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HEADLINE: GOP Plan Boosts Defense, Education Dollars

BYLINE: George Hager, Washington Post Staff Writer

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Senate Republicans began unveiling details of their fiscal 2000 budget yesterday, showcasing boosts in defense and education spending, a major 10-year tax cut and plans to lock away more surpluses for Social Security than President Clinton has proposed.

The proposal, which provides specific numbers for a budgetary framework announced by House and Senate Republican leaders two weeks ago, would cut taxes by $ 15 billion next year and nearly $ 800 billion over the coming decade. It would boost defense spending by $ 10 billion next year and provide an extra $ 3.3 billion for education.

"Overall, we have a very good budget," Senate Budget Committee Chairman Pete V. Domenici (R-N.M.) said as the committee began deliberations he predicted would produce a finished product by the end of the week. The House Budget Committee is scheduled to approve a nearly identical budget today. Democrats quickly declared the GOP proposal lacking, criticizing it for what they said was a plan to shortchange Medicare in order to make room for tax cuts. "Is the first thing that we do to provide tax cuts for those in a higher income bracket, or do we save Medicare?" said Sen. Frank R. Lautenberg (N.J.), senior Democrat on the Budget Committee.

In an unexpected twist, the GOP budget would set aside $ 132 billion over the next 10 years that could be used for Medicare reform. That is less than the roughly $ 350 billion the White House demanded be put away, but it appears to give Republicans some defense against persistent Democratic criticism that they would underfund the big health care program for the elderly, which is projected to go bankrupt after 2008.

As for Social Security, Domenici insisted his budget sets aside all $ 1.8 trillion of the Social Security surplus over the next 10 years, while Clinton's proposal would protect only $ 1.3 trillion.

In the more immediate universe of Congress's annual spending bills, the proposed budget would increase defense spending by nearly $ 10 billion above the current level, which includes onetime emergency funding approved last fall. The increase from the nonemergency level would be about $ 18 billion.

The budget plan would increase spending for elementary and secondary education by $ 3.3 billion next year and $ 28 billion over the next five years, fulfilling Domenici's pledge to allow Republicans to vie with Democrats as protectors of education.

At the same time, though, the budget would require GOP appropriators to live within strict spending caps set in the 1997 balanced-budget agreement, despite widespread bipartisan fear that Congress will not be able to pass spending bills this year without more money.

While the budget plan does not mandate where appropriators should cut back in order to keep spending below the caps, it offers some ideas. It suggests saving $ 2.8 billion next year by privatizing the Government National Mortgage Association (Ginnie Mae), which guarantees securities based on government-insured mortgages.

It suggests repeal of the Davis-Bacon Act, which effectively requires contractors on government construction projects to pay union scale. It also suggests freezing or terminating lower-priority programs.

The budget would cut taxes by at least $ 15 billion next year, and by $ 778 billion in the 10 years from 2000 through 2009. Domenici said the larger tax cuts would begin to kick in as the non-Social Security budget surplus grows in later years.

Domenici brushed aside charges that the GOP is cutting taxes for the rich, insisting that the budget mandates no specific tax cut. However, he said the budget could accommodate a reduction in the so-called marriage penalty, extension of the research and development tax credit and other targeted tax breaks.

And in a disappointment for cash-strapped appropriators, he said that if the Congressional Budget Office projects a larger surplus when it redoes its fiscal 2000 projections this July, the extra money would go for tax cuts, not spending bills.

LOAD-DATE: March 17, 1999