House and Senate versions will be ironed out in conference, probably beginning Monday evening.

President Clinton has declared the GOP budget proposals too extreme and threatened a veto unless Republicans agree to scale back their $245 billion tax cut and the massive cuts in health care for the elderly and poor, welfare programs, student loans and the Earned Income Tax Credit for the working poor.

Gingrich said he would be willing to begin discussions with Clinton whenever the president was willing to do so. Asked what areas would be negotiable, he said: "I would not want to put on the table or take off the table anything until I hear from the president."

But the White House and the congressional Republicans appear to be light-years apart on the details of the budget, and prospects for a breakthrough in the next few weeks appear remote.

Declaring that the president "has a much better way to balance the budget," White House Chief of Staff Leon E. Panetta said, "The House voted tonight for an extreme budget that will severely harm Medicare, Medicaid, education and the environment and raise taxes for working families while providing huge new tax breaks for the wealthy."

From the Republican standpoint, the worst scenario would be a failure to pass their program because of a stalemate with the administration. If budget reconciliation fails this year, the status quo would remain and there would be no changes in Medicare, welfare, student loans and the scores of other programs targeted by the GOP.

But if Republicans can avert an all-out stalemate with the administration by working out a compromise in conference or cutting a deal after a veto, they will have assured profound changes in government spending and tax policy, regardless of the final details.

"Americans asked us for big change," said House Majority Leader Richard K. Armey (R-Texas). "We promised to deliver big change. Today is the day we can stand and deliver and keep our promise." Senate Majority Leader Robert J. Dole (R-Kansas), virtually locked up passage of the budget plan earlier in the day after negotiating compromises with a handful of moderate and conservative Republican holdouts.

In response to pressure from Sens. James M. Jeffords (R-Vt.), and William S. Cohen (R-Maine), chairman of the Committee on Aging, the leadership agreed to strike language that would have ended federal regulation of nursing homes.