Senate Narrowly OKs Clinton Budget : Deficit: Gore's tie-breaking vote makes the final tally 51-50, ending a bitter battle and giving the President a major triumph. Victory was assured when Sen. Kerrey announced he would reluctantly back the plan.

By JIM LUTHER

Aug. 8, 1993 12 AM PT

ASSOCIATED PRESS

WASHINGTON — President Clinton won enactment of his deficit-reduction plan from a deeply divided Congress Friday night, prevailing 51-50 in a Senate showdown that stood as a crucial test for his young Administration.

Vice President Al Gore cast the tie-breaker in the Senate. But the decisive vote came from Sen. Bob Kerrey (D-Neb.), the last senator to make up his mind. He declared he “could not and would not cast a vote that would bring down” the Administration.

The bill, with claimed deficit savings of $496 billion over five years, cleared the House on a 218-216 vote Thursday night.

“Certainly not a mandate, two votes in the House and one in the Senate,” Senate Republican Leader Bob Dole observed acidly just before the roll call that dispatched the plan to the White House without a single GOP supporter in either chamber.

Democrats said the final passage marked the end of gridlock and pledged additional spending cuts later in the year.

The plan’s bitter pill of tax increases and spending restraints includes a gasoline tax increase of 4.3 cents per gallon. It also reverses 12 years of Republican policies by dumping most of the new tax burden onto the wealthy.

“Sometimes the right thing is not the easy thing,” Senate Majority Leader George J. Mitchell (D-Me.) said in a final plea for the bill. Vote yes, “not for your reelection . . . (but) . . . based on what is best for our country.”

“This is a bad plan,” countered Dole. “It raises taxes, and it does little to effectively reduce government spending or control the deficit.”

The packed Senate galleries erupted in cheers when Gore announced his vote and declared, “The President’s economic program is passed.”

All 50 Senate votes in favor came from Democrats. All 44 Republicans and six Democrats voted no.

But the suspense had been drained from the roll call roughly two hours earlier, when Kerrey, a rival of Clinton’s during the 1992 campaign for the Democratic presidential nomination, announced his support.

Enactment of the bill capped months of drafting, bargaining and polishing by the President and the Democratic leaders in Congress as they squeezed support from Democrats concerned about raising taxes. As late as Thursday night, the President was offering concessions to recalcitrant House Democrats, pledging his support for votes later this year on additional cuts in federal spending.

It was not known what Clinton’s discussions were with Kerrey, although the two men met privately in the White House early in the day. Hours of suspense followed, capped by the Nebraskan’s address to a hushed chamber.

“President Clinton, if you are watching now, as I suspect you are, I could not and would not cast a vote that would bring down your presidency,” Kerrey said.

“You do not deserve and America cannot afford to have you spend the next 60 days quibbling over whether we should have this cut or this tax increase,” he said.

When Kerrey finished, Senate Finance Committee Chairman Daniel Patrick Moynihan (D-N.Y.) and several other Democrats applauded and some shook his hand. Moynihan strode over to Kerrey and slapped him on the back.

Democrats called the bill an opportunity to regain control of the economy while Republicans accused the Democrats of being too eager to raise taxes and too slow to cut spending.

Sen. Robert Smith (R-N.H.) said Clinton deserved a place on Mt. Rushmore if the plan could deliver all the Democrats claimed for it. He added tartly: “The stonecutter can relax.”

Sen. Dennis DeConcini (D-Ariz.), who announced his support earlier in the week after intense White House lobbying, hinted at the unease of many supporters. “I don’t like to pay taxes either, but the time has come that we have to do something about the deficit,” he said. “And we have to do it today.”

Sen. Alfonse D’Amato (R-N.Y.) waved a magician’s wand while accusing Democrats of trying magic to make the deficit disappear. “Abracadabra, alakazam, presto--we have turned into a circus of magicians.”

Sen. James Sasser (D-Tenn.) was not amused. “Perhaps if he ever becomes weary of the Senate . . . he would do very well on the carnival circuit as a barker,” Sasser said dryly.

Democrats say the bill will raise taxes by $241 billion and eventually reduce spending $255 billion over the next five years. More than 90% of the taxes would come from those with incomes over $100,000. Some of the more affluent retirees would pay tax on more of their Social Security benefits, but the only provision that would hit the middle class directly is a 4.3-cent-a-gallon increase in the gasoline tax.

The major spending restraint in the bill would cut the growth of the Medicare health program for the elderly by $56 billion. A defense reduction of $70 billion or more is anticipated but not assured.

In a full day of debate, Republicans failed to unravel the measure. On a nearly party-line vote of 56-44, the Senate rejected a GOP charge that the plan’s retroactive income-tax increases on the 1.5-million richest couples and individuals was unconstitutional.

“We’re even raising the (estate tax) rates on the dead,” shouted Dole. “We’re talking about $10 billion being taken away from individuals, businesses and families that have lost loved ones since Jan. 1.”

But Mitchell said retroactive tax increases are as old as the income tax, accepted by the courts as constitutional.

Nevertheless, Mitchell said, “for short-term purely partisan political gain--to score a political point” Republicans were asking senators “to come forward and vote for a proposition which they know not to be true. That is a sad day in the United States Senate.”

The retroactivity issue developed a life of its own during the week and was mentioned by Republicans as often as any other before the House approved the compromise bill.

Lawmakers reported heavy concern about retroactivity among voters, even though 98.5% of Americans would face no tax increase at all. The tax on the dead that Dole referred to would apply only to estates worth more than $2.5 million.

Democrats noted that dozens of retroactive tax increases have been enacted over the years; nine provisions in the 1990 deficit-reduction bill took effect retroactively.

But the issue, insisted Sen. John Danforth (R-Mo.) was whether retroactive increases meet the test of fairness. The Senate ruled that they do, with only Bob Packwood (R-Ore.) siding with Democrats in the majority and Richard Shelby (D-Ala.) breaking party ranks to vote with Republicans.

There was one major area of agreement between the parties about the bill: It was not the final answer to the government deficit. It will require a continuing effort to rein in spending.

Even if the package ultimately produces the promised $496 billion in deficit reduction over five years, the government debt--most of which was rung up in the 1980s--will still increase by $1 trillion over the next five years. But without the bill, the increase would be $1.5 trillion.

The 1994 deficit is projected at $302 billion without the bill; with it, $255 billion. It is projected to cut the 1998 deficit of $361 billion to $213 billion.

Republicans say the bill will not work because the tax increases will hurt the economy and the spending cuts will never develop.