WASHINGTON - House and Senate conferees will plunge into budget negotiations this week faced with a warning from the White House not to try scaling back the budget package's overall goal of $500 billion in deficit reductions over the next five years.
Sen. John Breaux, D-La., and some other members of Congress have suggested that reducing the goal to $400 billion would enable the conferees to drop the plan's controversial energy tax, which would raise $72 billion under the House version of the bill and $23 billion under the Senate version.
Any decision to substantially lower the goal also would clear the way for the conferees to adopt most of President Clinton's proposed tax-exempt bond initiatives and other tax incentives, contained in the House version of the bill, which overall would cost the government about $50 billion.
According to congressional estimates, the budget plans currently would produce only about $445 billion of "hard" spending cuts, tax increases, and user fees. When supplemented with about $55 billion of interest savings on the national debt attributable to enactment of the package, they would achieve the $500 billion figure.
House and Senate budget conferees in the past have often been tempted to simply jettison major bones of contention, especially when, like this year, they are under pressure to quickly produce a bill.
But the President made it clear in a press conference late Thursday that he will not countenance much slippage from his original goal. He said he wants the plan to produce the largest deficit reduction in history. The previous record, set in 1990, was $482 billion over five years.
White House press secretary Dee Dee Myers was also emphatic Friday that the final package must come in very close to Clinton's original goal. "I think the President still wants $500 billion in deficit reduction," aid, although she added, If it was $497 billion, I don't think that that would be a deal breaker."
Administration officials also pointed to revised deficit projections released by the Office of Management and Budget late Thursday in making their case for maintaining the budget package's ambitious goal.
The budget office projected that the deficit for the fiscal year ending Sept. 30 will be $25 billion lower than the $310 billion it forecast earlier this year, largely due to fewer-than-expected thrift and bank failures.
But in the following four years, without enactment of the budget package, OMB sees the deficit falling only an average of $8 billion below its previous forecast. After hitting $300 billion in 1994, the deficit would dip to $286 billion in 1995 and then rise again to $379 billion by 1998, the budget office said.
"Who would argue that a $285 billion deficit in 1993 and continuing $300 billion deficits through 1998 are an argument for less deficit reduction?" asked OMB Director Leon Panetta, in releasing the figures.
"The deficit problem is as big as ever, and we clearly need to enact the full $500 billion of deficit reduction that the President has called for." he said.
OMB's latest forecast is based on an economic outlook close to the current consensus forecast of Blue Chip economists, according to Roger Altman, deputy secretary of the Treasury, said the revisions shave only $50 billion off OMB's forecast of a $1.5 trillion cumulative growth in the debt in the next five years.
"You're talking about no fundamental change in the outlook" that would justify revising the budget package's goals, he said.
Breaux had argued last week that the budget package's deficit savings should be reduced to shore up public support and counteract unexpected softness in the economy. "People are very aware of the taxes and very aware of the spending cuts, but they're not very aware of the deficit reduction we have here, he said.
"If we want to spend more money for some of the House programs and less money for taxes because people don't like taxes. maybe we ought to consider a different deficit reduction number." Breaux said. "I don't think a lot of people back home are going to say. ~By golly, it should have been 500 instead of 400.'"
"The $500 billion figure was not picked out by some magical computer that said you've got to have this to have a strong economy," Breaux said. "That was a number that was arrived at several months ago," and a lower number "may be the right thing for the economy at this time."
But congressional Democratic leaders stood strongly behind the White House in reaffirming the $500 billion goal. House Speaker Thomas Foley, D-Wash., said Thursday that OMB's new figures "ought to encourage us to believe that we can make a greater step forward with the $500 billion reduction."
For Congress to let the debt grow by more than $1.5 trillion in the next five years would be "totally irresponsible, he said. "It has reached a point where some people are writing doomsday predictions."
Foley said he understood why some Democrats who have been under pressure from constituents for voting to raise taxes have suggested scaling back the plan. "Everybody has their own sort of point where they don't like to vote on some aspect or another. They want to eliminate from the package some of the things that are more difficult, and it is a natural tendency," he said.
But he added that it would be a "slippery slope" for the conferees to start lowering their sites. "If you say that $450 billion is all right, then why not $425 billion?" he asked.
