WASHINGTON - Sen. John B. Breaux unveiled a plan yesterday to scale back President Clinton's energy tax and substitute $30 billion of Medicare cuts, a proposal that drew the fire of Democratic liberals.
The Louistana Democrat is a swing vote on the Senate Finance Committee, along with Sen. David Boren, D-Okla., who gave tentative support to the Breaux plan yesterday.
The committee's chairman, Sen. Dantel P. Moynihan, D-N.Y., has said Breaux's proposal is one of several being considered in the search for a compromise that would unite the committee's 11 Democrats. The committee has until June 18 to report a bill raising about $300 billion through tax increases and spending cuts.
The Breaux plan would impose a fuel tax of 7.3 cents per gallon on all forms of transportation - only a little less than the administration's energy tax would impose when fully implemented. It also would retain all the current exemptions from the motor fuels tax, including the one for state and local governments, Breaux said.
But the new tax would dispense with other, more controversial aspects of Clinton's proposed tax affecting producers and manufacturers, reducing the amount of revenue that would be raised overall from $72 billion to $40 billion.
To replace the lost revenues, Breaux proposed eliminating part of the subsidy for health-care enjoyed by elderly individuals with incomes of over $75,000 a year, requiring all recipients to pay 10% of the cost of home health-care visits, and reducing inflation adjustments in payments to hospitals.
Breaux said the cuts would save about $30 billion, on top of the $50 billion of Medicare cuts already included in the House-passed budget package. His figure is close to the $35 billion level of cuts that Moynihan has targeted in his negotiations with committee Democrats.
Wall Street economists have been calling for such cuts and more in Medicare because it is one of the fastest-growing federal programs. Along with the Medicaid health-care program for the poor, it is largely responsible for the large increases in the deficit projected in the next few years.
Lawrence Chimerine, economist with DRI/McGraw-Hill Inc., for example, has suggested aggressive means testing" or pushing back the age at which individuals can receive benefits as ways of getting control of spending in the old age program.
The idea of limiting such benefits remains highly controversial on Capitol Hill, however. and immediately provoked a critical response from liberal Democrats.
"The entitlement cuts will be a serious complication in the House" if the Senate tries to force the other, more liberal chamber to accept them, Rep. Mel Reynolds, D-Ill., said after hearing about the proposals. "We shouldn't be reducing the deficit purely on the backs of the elderly and poor."
Breaux said his proposal would not hurt any disadvantaged groups, however. "Why should the government be subsidizing 75% of the health care" of people earning more than $75,000, he asked. The burden of paying for such benefits largely falls on people earning less than half as much, he said.
Nevertheless, while he characterized his proposal as "moderate," he conceded that deeper cuts in Medicare will be hard to win from his own party. "It is a delicate balance. If we cut too much, it will not pass when it goes back to the House," he said.
George Kandanis, an aide to House Speaker Thomas Foley, D-Wash., said the reason so many Democrats are leery of cutting benefits, even for upper-income groups, is because of their bad experience several years ago with an attempted expansion of the Medicare program to encompass catastrophic health care.
"When we tried to put the heavier burden on the upper-income people" to pay for the catastrophic coverage, it provoked outrage that forced Congress to repeal the plan, he said.
Meanwhile, the House Democratic Caucus yesterday turned back an attempt by 81 members to immediately take away the subcommittee chairmanships of 11 representatives who defied the party leadership and voted against the $344 billion budget package last month.
Instead, the caucus agreed to review the voting records of all of the House's dozens of subcommittee chairmen at the end of two years to determine their allegiance on important party issues.
"The consensus of the caucus was that no retaliation should be threatened or taken against any member for any vote," said Foley.
But others emerging from the caucus said the new review requirement was intended as a warning to renegade chairmen. "They serve as subcommittee chairmen at the grace of the caucus," Reynolds said. "They won't be judged on one vote, but on a series of votes," he said.
One of the targeted chairmen, Rep. William O. Lipinski, D-Ill., said the. pressure exerted by the caucus wouldn't have changed his vote. "They shouldn't attempt to intimidate people into supporting" an unpopular budget package, he said, adding that he would gladly relinquish his chairmanship if that were the price to pay" for defending the interests of his district.