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Grinding Out a Budget

The federal budget process is grinding into action, with the president's budget proposal due next week. It's a noisy operation, but the squeaks and groans are somewhat subdued this year. The lubricant of bipartisan agreement on the need for a balanced budget is having its effect.

Areas of disagreement, however, remain plentiful. Defense is sure to cause squabbling, as Republicans seek increased spending. On the "butter" side of the ledger, Mr. Clinton wants, but won't easily get, more money for education, to offset the costs of college for middle-class families, and for welfare, to restore benefits to legal immigrants.

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Tax cuts will be another area of difference. GOP legislators are holding to their vision of large, across-the-board reductions, including a 50 percent slash in the capital gains tax. The administration is sticking to "targeted cuts," favoring, for instance, elimination of capital gains on the sale of private homes - another bow to the middle class. But departing from the recent past, both sides are talking cuts in this area of taxation; a deal is in the air.

Harder to foresee is a deal on Medicare, though no area of spending is more central to deficit reduction. The president has put on the table a plan for $138 billion in Medicare savings over the next six years. It met, initially, with welcoming sounds from the Republican side, but GOP critics soon found parts of the plan to take issue with - particularly its shifting of home health-care costs from one Medicare account to another. The critics have a point. Medicare's climbing costs have to be honestly addressed. Clinton and Senate majority leader Trent Lott are discussing the possibility of higher premiums for wealthy Medicare beneficiaries - a hopeful sign.

Meanwhile, the drumbeat for a balanced budget constitutional amendment is again crescendoing. Proponents see the "BBA" as the surest route to fiscal responsibility. Opponents see it as a fiscal straitjacket. It is certainly a distraction from the more important work of actually shaping a budget that leaves the deficit anchor behind.

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