Clinton, GOP Chiefs Heap Praise on Pact, but Critics Emerge

By JONATHAN PETERSON

July 30, 1997 12 AM PT

TIMES STAFF WRITER

WASHINGTON — Citing “an historic agreement that will benefit generations of Americans,” President Clinton and much of the rest of official Washington lavished praise Tuesday on a balanced-budget deal that has eluded political leaders for decades.

Yet even after the White House and congressional leaders publicly celebrated the accord, the two sides were negotiating technical details of the children’s health initiative, child tax credit and a few other tax issues until late Tuesday night.

As one example, the White House ultimately rejected a congressional proposal to allow penalty-free withdrawals from individual retirement accounts to pay for private schooling.

Finally, after a four-hour session inside the Capitol, the White House team, led by Chief of Staff Erskine Bowles, and the GOP side, led by House Speaker Newt Gingrich (R-Ga.) and Senate Majority Leader Trent Lott (R-Miss.), “locked down” the entire deal.

Congress now plans to vote on the spending package today and the tax bill on Thursday before going into recess at the end of the week.

“We still have to pass this agreement,” Clinton said earlier Tuesday, contending that Democratic and Republican supporters of the accord had a “solemn obligation to go out there and keep moving” and turn the deal into law.

One dissenter to the day’s spirit of conciliation was House Democratic Leader Richard A. Gephardt (D-Mo.), who boycotted the White House ceremony celebrating the pact and released a statement that called the deal shortsighted. He termed it especially inadequate in funding education and addressing the needs of working families.

Other criticism emerged from tobacco-growing states, where producers would be affected by a 15-cent hike in the cigarette tax.

And true-believing conservatives blasted the plan as too costly and a retrenchment from the goal of slashing the federal government.

For the most part, however, advocates of the agreement depicted it as an extraordinary political compromise that would strengthen the economy, help households and balance the budget in 2002. The government last reported a balanced budget in 1969.

“We have the pleasure of announcing today an historic agreement that will benefit generations of Americans,” Clinton declared at the ceremony on the White House’s South Lawn, as members of the administration cheered.

The deal would cut taxes by an estimated $91 billion in the next five years and impose about $900 billion in savings from projected government growth over the next 10 years. Its particulars include cutting capital gains taxes (the top rate will decline to 20% from 28%) and providing most families with tax credits--reaching $500 per child in 1999--for children 16 and under. The White House and congressional leaders also agreed on new tax breaks for higher education, restoration of benefits that had been taken away from legal immigrants and $115 billion in Medicare savings over the next five years.

Clinton said the agreement would “balance the budget in a way that honors our values, invests in our people and cuts tax for middle-class families.”

“After decades of deficits,” he continued, “we have put America’s fiscal house in order again.”

Proponents said the budget and tax measures, which are embodied in two large bills, will be passed before members begin a monthlong vacation Friday.

In large measure, brisk economic growth that has reduced the budget deficit beyond official forecasts made it possible to come up with a plan that included GOP tax-cut goals, along with Clinton’s spending requests for education, a children’s health initiative, the environment and other areas. This resulted in a convergence of interests between well-known Democratic and Republican adversaries.

“All we have to do is go out and tell people what it is. It sells itself” among Republicans, exulted House Majority Leader Dick Armey of Texas, a staunch advocate of tax cuts.

GOP congressional leaders formally announced the deal with a festive rally on the House steps. Flanked on one side by khaki-shirted Boy Scouts and on the other by a group of Florida schoolchildren in purple T-shirts, House and Senate leaders praised the deal as an effort by lawmakers to put aside partisan bickering.

Declared House Speaker Newt Gingrich (R-Ga.): “It is a great victory for all Americans. It is a bipartisan victory. We join the president in working together to truly create a better future for all of us and our children.”

No less a liberal icon than Sen. Edward M. Kennedy (D-Mass.) appeared to agree, participating in the White House ceremony and conceding, “I’m inclined to vote for both” the tax and spending packages.

“This budget agreement gives America’s children back their shot at the American dream,” said Senate Minority Leader Tom Daschle (D-S.D.).

While some hard-line House conservatives remained disappointed in the accord, it was Gephardt, the House minority leader, whose chilly response was most apparent Tuesday.

“The budget and tax agreements announced today attempt to balance our federal budget in the short term but [are] shortsighted because [they do] not address our nation’s needs in the long term,” Gephardt, who is interested in running for the presidency in 2000, said in a statement.

” . . . I know that those who question the budget agreement are going to be considered by many to be the skunks in the Rose Garden. At this moment in history, balancing the budget for the next few years is all too easy, but building a stronger economy, a shared prosperity, and a stable society in the next century is all too difficult. Unfortunately, this agreement sacrifices tomorrow’s hopes for today’s headlines,” Gephardt said.

But if Gephardt declined to join in the White House celebration, his expected rival for the next Democratic presidential nomination--Vice President Al Gore--exploited the media attention, extolling the budget deal, with the president at his side.

“Four-and-a-half years ago, no one thought that we could possibly cut spending, shrink the federal work force to its smallest size since the 1960s, and, at the same time, give this country more education, more health care for our children, better protection of the environment, and real tax relief for families. But that is what President Clinton has done for the United States of America.”

Times staff writers Sam Fulwood III, Heather Knight and Lauren Shepherd contributed to this story.