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White House Unveils $1.77 Trillion Federal Budget Plan

By Jonathan Peterson and Alissa J. Rubin
Los Angeles Times

Launching a novel era in budget politics, the White House unveiled a $1.77 trillion budget plan for next year that presumes surpluses "as far as the eye can see," even though it proposes costly fixes for Social Security and Medicare and includes a broad array of new spending.

Beyond the numbers, the fiscal blueprint released Monday serves to spotlight likely concerns of the White House and Congress in a post-impeachment, post-deficit era. The administration would pre-empt the across-the-board tax cuts sought by conservatives by steering the surpluses into areas of defense and social spending, including such liberal favorites as education, health care, the environment and urban development.

And it would commit the vast share of new spending to the retirement and health-care expenses of the aging baby boom generation, a priority the White House places above all else.

"Yes, we're saving Social Security and Medicare, and yes, that will prepare for the retirement of the baby boomers, and yes, it will save money for our children and grandchildren," Clinton said of the spending outline. "But it will also guarantee them an economy of continuing, enduring stability and a hedge against the storms that may happen beyond our borders."

Republicans quickly derided the White House plan as a big-government strategy that fails to provide the level of tax cuts that growing surpluses make possible and creates a grab-bag of new spending programs.

"The budget contains something for everyone, and that's what's troubling," said House Ways and Means Committee Chairman Bill Archer (R-Texas). "It's a throwback to the days when the government tried to solve problems by raising taxes and throwing money at problems."

Because budget forecasts are notoriously wide of the mark, there is uncertainty in the administration's plans for the long haul. Still, many analysts now believe that a combination of strong economic growth and relative restraint in federal spending has markedly improved the government's financial outlook.

The budget projects a $4.4 trillion surplus over the next 15 years. In the fiscal year that ended last Sept. 30, the surplus the first in three decades totaled $70 billion.

The White House projects that the surplus will rise to $117 billion next year and, without changes in spending or tax policy, increase to $393 billion in 2009. The nonpartisan Congressional Budget Office also projects large surpluses.

The government's expectation of indefinitely growing surpluses is like a poor man's discovery of a wallet bulging with bills, said Henry Aaron, an economist with the Brookings Institution. The news is as disorienting as it is welcome.

"This is a big issue and a big debate," Aaron said. People have not quite understood the fundamental nature of the difference between the visions being presented."

Clinton seeks to use the surpluses to sustain Social Security and Medicare, the key Democratic programs of the 20th century.

Republicans want to give individuals greater responsibility for their own well-being. Archer and Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) have proposed using part of the surplus perhaps as much as 15 percent for a tax cut.