As many Federal departments and agencies lurch into an era of running without funds, the leaders of both parties of Congress are spending less and less time searching for a compromise to balance the budget, and more and more time deciding how to use it to their advantage on the campaign trail. Meanwhile money is easily borrowed to pay for government overhead. In an attempt to change this, on June 29, Congress voted in favor of HConRes67 that called for a 7 year plan to balance the Federal Budget by the year 2002 (Hager 1899).
This would be done by incorporating $894 billion in spending cuts by 2002, with a rojected 7 year tax cut of $245 billion. If this plan were implemented, in the year 2002, the U. S. Government would have the first balanced budget since 1969. There is doubt by citizens that a balanced budget will become reality. A recent Gallop Poll from January, 1996 showed the budget as the #1 concern among taxpayers, but 4/5 of those interviewed said they doubt the GOP will do the job (Holding 14).
Meanwhile, an ABC poll from November reported that over 70% of those polled disapprove of the current performance by Congress, and most blamed politicians for failure to take action (Cloud 3709). These accusations of failure to ollow through come with historical proof that Congress and Clinton have failed to compromise and resolve the issue. After all, current budget plans are dependent on somewhat unrealistic predictions of avoiding such catastrophes as recession, national disasters, etc. and include minor loopholes.
History has shown that every budget agreement that has failed was too lax. One might remember the Gramm-Rudman-Hollings bill that attempted to balance the budget, but left too many exemptions, and was finally abandoned in 1990 (Weinberger 33). So after a pain-staking trial for GOP Republicans to create, romote, and pass their budget, as promised on campaign trail 94, Clinton rejected the very bill he demanded. This essentially brought the federal budget back to square one.
Clinton thought such a demand on Republicans to produce a budget would produce inner-party quarrels and cause the GOP to implode. Instead, they produced a fiscal budget that passed both houses of Congress, only to be stalemated by a stubborn Democratic President Clinton. Meanwhile, Clinton bounced back with a CBO scored plan with lighter, less risky cuts to politically sensitive areas like entitlements. Clintons plan also saved dollars or education and did not include a tax increase, but most cuts would not take effect until he is out of office, in the year 2001.
Although Clinton is sometimes criticized for producing a stalemate in budget talks, the White House points out that the debt has gone down since Clinton took office, with unemployment also falling. Republicans are quick to state that Clinton originally increased taxes in 1993 and cut defense programs, but his overall plan was for an increasing budget without deficit reduction. Startling Facts about the budget: As of 1996, the national debt was at an all time high of $5 rillion dollars, with interest running at a whopping $250 billion per year (Rau M-1).
This equals out to an individual responsibility of more than $50,000 per taxpayer. Nearly 90% of that debt has accumulated since 1970, and between 1980 and 1995, the debt grew by 500%. Currently, the debt grows by more than $10,000 per second (Rau M-l), and at current rates, a baby born in 1992 will pay 71% of his or her income in net taxes. At current rates, our government is about to reach its breaking point. If thats not enough to scare a taxpayer, by 2002, 60% of government spending will be for entitlements, and by 012, these programs are projected to take up all government revenue (Dentzer 32).
Not only economic development, but also family income is hurt by debt. With the cost of living going up, it becomes harder to find a job. According to the Concord Coalition, real wages peaked in 1973 and have gone down ever since. If the economy grew as fast as it did in 1950, without a debt, the median family income would be $50,000, compared to the present median of $35,000 (Rau M-1). As of current fiscal years budget, the United States government spends $1. 64 trillion yearly. $500 billion of that, or 1/3 of the otal, is for discretionary spending (Rau M-1).
This discretionary spending is the target for most cuts, and seems to be the easiest to make cuts in. Overall, the difference between the two parties budget plans is only $400 billion. This could easily be trimmed by eliminating tax cuts and adjusting the consumer price index to reality. Democrats say the GOP plan is too lopsided, and Republicans criticize the Democrat plan for being unrealistic. A study by the Urban Institute shows GOP cuts will be felt mainly by the bottom 1/5 of U. S. population. This should be more equally spread out across income brackets (Hosansky 1449).
The GOP plan: By fulfilling campaign promises made by freshman Republican Congressmen to cut government spending, the GOP managed to pass a $1. 6 trillion budget resolution by a party-line vote, in both houses of Congress (Hosansky 1450). This budget called for major cuts in education, environmental programs, discretionary spending, and the largest of all: entitlements. 70% of the money to balance the budget under the GOP plan would have come from entitlements. This is because entitlement programs currently take up $301 billion a year.
