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Bipartisanship Reigns at Budget Signing

By John F. Harris and Eric Pianin
Washington Post Staff Writers
Wednesday, August 6 1997; Page A01

A partisan showdown that dominated Washington politics for nearly three years came to a placid ending on the White House South Lawn yesterday, as President Clinton signed legislation that cuts taxes for millions of Americans and puts the government on a path to a balanced budget by 2002.

Brushing aside the acrid disputes and allegations of bad faith that had separated them so many times in the past, Clinton and House Speaker Newt Gingrich (R-Ga.) celebrated the new accord as a model for how divided government can work and bathed each other in praise for making it possible.

Clinton took credit for signing "the first balanced budget in a generation" – assuming the government's estimates of economic growth and spending come true over the next five years. In language reminiscent of President Ronald Reagan, he said Democrats and Republicans, by choosing cooperation over conflict, had ensured that "the sun is rising in America again."

The two bills Clinton signed yesterday, using 40 pens, put into practice the broad concepts the administration and congressional Republicans embraced last May. Even with general agreement in hand, arriving at the precise details was a tense, protracted process that nearly fell apart several times before the two sides came together last week.

The tax bill Clinton signed includes a $500-per-child tax credit for families with incomes under $110,000 that had been promoted by both sides. It also contains Clinton's plan for $1,500 tax credits to offset the cost of college tuition, as well as reductions in capital gains and estate taxes that had been principal goals for the GOP.

The spending measure enacted yesterday cuts the growth in Medicare, the health program for senior citizens, by $115 billion over five years, and Medicaid, the health program for poor and disabled people, by $13 billion over the same period. In his reelection campaign, Clinton lashed Republicans for proposing larger cuts – saying they would go for tax cuts to the rich – but in the end agreed to the smaller reductions to prevent the programs from impending bankruptcy.

Gingrich, who led a strategy of GOP confrontation with Clinton during 1995 and 1996 that yielded only budget stalemate and two government shutdowns, said 1997 proved more productive because Clinton, coming off his reelection victory, chose "to reach out a hand and say, `Let's work together.' "

And Gingrich suggested that his own party, which barely hung on to its congressional majority last year, had been chastened by the public. The budget accord, he said, proves that "the American constitutional system works, that slowly, over time, we listened to the will of the American people, that we reached beyond parties, we reached beyond institutions, and we find ways to get things done."

Yet Clinton too had to accede to ideas he had once been loath to embrace. After the GOP came to power in Congress at the start of 1995, Clinton proposed a budget that forecast annual deficits of $200 billion or more into the indefinite future. His advisers warned publicly that trying to reach balance by 2002, as Republicans insisted, was a dangerous idea that might throw the economy into recession.

As for tax cuts, they too were driven by the GOP. Clinton had proposed a middle-class tax cut in the 1992 election, but he dropped the idea after taking office. Republicans forced him to pick it up again after their takeover in 1994.

But even as Clinton yielded on broad concepts, yesterday's agreement reflects how he brought Republicans to heel on many specifics.

At his insistence, families earning as little as $18,000 a year and paying no income tax would benefit from the new credit. Nearly $40 billion in higher education tax credits were added to the tax bill, with most of it earmarked for Clinton's programs. Republicans were forced by Clinton to drop their proposal for indexing capital gains against inflation – a provision the Treasury claimed would explode in cost in the coming decades. And the legislation provides $24 billion of expanded health care programs for low-income children, about $8 billion more than House Republicans wanted to spend.

In the aftermath of the budget wars of 1995, there were dozens of explanations for the failure. Angry Republicans blamed Clinton's intransigence, arguing Clinton had made the cold calculation that a balanced budget deal was not in his political interest. Democrats claimed that an arrogant Republican Congress had overreached – attempting to jam through major reductions in Medicare and other programs and a huge tax cut despite Democratic objections and a mounting public alarm over their tactics.

This time – with the 1996 election behind them and a booming economy that greatly simplified their challenge of balancing the budget – the two sides concluded the time was ripe to sue for peace and negotiate a settlement.

Gingrich, who describes the failed budget talks of 1995 as "one of the most bitter things I've gone through," had to be convinced by Senate Majority Leader Trent Lott (R-Miss.) that it was worth trying again.

A breakthrough came early in the process when the new administration budget negotiating team, headed by White House Chief of Staff Erskine B. Bowles, convinced Gingrich and Lott that Clinton was sincere about wanting a deal.

Yesterday, the administration went out of its way to be solicitous of Gingrich. Vice President Gore even asked the speaker's wife, Marianne, to stand and be applauded by the crowd.

The question that hung over yesterday's ceremony was whether the budget deal will prove to be an aberration or a pattern for the future.

One White House aide boldly predicted that the accord marked the end of a two-decade period in which the debate over taxes and social spending dominated presidential politics – with both sides ready to call a truce and turn their attention to other subjects.

Rep. John M. Spratt Jr. (D-S.C.) said that by reaching agreement, Democrats had erased their public reputation for being heavy taxers, always willing to spend more. "This is not an issue that'll keep hitting us on the chin," he said.

But other comments suggested that budget bipartisanship may be short-lived. Rep. John Linder (R-Ga.), chairman of the National Republican Congressional Committee, crowed in a statement that Republicans had overturned "40 years of the misguided policies of liberal Democrats in Congress."

Rep. Steny H. Hoyer (D-Md.) said there remain sharp philosophical divisions in Congress. "I think there'll be more budget battles because there is still a large faction of the Republican Party that doesn't believe government ought to do anything on the domestic side."

And he cautioned against assuming the budget will truly be balanced in five years.

"We've projected in the past," Hoyer said, only to see the projections overturned and the deficits continue.

Budget politics are likely to continue, moreover, because the five-year plan signed yesterday does not address the long-term costs of government health care and retirement programs – projected to skyrocket in cost after the turn of the century.

While the administration and GOP leaders ultimately tabled proposals for charging higher premiums on affluent Medicare beneficiaries and raising the eligibility age from 65 to 67, they did agree to establish a commission to recommend long-term structural changes in Medicare within two years.

"I pledge right here," Gingrich said, "working with the president, that we will work on a bipartisan basis, not just to appoint a good commission, but to enact in 1999 the right savings and the right steps to reform the system for the baby boomers and their children."

© Copyright 1997 The Washington Post Company

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