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Clinton Offers 3rd Omnibus Spending Plan This Year

By Paul Richter and Janet Hook
Los Angeles Times

In a new bid to crack the budget stalemate, President Clinton Thursday formally offered his third omnibus spending plan of the year, a 1,000-page document that would eliminate the deficit in seven years by squeezing a whopping 20 percent from lower-priority domestic programs.

Responding to GOP demands for specific spending cuts, Clinton laid out a $465 billion savings inventory that would leave almost untouched the administration's top-priority programs for education and the environment, Medicare and Medicaid, as well as a $98 billion tax cut package.

But it would pare an additional $15 billion from welfare spending, and save another $36 billion from lower cost-of-living raises for Social Security recipients and others. The revised budget would carve deeply into hundreds of lower-priority domestic spending efforts, probably including highways and mass transit, housing, energy, and arts funding, some budget experts predict.

"We presented on behalf of the Democrats a seven-year proposal to achieve balance and protect the priorities the president is concerned about," said White House Chief of Staff Leon E. Panetta.

But the Republicans lost no time rejecting the plan. "This is a tremendous disappointment, and frankly they have got to come back to the table," said House Budget Committee Chairman John Kasich, R-Ohio.

The Clinton budget plan basically squeezes the essentials of Clinton's previous 10-year deficit-cutting program into seven years, to match the deficit-cutting achieved in the omnibus plan the Republicans shepherded through Congress last month.

Clinton's budget and the Republican version, which cuts more deeply into future entitlement spending, will now become the basis for face-to-face negotiations to complete the year-end spending legislation that is already 2{ months overdue.

The key question about Clinton's new plan is how much credibility it will have with the public, especially considering that it is based on assumptions about future economic conditions that are slightly more optimistic than the Republicans'. Clinton's plan slices only $465 billion to eliminate the deficit, compared to the GOP's $812 billion, because it assumes that higher future government revenues and lower expenses will make the extra savings unnecessary.

To fend off anticipated Republican attacks on the plan's credibility, the White House officials said they will attempt to negotiate a special "enforcement mechanism" that will require more cuts, or higher revenues, if the government does not reach its deficit cutting targets in future years.

Some outside analysts have doubts about whether future Congresses would find a way to circumvent such safeguards. But administration officials argued that such a mechanism could ensure elimination of the $150 billion deficit, and thus make moot the raging debate over economic assumptions.

Republican reaction was also cool to a White House proposal for a new bill to extend the government's temporary spending and borrowing authority from Dec. 15 until Jan. 26. Without such an extension, the government may be faced with another partial shutdown next Friday.

The new Clinton plan adds $141 billion in savings from the budget Clinton offered in June.

The largest single chunk of savings comes from the non-defense "discretionary" spending -- that is, spending that does not rise automatically by law. The new Clinton plan would cut $64 billion in the non-defense discretionary realm, meaning the average program will be cut 20 percent after inflation is taken into account.

The Clinton administration has exempted some areas that it considers of special importance: education programs such as the student loans, the Goals 2000 curriculum-standards effort; the Head Start program for disadvantaged children; the AmeriCorps national service programs; and environmental programs.

Also Thursday, the Senate cleared and sent to the White House a $27.3 billion appropriation for the Departments of Justice, Commerce and State. Clinton has threatened to veto that bill because it would cut many programs he favors, including one designed to put more police on the beat.