Such cuts had already been partially implemented with the GOP cutting overall pending by 9. 1% in 1996 alone. First, in an attempt to stop the projected bankruptcy of Medicare in 2002, Republicans cut $270 billion overall from the program, with hospital reimbursement cuts being the deepest (Hager 1283). Although stabilizing the fund is only expected to cost $130-$150 billion over 7 years, the GOP budget would reform the program to run better, and cheaper, by allowing it to grow at 6% yearly, instead of the current 10%.
While both parties agree on premium hikes for beneficiaries, this is a touchy subject for the 38. 1 Million elderly voters on Medicare in 1996 (Rubin 1221). Medicaid, nother volatile program, would be cut $182 billion under the GOP proposal. This would entail placing a cap on the programs spending, and passing control of it to the individual state governments. For an estimated 39 million low-income people on Medicaid in 1996, the GOP plan cuts the program far more than Clintons proposed $98 billion cut. Social Security is another program being cut.
The government has already reduced the outlay for seniors 70 and younger who are on the program, but Republicans want more by increasing the eligibility for Social Security from 62 to 65 for early retirement, and 65 to 70 for standard retirement (Henderson 60). Smaller cuts included $11 billion in student loan reductions, $9. 3 billion in labor cuts, $10 billion eliminated from public housing programs, and several other numerous disaster relief programs cut (Rubin 1222). The GOP also wants to eliminate programs initiated by Clinton like the National Service initiative, summer jobs, Goals 2000, and Americorps.
Also, by terminating unnecessary farm programs, and cutting others by $12. 3 billion, Republicans hope to cut the yearly $6 billion that the Federal Government spends on direct subsidies to farmers. Agricultural policies were also reformed and embedded into udget-reconciliation bills (Hosansky 3730). Clintons Budget: Clintons budget only surfaced after he vetoed the budget passed by Congress, and included shallower cuts, with little or no reform to entitlements. This plan was supported by most Democrats and was used as an alternate to a gutsy GOP budget.
Clinton repeatedly trashed the Republicans efforts to make cuts on programs he feels important like student loans, agricultural programs, and entitlements. He accused Republicans of wanting to kill some all together. He has also threatened to veto a Republican plan to reform Medicare called Medical Savings Accounts, unless his programs are left intact (Hager 752). Under Federal law, the President is required to submit budget requests in 2 forms: Budget Authority (BA), the amount of new federal commitments for each fiscal year, and Outlays, the amount actually spent in the fiscal year (Rubin 1221).
The plan that Clinton has presented is not only a budget resolution in the form of a campaign document, but also proof of how far the Republicans have moved him to compromise since the they took control of Congress. Most important, it does not readily translate into regular accounting principles used for overnment programming. This years White House budget was a 2,196 page document that the GOP struck down immediately for not cutting taxes enough and neglecting to downsize the government (Hagar 752).
There is little or no change at all in this budget,” said Pete Domenici (Senate Budget Committee Chairman), talking of Clintons new budget. Among largest cuts within Clintons plan was the downsizing of 1/5 to 1/3 of all programs that he felt were not a priority to present day government. In addition, he wanted to close loopholes presented to corporate taxation, that would save an estimated $28 billion. He vowed to keep programs like education, crime prevention, and research or environmental grants, while increasing the Pell Grant from $2,340 to $2,700.
Attention was also placed on discretionary spending, with Clinton cutting a smaller $297 billion compared to GOPs $394 billion cut. According to the Office of Management and Budget, the Presidents plan cuts middle-income taxes by $107. 5 billion in 7 years, small business by $7 billion, and cuts $3. 4 billion from distressed urban and rural area relief (Rubin 1222). This was to be paid for by a $54. 3 billion hike in corporate and wealthy-income axes, and also in $2. 3 billion of tighter EITC (Earned Income Tax Credit) adjustments.
Although Clintons plan was expected to cut a whopping $593 billion in 7 years to furthermore produce an $8 billion surplus in 2002, most cuts are long term without a clear goal. Clinton is sometimes criticized by Republicans for unwillingness to compromise. He has used vetoes and stubborn negotiations to protect personal priorities like education, job training, and environmental programs, but Republicans have also tried using domination to force him to comply. GOP Presidential candidate Bob Dole said if Clinton was erious about the budget, “we probably could have had an agreement on New Years Day,” 1996 (Hosansky 1449).
The President is sitting on his hands while the federal debt keeps going up and up and up into the stratosphere,” said Congressman Jesse Helms, Rep -North Carolina. But one must remember that President Clinton does have somewhat of an overwhelming power in this debate that Republicans can do nothing about. He is the single person that can veto laws sent to him, and also has the power to call Congress back into session if he is unhappy with the current situation. This was President Trumans “ace in the hole” back in 1948.