The modest proposals in President Bush's budget to change the direction of federal benefit programs by shifting payments from the middle class to the poor are more important for their symbolism than the money they will save.
While no more than a few billion dollars a year is involved, the pro-posals are an attempt by the Bush administration to shake the label of party of the rich that Democrats hung on Republicans during last year's budget negotiations.
The president's budget document itself suggests that the proposals were designed "to counter the contention that 'fairness,' of necessity, means more federal spending rather than more effective targeting of spending to reach those in need."
Budget Director Richard G. Darman told the Senate Budget Committee yesterday that he wanted to "begin the debate at the margin," starting with only a handful of programs.
But several proposals to link federal benefit programs -- including Medicare premiums and Social Security benefits -- to recipients' incomes were rejected during last year's budget talks. Negotiators concluded that the money they would have saved was not worth the political heat they would have taken from the affected groups.
Darman has acknowledged that the political climate may not have changed enough for a different outcome this year. "I would say the political system does not want to take on the burden of shifting from the middle class downward at this stage," he said Monday in a briefing on the budget. "We thought nonetheless it would be valuable to get this issue of principle on the public agenda, to start the debate."
A version of one of the administration's proposals, linking Medicare premiums with a participant's income, was debated during last year's budget negotiations. The plan would impose a means test, for the first time since the program was created in 1965, that would determine how much a recipient would pay for the health care plan's voluntary coverage of physician fees and outpatient hospital services.
When the program began, premiums paid by beneficiaries covered half the cost of the program and general tax revenue covered the rest. But the government subsidy now covers three-quarters of the program's cost.
The administration wants to require that single participants with annual adjusted gross incomes of more than $125,000 and married couples filing jointly with yearly incomes of more than $150,000 pay three-quarters of the cost for their benefits. That would triple the monthly premiums for those people from about $32 each to $96, or more than $1,100 a year.
Only about 500,000 of the program's approximately 27 million participants would be affected, according to administration officials. While the change would bring in $91 million in increased premiums, Medicare officials estimate it would take about $50 million to administer the program.
Asking high-income participants to pay more than low-income earners is reminiscent of Congress's catastrophic-illness health insurance catastrophe. In 1988, lawmakers approved a plan that would have raised premiums paid by higher-income senior citizens in order to provide "catastrophic" health insurance for all senior citizens. It aroused such sharp criticism that lawmakers beat a hasty retreat and repealed the measure the next year.
The administration's proposal to eliminate crop subsidy payments for farmers with a yearly non-farm income of more than $125,000 is likely to generate less criticism. "That's something we can live with," said farm-state Sen. J. James Exon (D-Neb.). "It's only fair."
Farm subsidies are designed to regulate farm plantings and crop prices. They take the form of either direct income support payments or deficiency payments that make up the difference between market prices and target prices set by Congress.
Only about 10,000 recipients would be cut off, the administration estimates, saving about $90 million. Many of those recipients operate their farms as sidelines, not as their primary source of income. "These are not small farmers," Darman told the Senate Budget Committee yesterday.
There also was favorable congressional reaction to the administration's plan to increase spending on federal grants to college students while raising the maximum grant and redirecting money to students from the poorest families.
As a result of targeting the aid, known as Pell Grants, at students from families with annual incomes of less than $10,000, about 400,000 high-income students would no longer receive the grants. At the same time, the maximum Pell Grant award would rise from $2,400 to $3,700.
Middle-class students could make up for the loss of the grant money by taking advantage of the proposed higher limits for federally guaranteed loans, according to acting Education Secretary Ted Sanders.
Staff writers Kenneth J. Cooper and Spencer Rich contributed to this report.
President Bush's fiscal 1992 budget proposes to redistribute certan benefits so that programs pay more to the poor and provide less to better-off recipients. MEDICARE
Medicare Part B premiums would increase for participants with income exceeding $125,000 annually. Savings: $141 million in fiscal 1992, $1.3 billion over five years. AGRICULTURE:
Farm subsidy payments for farmers with non-farm income of more than $125,000 a year would be eliminated. Savings: $90 million fiscal 1992. EDUCATION:
More federal college and graduate school grants would be directed to students from the lowest-income families. Spending would increase $401 million to $5.8 billion in fiscal 1992.
Subsidies for school lunches and breakfasts for children from families near or below the poverty level would increase while those for students from better-off families would be reduced. VETERANS
Benefits would be standarized to increase payments to survivors of lower-ranking personnel .