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For First Time in 30 Years, Proposed Budget Balances

By Eric Pianin
The Washington Post

President Clinton Monday did what he promised in his State of the Union address and submitted the first balanced budget in 30 years, one that would bar substantial new spending and tax cuts until a plan is in place to preserve Social Security.

"This budget marks an end to decades of deficits that have shackled our economy, paralyzed our politics and held our people back," Clinton said at a White House ceremony. "It can mark the beginning of a new era of opportunity for a new American Century."

The 368-page document the administration sent to Congress Monday is the first formal move in what will be a series of political and legislative maneuvers throughout the coming months to craft a final budget and tax plan for fiscal 1999, which begins Oct. 1.

Senate Majority Leader Trent Lott of Mississippi and other GOP leaders quickly challenged some of the president's spending priorities and how he intended to pay for them. "You're talking about the lollipop budget with lollipops for everyone," Lott told reporters.

Republican budget leaders promised to come up with a leaner budget plan of their own that emphasized tax cuts, not new spending.

The biggest criticism of Clinton's proposal is his use of $65 billion of a proposed tobacco industry settlement to offset about two-thirds of the cost of new spending and tax relief initiatives for education, child care, expanded health care, research and other measures.

Republicans and some Democrats - including Rep. John M. Spratt of South Carolina, the ranking Democrat on the House Budget Committee - warn that the settlement itself may be in serious trouble in Congress. Unless Clinton or his top lieutenants get more aggressively involved in trying to work out the tobacco legislation than they have in the past, "I don't see it happening," Lott said. "Right now the tobacco agreement is losing ground rather than gaining ground," Spratt said.

Yet unlike many presidential budgets, Clinton's $1.7 trillion budget - projecting a $9.5 billion surplus next year and packed with an estimated $130 billion to $150 billion of new spending and tax cuts over five years - was not declared dead on arrival. All of that spending, Clinton insisted, will be paid for.

With polls showing growing support for Clinton's spending priorities and his desire to use the surplus to bolster Social Security against the tide of baby boom retirements that threaten its long-term solvency, Republicans have little choice but to take seriously the president's proposals - even as Clinton struggles with the White House sex scandal.

According to a new Washington Post poll, 75 percent of those interviewed approve of Clinton's call to strengthen Social Security before using any of the projected surpluses. While nearly half of the Americans surveyed described Social Security reform as their top priority, only 17 percent called for further reductions in income tax - as favored by many Republicans - and 10 percent favored new domestic programs.

Republican criticism was further tempered by widespread voter approval of Clinton's handling of the economy and the fact that the president's new budget is tied into last summer's bipartisan balanced budget agreement that both parties heralded as a turning point in GOP-Democratic relations.

"It's obvious that the president of the United States is popular," Senate Budget Committee Chairman Pete V. Domenici, R-N.M., told reporters. "It's obvious that he has put forth a series, long litany, of popular programs [but] it's absolutely preposterous, the contradiction of telling the American people government's getting smaller." He said Clinton's plan to use proceeds from a tobacco settlement that may not materialize was irresponsible and could lead to spending in excess of limits established by last year's budget agreement.

Overall, Clinton's budget projects a 3.9 percent increase in federal spending over the current fiscal year. The biggest winners are child care, with $21 billion for increased subsidies, tax credits and grants; and education, with large increases to add 100,000 teachers and reduce class size for grades 1 through 3 as well as build or remodel 5,000 schools. Clinton has also proposed greatly expanding the Medicare national health program for seniors by extending eligibility to Americans 55 to 64 years of age who can afford the premium.