The House last night approved President Clinton's economic stimulus package and the broad outlines of his five-year plan, a new Democratic vision for reinvigorating the economy and reducing the deficit by $510 billion that would require a huge tax increase, bruising cuts in defense and major "investment" spending.
House Majority Leader Richard A. Gephardt (D-Mo.), who spoke to Clinton shortly before midnight, said the president was "very up" and "thrilled" that the House had adopted his proposals largely intact.
"I think it's the first of a number of victories," Gephardt said.
The votes on the $16.2 billion in economic stimulus spending and the House budget resolution, coming barely a month after Clinton announced his plan, marked a major victory for the new president, who has staked the success of his administration on swift enactment of his short- and long-term economic strategies.
Overcoming stubborn opposition from some House conservatives who said the stimulus package was a waste of money at a time when the economy is beginning to recover, the House voted 235 to 190 to approve the funds for emergency unemployment insurance, summer jobs for youth and a varied list of grants to generate new jobs.
Twenty-two Democrats, including Rep. Charles W. Stenholm (D-Tex.), who led the opposition to the stimulus package, voted against it.
The budget resolution was adopted earlier by a vote of 243 to 183. Eleven Democrats joined with 172 Republicans to oppose it.
"The president is a very powerful lobbyist," said Stenholm, who was blocked by the leadership from offering an amendment that could have eliminated more than half the stimulus. "We struck out."
Under the multi-year budget resolution approved by the House, defense spending over the next five years will be slashed by $115.7 billion more than was recommended by President George Bush -- a move that would cause widespread layoffs in the defense industry and additional base closings.
To help finance Clinton's domestic spending initiatives and to reduce the deficit, the resolution also would net about $249 billion in new revenue, one of the largest tax increases in U.S. history.
The Senate, which is debating its version of the budget resolution, is likely to vote next week on the Clinton proposals. Sen. Herbert H. Kohl (D-Wis.) notified the Senate leadership yesterday that he intended to offer a variation of Stenholm's amendment.
Asked if he would be able to deliver Senate Democrats in support of the stimulus package, Senate Majority Leader George J. Mitchell (D-Maine) said, "I have never failed once in 13 years in the Senate to deliver my vote. And that's about as far as I'm prepared to go now."
The Senate did vote last night, 53 to 46, to reject an amendment that would have knocked out Clinton's proposed energy tax. Three Democratic senators, David L. Boren (Okla.), Bob Krueger (Tex.) and Richard C. Shelby (Ala.), supported the amendment.
Yesterday's votes marked a sea change in the national economic debate. Instead of the trickle-down philosophy of Reaganomics and conservative distrust of government activism, the Clinton program links economic growth to aggressive intervention in the public and private sectors and favors targeted new spending -- what Clinton calls investment -- over consumption.
"There's a new breeze blowing here," said Rep. Robert E. Wise Jr. (D-W.Va.), a leading House liberal, in defending the plan.
House Republicans blasted the Democrats' plan as more of their old "tax and spend" policies. They argued that Americans eventually will reject Clinton's approach, notwithstanding polls showing widespread public support for the president's plan.
Rep. Richard K. Armey (Tex.), a GOP leader, said Clinton's plans for raising the top income and corporate tax rates and levying a broad-based energy tax would frustrate economic expansion and add to the deficit.
In contrasting GOP alternatives to Clinton's plan, Armey said, "We ought to grow down the size of government to provide more freedom to grow up the private sector" and generate the tax revenues needed to reduce the deficit. But House Democrats scorned the GOP alternatives as more of the "trickle-down economics" of the Reagan and Bush eras.
"If they had their way, they'd have us back to gravel roads," said House Budget Committee Chairman Martin O. Sabo (D-Minn.) "Their approach reflects a very, very restrictive view of government, and they want to make sure the wealthy don't pay more in taxes. In the process, that leaves us with a larger deficit."
By wide margins, the House rejected budget alternatives offered by Rep. John R. Kasich (Ohio), ranking Republican on the House Budget Committee, and by Rep. Gerald B.H. Solomon (R-N.Y.). It also rejected an alternative offered by the Congressional Black Caucus that would have cut defense spending more to boost domestic spending. The negotiations in recent weeks between the administration and conservative House Democrats who demanded more in spending cuts has largely eclipsed concerns about Clinton's fat tax package and the fact that overall federal spending will continue to mount.
Yesterday, Treasury Secretary Lloyd Bentsen had to ask Congress to raise the federal government's debt ceiling to $4.37 trillion from the current $4.145 trillion. He said the Treasury would reach the current limit on April 7 and he asked lawmakers to act by March 26 to "avoid unnecessary uncertainty in financial markets."
The House budget resolution calls for overall spending to grow from $1.5 trillion in fiscal 1994 to $1.78 trillion in 1998, largely as the result of the mounting costs of Medicare and Medicaid and other entitlement programs.
Clinton has proposed new "investment" spending for education, job training, social services, health, science and technology and community development totaling $231 billion over five years. The budget resolution contains about $4.6 billion in new spending for those purposes in fiscal 1994.
The House budget resolution calls for a total of $510 billion of deficit reduction over five years to be achieved by freezing all discretionary spending below 1993 levels, by raising taxes and by saving $8 billion by cutting civil service and military retirement cost-of-living adjustments.
Under the resolution, the deficit, which totals about $300 billion this fiscal year, would drop to $183.6 billion by 1997, before starting to rise in 1998.
The resolution pending in the Senate would achieve about $502 billion in deficit reduction over five years, in part by raising more in taxes than Clinton has proposed. Both the House and Senate resolutions count roughly $30 billion in savings from reduced interest payments on the debt that would result from the new spending cuts and from a plan to change the way the government finances its borrowing.
The plan Clinton announced Feb. 17 was designed to produce net deficit saving of $473 billion over five years. The Congressional Budget Office later challenged some of the administration's economic assumptions and revised that figure down to $406 billion -- putting added pressure on Congress to find more spending cuts.
Over the next five years, the resolution calls for defense cuts of $115.7 billion beyond those in the Bush defense plan. Republicans and some conservative Democrats have expressed alarm at the depth of the cuts and have warned they might weaken the nation's security and add to economic woes.
Staff writer Steven Mufson contributed to this report