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GOP Walks High Wire on Budget

Its tax-and-spending cuts stir splits in own ranks, Democratic ire

ANYBODY can write a plan to balance the federal budget, if you think about it.

Take the back of an envelope and jot down the government programs you think are too big, shouldn't exist at all, or should be handled by states or cities or the private sector. For months, interest groups around Washington have been doing just that.

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But this week, the extraordinary took place: Republicans in the House and Senate put forth serious proposals that, at least on paper, would balance the federal budget in seven years. These budget resolutions are more than statements of philosophy. If passed, they become blueprints that Congress must follow as it allocates taxpayers' money.

The GOP budget committee chairmen have also boldly confronted a politically powerful voting bloc: senior citizens.

Even though Social Security has been kept off the table, both the House and Senate plans call for major savings from cutting Medicare and Medicaid, the federal health-insurance programs for retirees and the poor. Lobbying by senior groups is already gearing up.

So far, the Republicans appear undaunted. The House Budget Committee approved the resolution early Thursday, less than 24 hours after it was unveiled.

Whether the budget could actually be balanced by the year 2002 is a matter of debate.

''I'd say the chances of it's happening are close to nil,'' says Allen Schick, a budget expert at the Brookings Institution in Washington, D.C. ''It would mean no recession from 1991 to 2002,'' and the country has never gone that long without a recession.

''To me, the bigger story is not the balanced budget; that's just a statistic,'' Mr. Schick continues. ''It's what's behind the numbers: an end to a half-century in which Americans forgot that they really hate government,'' he says referring to moves now to shrink Washington's role.

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What these resolutions represent, he concludes, is ''a frontal attack on the entity called government.''

The two GOP plans are different, but both follow the same basic outline. Both would eliminate scores of federal agencies, programs, and even some Cabinet departments. Both envision smaller increases in spending on Medicare than the program is expected to require.

A key difference lies in the area of tax cuts. The House plan calls for a $340 billion tax cut over seven years, while the Senate calls for none, preferring to wait until the budget is balanced before cutting taxes.

As a result, the House plan projects greater reductions in spending than the Senate -- $1.4 trillion in the House vs. $961 billion in the Senate.

But budget analysts expect the final package to contain at least some tax cuts. After all, they point out, there is even some ground for bipartisan agreement: President Clinton has proposed his own tax cuts to help people pay for education costs.

Administration officials reacted to the Republican budget proposals by repeating some of their tried and true arguments: Slowing the growth of federal spending at such a rapid pace could endanger the economy.

Cuts in the growth of Medicare and Medicaid would hurt society's weakest members, the poor and the elderly. And, chief of staff Leon Panetta reiterated to reporters, ''They are basically saying ... we're going to balance this budget on the backs of the elderly and on the backs of children.''

The difficulties that lie ahead for the Republicans in cutting specific programs were underscored when Rep. Charles Stenholm, a conservative Democrat from Texas and a strong supporter of a balanced budget, chastised the GOP for plans to cut some $9 billion in agriculture subsidies.

He says American farmers would not be able to compete in the international market.

Washington is still coming to grips with the magnitude of the Republican proposals, which have sent some Cabinet chiefs and agency heads scrambling to defend their livelihoods.

Following is a rundown of some of the proposed changes:

* The Senate Budget Committee would close one Cabinet agency, the Commerce Department. The House Budget Committee would close Commerce, as well as the Education and Energy Departments. Some functions of those agencies would cease to exist, while others would be transferred to other parts of the government.

* The House committee would lower the Consumer Price Index by 6/10 of 1 percent, a move some economists say would more accurately reflect the impact of inflation. This would allow the government to lower the increases in government social benefits that are tied to inflation.

* The Senate committee would cut job training by 25 percent and cut funding for National Endowments for the Arts and Humanities in half. The House would phase out the Corporation for Public Broadcasting.

* The Senate would close the Interstate Commerce Commission and end subsidies to Amtrak and other transportation programs. The House would end support for the Tennessee Valley Authority.

Not everyone, though, would face the budget ax. The Senate would boost the budget of the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Internal Revenue Service. Also, the space station would not lose funding.

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