President Clinton on Monday sent to Congress a $1.77 trillion budget that proposes taking advantage of a booming economy to accomplish everything from buying more missiles to reducing global warming.
The second balanced budget of Clinton’s presidency also earmarks a huge surplus to protect Social Security and Medicare, while funding additional domestic programs through measures such as raising the cost of cigarettes by 55 cents a pack and closing corporate tax loopholes.
From a political standpoint, the fiscal 2000 budget, which must be approved by Congress, challenges Republicans to either support Clinton’s use of the surplus to protect popular programs or plunge ahead with their own plans for across-the-board tax cuts.
The administration is keenly aware that a robust economy has kept the president’s approval ratings high in the face of an embarrassing sex scandal and impeachment process.
While past presidents have had to struggle to craft budgets that dealt with staggering deficits, Clinton faced an embarrassment of riches and was able to formulate a budget on which the chief point of dispute will be on how to spend the massive surplus.
“We have a special obligation because our predecessors for the last several years never had this opportunity,” Clinton said. “They never had the option to do what we can now do . . . and we had better fulfill our duty.”
Clinton’s budget proposes a $39 billion increase, or 2.3 percent, in spending in fiscal 2000, which begins Oct. 1.
The budget blueprint is intended to keep the economy healthy and to keep citizens’ attention on their fatter pocketbooks, not on Clinton’s impeachment trial.
On Monday, the split-screen presidency continued, with Clinton dramatically announcing his budget in the splendor of the White House East Room while five blocks away Monica Lewinsky was questioned for several hours by House prosecutors in a downtown Washington hotel room.
Clinton drew a line in the sand from the outset, challenging Republicans not to spend the surplus on tax reductions.
“Our economic house is in order and strong,” Clinton said. “If we manage the surplus right, we can uphold our responsibility to future generations. We can do so by dedicating the lion’s share of the surplus to saving Social Security and Medicare and paying down the national debt.”
The spending Clinton envisions would go to many programs designed to play directly to those constituencies that carried Clinton to victory in the last two presidential elections–women, minorities and the middle class–by emphasizing spending on families, health care and education.
At the same time, the budget includes $262 billion in military spending, $1.3 billion over five years to put more police officers on the street and $215 million to promote “zero tolerance” of drug use by criminal offenders, all of which are designed to appeal to more conservative voters.
While Congress is likely to fight many of Clinton’s spending measures, the big battle will be over how to use the budget surplus that has been generated by an expanding economy and a decrease in federal spending as a share of that economy.
Always conscious of the stagecraft of every event, the White House had the budget bound in black this year to symbolize the black ink not just of a balanced budget, but one with a whopping $117 billion surplus.
Clinton wants to transfer 62 percent of the projected budget surplus for the next 15 years, or $2.8 trillion, to the Social Security system and 15 percent to the Medicare system. An additional 12 percent would be set aside for a new Universal Savings Accounts program, designed to help working families save for retirement, and the remaining 11 percent for military readiness and other spending programs.
Republicans want to use some of the budget surplus to protect Social Security but want to use the rest to cut income taxes by 10 percent, or about $600 billion over the next 10 years.
“We didn’t balance the budget so government could grow,” said Senate Finance Committee Chairman William Roth (R-Del.). “Yet the president has asked Americans to go without a significant tax cut until at least the year 2015 so he can spend hundreds of billions of dollars on big government. That is just plain wrong.”
Also likely to meet with opposition is Clinton’s plan to shut down corporate tax shelters and loopholes, which is designed to raise $33.4 billion over the next five years.
The White House is especially targeting those corporate tax shelters that are designed to reduce a company’s tax bill without having a wider economic purpose.
“These kinds of tax shelters violate the intent of Congress, they violate the (tax) code, they clearly erode the corporate tax base and they breed disrespect for the tax law,” Treasury Secretary Robert Rubin said Monday.
Clinton also wants to increase the cost of cigarettes by 55 cents a pack, which he believes will cut smoking by teenagers and raise up to $8 billion a year for the next five years.
The 2000 budget contains a $12.6 billion increase for the military from present spending levels and is part of an overall increase of $110 billion Clinton is recommending for the next six years.
In terms of dollars adjusted for inflation, the increase is the first real, sustained increase in military spending (as opposed to special appropriations for the Persian Gulf war) since the Reagan Cold War buildup ended in 1985.
Some $53 billion of next year’s defense spending would go for new weapons and equipment–a 7 percent increase in procurement spending–and $6 billion would finance a 4.4 percent pay raise for uniformed personnel. Defense Secretary William Cohen said the pay raise is urgently needed to deal with increasingly serious recruitment and retention problems.
As Cohen acknowledged in a Pentagon briefing, only $4 billion of Clinton’s $12.6 billion increase would be financed from the new budget. The rest would come from money made available by anticipated economies in Pentagon operations, expected lower fuel prices and unspent funds from previous budgets.
Clinton seeks to spend $34 billion on targeted tax cuts, including a $1,000 tax credit to help citizens cover the costs of long-term care for themselves or a relative, a $700 tax credit to assist workers with disabilities, tax relief for a parent who stays at home to care for a young child and tax credits to pay for school construction.
Also, Clinton’s budget allocates $200 million to help students do better in schools, $600 million for after-school programs, and $1.4 billion to help schools recruit, hire and train 100,000 new teachers by 2005.
Along with protecting Social Security, the budget retargets areas that Clinton and Vice President Al Gore used successfully in their 1996 re-election campaign: Medicare, Medicaid, education and the environment.
The 2000 budget allocates a 5 percent increase, or a record $33.9 billion, to protect natural resources and $4 billion to deal with global warming by reducing greenhouse gas emissions.
Time and again Monday, the Clinton economic team sought to avoid numbers and put the budget in human terms.
“This budget gives America the help we need to build safer, more livable communities, where parents can spend less time stuck in traffic and more time reading stories to their children,” Gore said.
Repeatedly, the presidencies of Ronald Reagan and George Bush were portrayed as a budget-busting, deficit-growing nightmare era for the average American.
Clinton said: “Seven years ago, when I ran for president, I committed to put our fiscal house in order. Irresponsible policies had quadrupled our national debt in the 12 previous years. . . . Last year, for the first time in three decades, as all of you know, we had turned red ink to black with a $70 billion surplus.”
Republicans were quick to strike back.
House Republican Leader Dick Armey of Texas said: “Right now, the tax burden on the American people is at an all-time high– higher than during World War II. If we can’t cut taxes now, when can we?”
White House polling, however, shows little public clamor for a federal income tax cut.
“We have a rare opportunity that comes along once in a blue moon to any group of Americans,” Clinton said, stating that the robust economy has given the nation the opportunity to save Social Security and Medicare and still pay down the national debt.
“We can and, because we can, we must do it now,” Clinton said.
