Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, June 24, 1993                   TAG: 9306240212
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A1   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

SENATE KILLS GOP PROPOSAL DEFICIT-CUTTING PLAN CALLED BREAK FOR RICH

A 55-43 vote that doomed the GOP proposal apparently cleared the way for passage today of a Democratic package of tax increases and spending cuts designed to reduce the federal deficit by $516 billion.

In opposing the Republican measure, 54 Democrats were joined by Sen. James Jeffords, R-Vt., while Sen. Richard Shelby, D-Ala., and 42 GOP senators voted in favor of the proposal.

The Republicans' intent was clear, said Majority Leader George Mitchell, D-Maine: "Protect those whose incomes exceed $200,000, exempt them from the burden of deficit reduction . . . shift the burden onto - who else? - the middle class."

President Clinton used similar language at the White House, calling the GOP plan "nothing but a shield to keep the wealthiest Americans from paying their fair share."

Republicans said their proposal was a clear response to voter demand for a plan that would "cut spending first."

"This is a small-business approach: No taxes, no user fees, no new spending programs - a spending cut," said Minority Leader Bob Dole, R-Kan. "So let's give taxpayers a chance."

The GOP plan was designed to cut the deficit by about $367 billion over five years - $20 billion more than Republicans give Democrats credit for proposing. Democrats said it lacked specifics, simply decreeing, for example, that Medicare spending would be subject to severe restraints without saying how.

It would have limited spending for Medicare, pensions and similar mandatory spending to a level $50 billion below the Democratic version, starting in 1996. Social Security would have been exempt. It would have frozen discretionary non-military spending, which covers a range of programs including schools and highways, at current levels for five years.

Those cuts would be so severe, argued Sen. James Sasser, D-Tenn., manager of the Democratic bill, that "weeds would be growing in the streets of the cities . . . and it's dangerous enough now."

But Sen. Pete Domenici, R-N.M., accused Democrats of producing an "Alice in Wonderland" plan that would drain the economy of money needed for job creation without controlling mandatory spending programs that threaten to bankrupt the country.

The Democratic bill, which follows Clinton's principles but varies in some details, would raise taxes by $249 billion over the next five years, with 87 percent of the increase falling on those earning more than $100,000. The only impact on most middle- and low-income families would come from a 4.3-cents-a-gallon increase in the tax on motor fuels. Some retirees would pay more tax on their Social Security benefits.

The bill would restrain the growth of mandatory spending programs, including Medicare and Medicaid, by $107 billion. It anticipates - but does not ensure - that Congress and the president will agree later on spending cuts, fees and other changes totaling $110 billion. Expected savings on interest costs would bring the total deficit cut to $516 billion.

Thus, over the next five years, Democrats said, there would be about $1 of spending cuts for each $1 of new tax. Republicans preferred to emphasize that in 1994 there would be only about $8 billion of spending cuts but $37 billion of new taxes.