Deficit Reduction Tagged Key Budget Goal

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WASHINGTON--Deficit reduction will be a central budgetary goal of the new Administration, President-elect Bill Clinton and his top advisers emphasized last week.

As a result of bleaker-than-expected deficit projections, the incoming officials noted, deeper cuts than previously envisioned may have to be made in some discretionary programs.

At the same time, the aides also made clear that Mr. Clinton is resolved to pump more money into areas that he considers "investments,'' including education.

"We have to achieve multi-year deficit reduction that's real and that we can stick to,'' Rep. Leon E. Panetta, D-Calif., the director-designate of the Office of Management and Budget, told senators at his confirmation hearing. "And [Mr. Clinton has] also made a commitment to try to make important investments, targeted investments in this country, in terms of areas like education and health care and infrastructure.''

In an interview on "The MacNeil/Lehrer News Hour,'' the President-elect said that deficit reduction cannot come at the expense of certain domestic programs.

"Our country has an investment deficit as well as a budget deficit, and I have to pursue that investment program because that's the only way we're going to grow the economy,'' Mr. Clinton said.

Mr. Panetta and Mr. Clinton made the remarks after the Bush Administration issued valedictory budget projections showing a fiscal 1997 budget deficit of $305 billion--$68 billion more than the estimate officials had offered in July.

Questioned about his ability in light of the new figures to meet his campaign pledge of halving the deficit by 1997, Mr. Clinton appeared to back off.

The President-elect's economic team is in the process of developing a package of defense cuts, cutbacks in entitlements, taxes and other revenue producers, and possible cuts to other programs in an effort to meet the campaign pledge. That process would need to begin in fiscal 1994, according to budget experts.

"Clearly, [the new deficit figure] indicates a more severe problem,'' said an aide to Rep. William H. Natcher, D-Ky., the chairman of the House Appropriations Committee.

Single Budget Cap

The 1994 budget that Mr. Clinton will present to Congress will be the first since passage of the Budget Enforcement Act of 1990 in which there will not be separate caps on domestic, defense, and international spending.

But observers do not expect that the shift to a single spending cap will lead to a bonanza for education and other domestic discretionary programs.

"It doesn't really promise any improvement,'' said an aide to Sen. Tom Harkin, D-Iowa, who chairs the Senate Appropriations Subcommittee on Labor, Health and Human Services, and Education. "There's potential for improvement, but it doesn't promise any improvement.''

Under the budget act, Mr. Clinton and Congress will decide how to divide $515.3 billion among the three areas. In total, that is $2.2 billion below the amounts allocated for those areas in the current fiscal year.

In budget projections released earlier this month, President Bush indicated that he would have included a $3 billion increase in education programs, putting the figure at $33.5 billion for fiscal 1994.

But the burgeoning deficits foreseen in the latest budget document suggest that had Mr. Bush been required to submit a real budget, he would not have been able to propose such an increase.

Mr. Clinton is required by law to submit his 1994 budget by Feb. 1. But Mr. Panetta said the new Administration hopes to get the budget to Capitol Hill by mid-March. (See Education Week, Dec. 9, 1992.)

Vol. 12, Issue 17

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