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Budget action reaches critical juncture on Hill.

The House of Representatives last week overwhelmingly rejected President Bush's proposed cuts in priority municipal programs, 370-42, and passed and sent to the Senate a budget blueprint to make deeper cuts in defense spending to finance reinvestment in America's communities.

The House action sets the stage for a critical vote this week to determine whether Congress wants to reinvest or disinvest in the nation's communities. The budget adopted by the House clears the way of reinvestment of more than $68 billion of defense savings into America's communities to ensure economic security and opportunity over the next five years.

Under the plan, the federal government would cut defense spending by $114 billion over the next five years, reinvesting 60 percent of the savings in public and human infrastructure in the nation's cities and towns, and 40 percent in long term deficit reduction. The plan closely resembles the resolution adopted unanimously by NLC delegates at the Congress of Cities last December, except that the Congressional plan would provide for much higher levels of defense spending.

Implementation of the House budget blueprint, H. Con. Res. 287, however, depends upon action by the House this week to pass Rep. John Conyers' NLC-supported bill, HR 3732, to amend the 1990 budget agreement and permit defense and foreign aid savings to be used for reinvestment in the nation's cities and towns. The vote is expected as early as Wednesday.

The action came as the White House threatened to veto the bill, the President repudiated the 1990 budget agreement, and U.S. Treasury Secretary Brady warned Congress that failure to approve more than $4 billion in additional international aid to Russia would be "extremely adverse."

NLC President Glenda E. Hood expressed thanks to House Budget Committee Chairman Leon Panetta (D-Ca) for his leadership in passing a budget that sets a new direction for the nation. She urged all community leaders to contact their Representatives and Senators immediately in support of the Conyers bill and a companion version introduced by Senators Jim Sasser (D-Tenn) and Paul Sarbanes (D-Md), S 2250:

"The House has offered us a blueprint to help us incrase our economic security and domestic stability. It is a plan to invest more of our taxes back into our own communities than foreign aid to our competitors. It offers a first, critical step to help us secure a better future for our children.

"I hope every leader will call upon his or her Representative and Senators to urge a strong commitment for the Conyers bill, HR 3732 and co-sponsorship of S 2250. They mark the first time in nearly a decade in setting forward an urban agenda and partnership with the nation's cities and towns.

"The message is simple: either you support investment in our kids and American communities, or disinvestment in our future."

House action

The House action came late last Thursday when the House in two votes narrowly adopted an unusual dual option budget to guide the federal government next year, after easily rejecting two alternatives. Both options reject severe cuts in priority municipal programs proposed by the administration, and the mandated tax increases on state and local governments. Both propose to cut defense spending by $114 billion over the next 5 years from current levels--more than double the amount proposed by the White House.

The first version would reinvest more than $7 billion in America's communities next year from the cuts in defense spending and provide an additional $1 billion in defense spending to be dedicated to assisting communities severely impacted by defense economic conversion. The second would dedicate all of the defense savings to deficit reduction.

Many of those savings would be reinvested in priority municipal programs next year, including:

[section] $350 million in community development block grants and EDA;

[section] $3.1 billion in highways and public transportation;

[section] nearly $300 million in rural housing and development.

[section] nearly $600 million in job training;

[section] $4.2 billion in Head Start and education;

[section] nearly $4 billion in low income housing and homeless programs.

Both House budget options propose major shifts in priorities from the administration's budget. Both would cut or freeze a number of domestic programs, including 5 percent cuts in both Congress' and the White House's budgets. The savings from those cuts enabled the House to fund priority municipal programs, and make significant investments under the economic conversion option.

That version assumes the nation's municipal leaders will be successful in working with Congress to change the 1990 budget agreement through enactment of legislation, HR 3732 and S 2250, to remove the firewall preventing defense and foreign aid savings from being reinvested in domestic discretionary programs.

The other version assumes that President Bush will veto any effort to reinvest defense savings in American communities. If that happens, as the White House has threatened, then it is unclear whether Congress could override such a veto. Therefore, the second version assumes significant disinvestment or a net overall reduction in domestic discretionary spending next year of some $6.4 billion next year in order to comply with the 1990 budget agreement, but rejects many of the severe cuts in city and town programs sought by the administration.

Earlier, after rejecting the President's budget, the House rejected an alternative by Rep. Bill Dannemeyer (R-Ca) to reduce defense spending by 5 percent, foreign aid by 25 percent, domestic discretionary assistance by 4 percent, and cap Medicaid and Medicare spending. His alternative proposed refinancing the national debt through the issuance of gold bonds.

Then the House voted 77-342 to reject an alternative offered by Reps. Adolphus Towns (D-NY) and Ron Dellums (D-Ca) to cut defense spending by 50 percent over four years, cut international security assistance by 25 percent, and increase individual and corporate income taxes on wealthy Americans to pay for both significant deficit reduction and major investment in transportation, education, housing, job training, and education.

The vote on the Conyers bill this week is expected to be close. Many of those who have expressed opposition come from Congressional districts with defense bases or contracts. They are concerned about major job losses in an election years. [paragraph] Statements last week by President Bush repudiating the 1990 budget agreement because of the tax increases it contained further confused the situation. That agreement imposed strict limits on federal discretionary spending, but much softer limits on federal tax subsidies and entitlement spending. It imposed no limits whatsoever on so-called stealth federal spending--for the S&L and commercial bank bailouts, Operation Desert Storm, interest on the national debt, and so-called emergency spending.

The President's statement also left unclear the status of the proposed tax increases the President proposed in his own budget, one of the key factors leading nearly 100 House Republicans to vote against their own President's budget.

Senate action

With the Senate Budget Committee preparing to mark up its own version of the FY 1993 budget within the next two weeks, Senate Budget Committee Chairman Jim Sasser and Joint Economic Committee Chairman Paul Sarbanes--who will serve as a keynote speaker on a special budget priorities session at NLC's Congressional City Conference next Monday--had collected 47 co-sponsors for their bill, S 2250, to tear down the firewalls between defense, foreign aid, and domestic discretionary spending on October 1 of this year, one year before their scheduled self-destruction under the law.

Passage of the legislation is critical to enable Senate consideration of what Sarbanes has called their "Marshall plan" to reinvest a much greater peace dividend in America's communities than Panetta has proposed.
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Title Annotation:Capitol Hill
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Mar 9, 1992
Words:1253
Previous Article:Nation must confront economy on local fronts.
Next Article:Senate nears closure on tax plan; veto likely.
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