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Plan features debt reduction, local investment.

The Senate passed and sent to conference with the House its version of President Clinton's $1.5 trillion 1994 federal budget resolution, S Con Res 18, last Thursday, As passed, the resolution would provide a blueprint for over $500 billion in deficit reduction and $112 billion in new domestic investment over the next five years.

The 54-45 vote came after 50 hours of debate and rejection of dozens of amendments.

The NLC-supported resolution now goes to conference with the House, with final agreement on differences expected to be approved by both houses before Congress recesses this Friday.

The Senate rejected every amendment seriously challenging the President's economic recovery plan, including amendments to increase the level of defense spending, to eliminate the President's proposed BTU energy tax, and to eliminate the reduction in tax breaks for Social Security recipients. Passage of the budget resolution cleared the way for the Senate to take up the President's economic stimulus plan late last Thursday.

In a key vote, the Senate rejected 57-42 a Republican alternative that would have eliminated all of President Clinton's new spending, added $20 billion in increased defense spending, and frozen all domestic discretionary programs going to cities and towns.

The Republican alternative also would have increased unfunded federal mandates by imposing a cap on the Medicare and Medicald entitlement programs. The cap on Medicaid would not have reduced rederally mandated services by state and local governments, in effect passing the buck to state and local governments in the form of higher, unfunded federal mandates.

New Firewails?

In perhaps the most important vote for municipal leaders, the Senate voted 56-43 to adopt a sense-of-the-Senate amendment offered by Sen. Sam Nunn (D-Ga.) urging that funds from any defense cuts in addition to those called for in the budget be used to reduce the federal deficit, not for any increased domestic investment.

The Nunn amendment, if agreed to by House and Senate conferees this week, would have the effect of erecting a new "firewall" to prevent converting defense savings to domestic investment. The Nunn amendment would not, however, prevent cuts in domestic savings from being used for increased defense spending.

Key House-Senate Differences

House and Senate conferees do not have major differences to settle in attempting to reach agreement this week. From the perspective of cities and towns, the two biggest differences are in the tax and defense areas.

The Senate version would require Congress to raise $20 billion more in taxes than either the President's plan or the House version. While the Senate budget provides no guidance on how the tax committees might raise those additional taxes, there has been some suggestion that the extra amount could be raised by limiting the President's proposed permanent extension of the municipal mortgage revenue and small issue industrial development bond programs to two years, and to make a 60 percent cut in the administration's proposed enterprise zone program.

On defense, the Senate version would impose severe restraints on the use of savings from defense cuts, while the House version would allow the flexibility provided under current federal law, where the firewalls are scheduled to selfdestruct on October 1st.

Shark Tank Process to Begin

While the budget resolution itself is not binding, it sets in process a mandatory process called reconciliation in which each of the committees in Congress is instructed to make cuts or tax increases to achieve the level of deficit reduction set in the Budget Committee's instructions. This means that the committees can ignore specific suggestions, but must meet the bottom line.

For cities and towns, adoption of a concurrent budget resolution will begin a process of a giant shark tank in the Congressional appropriations or funding committees later this year in order for the President's plan to change federal spending priorities and invest in the future to succeed.

For cities and towns, this will create some especially difficult struggles in the appropriations or spending committees, where the committees will find the President's long-term initiatives pitted against proposed cuts in existing programs. For instance, the Space Station Freedom will be pitted against both the Community Development Block Grant (CDBG) and EPA Clean Water programs. The freeze will force difficult tradeoffs if the President's plans are to succeed.


The House and Senate action should clear the way to meeting a goal of working out differences between the House and Senate before the end of the week. That would clear the pat| for action on the stimulus pack. age for cities and towns and sel in motion the next step, recon ciliation, where the budget blue print will actually become th, law later this year.
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Title Annotation:President Bill Clinton's debt reduction plan
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Mar 29, 1993
Previous Article:In Senate: debate slows stimulus; Clinton budget passes. Stimulus hostage to the 'killer amendments.'
Next Article:Local, Senate leaders back quick action on Clinton economic stimulus proposal.

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