1997 Budget Battle Looks Tougher Than '96 Brawl

Just two weeks after President Clinton signed the 1996 federal budget, the tardiest and most embattled in history, the whole feather-plucking process is about to begin anew.

But as congressional Republicans prepare to unveil their budget blueprint for 1997, the mood is dark. Last year's aplomb has been supplanted by infighting, and the goal of a comprehensive seven-year plan to erase the deficit - once sacrosanct to the GOP - seems more elusive than ever.

One Republican aide, still drained from the recently concluded 50-week 1996 budget marathon, likened opening this year's negotiations to "putting on a pair of wet socks."

To wit, Republicans say their upcoming budget strategy will be less confrontational and more attuned to avoiding the tactical mistakes that stymied them last year.

But in the end, observers say, disagreements within the Republican ranks, coupled with the presidential contest between Mr. Clinton and Senate majority leader Bob Dole, could make this year's budget battle even more intractable.

"This year will be tougher," says Stan Collender, a budget specialist at the accounting firm Price Waterhouse. "Republicans have even less time, and they've already had a year and a half of acrimony. There's an election coming and no consensus within the party about which way to go. I don't believe they've developed an acceptable plan."

This interparty schism was evidenced last week as Sen. Alfonse D'Amato (R) of New York and Senator Dole blasted House Speaker Newt Gingrich and his troops for putting forth "the wrong message" in last year's budget debate.

Although Mr. D'Amato's remarks brought a rebuke from Mr. Gingrich, Republicans acknowledge making crucial miscalculations. One key Budget Committee staffer, who requested anonymity, admitted Republicans erred in allowing two government shutdowns to occur and in assuming Clinton would capitulate to their demands.

This year, the aide adds, Republicans plan to emphasize the programs they would preserve and protect, rather than the savings they hope to garner from emotionally charged programs such as Medicare, welfare, and environmental protections.

One problem last year, the aide continues, was that Republicans spent too much time talking about relatively arcane subjects, such as the difference in economic assumptions between the president's Office of Management and Budget and the Congressional Budget Office (CBO), rather than addressing issues voters could relate to.

"While Clinton fastened onto priorities like protecting education and the environment, we talked about policy-geek stuff," the aide says. "Even though [Clinton] vetoed a welfare-reform plan, everyone thinks he's doing a great job."

In addition, the staffer says, Republicans wrapped too many key reforms, from Medicare savings to tax cuts, into one giant reconciliation bill, instead of breaking them out separately and allowing Clinton to sign some measures and reject others. This year's budget, he adds, will be more segmented.

Nevertheless, Republicans argue that too often, the public ignores the fact that even without entitlement reforms, the 1996 budget managed to shave $23 billion from the federal deficit, and that the '96 budget is on track to balance in six years despite Clinton's rejection of the GOP's comprehensive plan. "It's incredible how far we moved the debate in our direction," the aide contends.

Still, Democrats and Republicans agree they are "miles apart" on a comprehensive balanced budget plan, and that a bipartisan compromise bill fashioned by Senate moderates John Chafee (R) of Rhode Island and John Breaux (D) Louisiana, is not likely to make headway, particularly because it would seek some savings from Social Security.

In addition, the upcoming presidential race, which pits a Democratic president and a Republican Senate majority leader, dims the likelihood that either side will see a political advantage in signing a balanced budget accord. The most deficit-hawks can hope for, observers say, is that Dole will be able to resuscitate a balanced budget amendment to the Constitution, slated for consideration this week. Last year, the amendment failed in the Senate by one vote.

BUT some things have not changed. Once again, the wild cards in the budget-balancing effort are entitlement programs like Medicare and Social Security, which make up a thick slice of the federal budget.

In testimony last month, CBO director June O'Neill warned that unless savings can be wrung from these programs, "the deficit will begin to grow steadily in 1997."

According to Price Waterhouse's Mr. Collender, the real key to balancing the budget is not presidential politics but public fortitude. In the last decade and a half, he says, most of the easy budget-cutting decisions have been made. Too many politicians, he argues, have led the public to believe the budget can be balanced painlessly.

"The public can entertain two views at the same time that are contradictory," adds Mickey Edwards, a former Oklahoma congressman who teaches at Harvard University. "The public has a desire to balance the budget and to do something about entitlements, as long as it's not their entitlements."