GOP Senators Unveil Budget

Senate Republicans Tuesday unveiled a $1.73 trillion budget plan that would maintain spending caps while producing an $8 billion surplus in fiscal 1999 and a cumulative surplus of $146.5 billion during the next five years.

"We don't have any new Washington-based programs of any significance in this budget," Senate Budget Chairman Pete Domenici, R-N.M., said at the start of the markup.

Many Republicans on the panel--ranging from moderate Sen. Olympia Snowe of Maine to conservative Sen. Phil Gramm of Texas--immediately endorsed the plan, although Sen. Rod Grams, R-Minn., said it still spends too much money and cuts taxes too little.

The plan maintains the discretionary spending caps called for in last year's balanced budget agreement, but sets highway spending at levels contained in the recently passed highway bill.

The Appropriations Committee would be asked to offset $18.5 billion in outlays for highways and $5 billion in budget authority for transit. Mandatory offsets for the spending include the repeal of the Veterans Affairs' decision to classify smoking as a service-connected disability, Medicaid cost reforms, cuts in social service block grants, termination of federal crop insurance for tobacco producers and the Market Assistance Program, and food stamp administrative savings, as well as an Federal Housing Administration loan limit increase. Several of the offsets were included in the president's budget.

Domenici's plan identifies some $30 billion in tax cuts, including the extension of research tax credits, extension of the Generalized System of Preferences, IRS reform, reform of the so- called marriage penalty and childcare tax relief. The budget also would establish a tobacco reserve fund, which would set aside any funds from a tobacco settlement for Medicare Part A. The blueprint also includes a sense of the Senate resolution to sunset the federal tax code on Dec. 31, 2001.

The Domenici budget would also provide increases for education programs, including a $2.5 billion boost in special education programs and a $522 million increase for an education reform initiative, which would provide additional flexibility to states and school districts. Funding for the National Institutes of Health would climb 11 percent, to $15.1 billion in budget authority, and the budget calls for $125 million for a teen smoking prevention program.

Republicans and Democrats agreed that a major fight is expected over the use of tobacco funds.

Domenici said he wants to set the funds aside for Medicare, contending there is a major link between tobacco use and health programs. However, Budget ranking member Frank Lautenberg, D-N.J., said the Domenici plan endangers the tobacco settlement because it does not allow the funds to be spent on other health programs.

Democrats are expected to release their own budget proposal, which would spend tobacco funds on a variety of programs. While that plan is based on the Clinton budget, Domenici said the president's budget could not be offered because the Congressional Budget Office said it would violate spending caps.

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