Clinton's '96 Budget Woos Middle Class

WASHINGTON -- President Bill Clinton proposed a $1.61 trillion 1996 budget Monday designed to woo the politically vital middle class by promising new tax breaks, but without tax increases or cuts in popular programs like Medicare.


But the budget plan, which projects deficits of around $200 billion through the end of the decade, has already come under harsh criticism from Republicans, who are demanding far greater spending cuts to achieve a balanced budget by 2002.


"His (Clinton's) budget doesn't go far enough. Essentially what he did was take a walk. He took a walk on the deficit," House Budget Committee Chairman John Kasich, an Ohio Republican, said Sunday on ABC television.


Labor Secretary Robert Reich said Monday it was too early to discuss whether the Clinton administration would accept further public spending cuts under Republican pressure.


"First we have to see what the Republicans are coming up with," he said on the ABC program Good Morning America. "They talk a lot about more tax cuts and more budget cuts. But they have not yet come up with anything."


Clinton's proposed budget for fiscal year 1996, which begins Oct. 1, includes a $63 billion in middle class tax breaks and $144 billion in spending cuts over five years.


The tax breaks include $500 tax credits for children up to 13 in families with incomes of less than $75,000, tax deductions for some college tuition and a new Individual Retirement Account program.


If the five-year budget plan were implemented, the White House forecasts that the federal deficit would be $196.7 billion in fiscal 1996 and $194.4 billion in 2000. The deficit would climb to $213 billion in 1997, and then drop back slightly below $200 billion through the year 2000.


"Our agenda is working. By cutting the budget deficit, investing in our people and opening world markets, we have begun to lay the foundation for a strong economy for years to come," Clinton said in his budget message.


The budget makes no new spending cuts in the federal Medicare or Medicaid programs -- the fastest-growing federal programs -- and makes only minor cuts in farm subsidies.


White House officials say Clinton wants to change Medicare and Medicaid only in the context of an overall health reform bill.


To pay for the middle class tax breaks and also provide $81 billion in deficit reduction the Clinton plan includes $144 billion of spending cuts over the next five years. The bulk of the spending reductions, $101 billion, come from consolidating 271 government programs, reducing 86 more and terminating 131 small programs.


The few big items that make up about 72 percent of the budget -- interest, Social Security, Medicare and Medicaid, and the military -- are virtually untouched by new, deeper cuts.


The military, which had looked to be in line for major cuts, will get a slight increase over earlier plans.


That means most of the new cuts fall on the 16 percent of the budget that makes up domestic discretionary spending.