BUDGET SURPLUS: Clinton Raises Estimate, Offers GOP Trade
Announcing that the projected budget surplus has grown by $1 trillion since the last official estimate, President Clinton yesterday made an effort to "break the logjam" on several proposed legislative measures, saying he would "swallow misgivings" about Republicans' plan to eliminate the marriage tax penalty if they agreed to his proposed Medicare prescription drug benefit, the Washington Post reports. Clinton said, "This is a proposal for true compromise. It asks each party to accept some of the positions of the other party in the name of progress" (Harris/Pianin, 6/27). The total surplus, including money from Social Security taxes, is expected to be $4.2 trillion over 10 years. In addition to the $255 billion he would spend on drug coverage over 10 years, Clinton has proposed using $115 billion from general revenue funds to shore up Medicare, thus extending the program's solvency. Medicare providers hurt by cuts made under the 1997 Balanced Budget Act also would benefit from the surplus, as Clinton favors giving them $40 billion. Another $90 billion would go to expanding health care coverage for children, while Clinton also would create a $500 billion "reserve" for future spending (Godfrey, Washington Times, 6/27). While $2.3 trillion of the surplus is expected to come from the Social Security system and is hence considered "off limits for tax cuts or spending programs," Democrats and Republicans are "fighting over" the remaining $1.9 trillion, which is projected to come from general tax receipts. Clinton's offer suggests that the "surplus, if it materializes, is big enough to give both parties much of what they want, and its sheer size has left Democrats and Republicans alike struggling to get a handle on the politics of political plenty," the New York Times reports. Still, it is not clear whether Democrats and Republicans will "even be able to negotiate during an election season in which they are eager to highlight their differences" (Stevenson, 6/27).
Republicans seemed initially cool to Clinton's olive branch. House Speaker Dennis Hastert (R-Ill.) said, "I am concerned that the president's newest [prescription drug] proposal will cost so much that it will ultimately bring down the entire Medicare system." Senate Budget Committee Chair Pete Domenici (R-N.M.) implied there would be no compromise, saying of the offer, "No horse-trading" (Washington Post, 6/27). House Ways and Means Chair Bill Archer (R-Texas) added that he "would not be interested in a raw deal where American families get just a few more pennies in tax relief and President Clinton gets a trillion-dollar blank check for more government spending" (McQuillan, USA Today, 6/27).