CNN U.S. News

Budget battles looming between Congress, Clinton

Money Shipman

September 24, 1995
Web posted at: 9:20 p.m. EDT (0120 GMT)

From Correspondent Claire Shipman

WASHINGTON (CNN) -- President Clinton slipped away Sunday to Scranton, Pennsylvania for a visit with Mrs. Clinton's relatives, but there was no calming of the political tussle in Washington.

The latest challenge tossed out by Newt Gingrich -- that the Republican Congress might refuse to approve an increase in the country's debt limit -- was still making waves. Without an increase in the debt ceiling, which Republicans and Democrats had already agreed to, the government could be forced to default on Treasury obligations.

House Majority Leader Dick Armey proposed giving the president temporary authority to make some payments.

D. Armey

"The President would have something that would be akin to a reverse line item veto," Armey said (51K AIFF sound or 51K WAV sound). "He could pay out those bills that are urgent and necessary, like we do in our household, and defer payment on those bills where deferred payment is possible."

But White House Chief of Staff Leon Panetta said such a structure would be irresponsible, embarrassing, and would drive the markets crazy.

L. Panetta

"Frankly, the debt ceiling ought not to be part of the larger issue related to the budget."

-- Leon Panetta, White House Chief of Staff

"We have a responsibility to protect the credit of the United States of America. We ought not to use that as a gun, somehow, to get our way on these other issues." (162K AIFF sound or 162K WAV sound)

Clinton advisers say they think Gingrich has backed away slightly from the explosive subject -- and they hope it will drop.

On the budget itself, the Clinton camp is threatening vetoes, but working toward compromise. Both sides say welfare reform should get through. And on Medicare, White House aides say there's room to maneuver in such areas as means testing, and age limits, for example.

The administration is also likely to accept some cuts in capital gains taxes -- if they target the middle class. Clinton aides say in return, they think Republicans will accept smaller tax cuts, and might back off the goal of having a balanced budget in seven years.

Administration officials seem hopeful, but still worried, as they head into the final stretch. As one senior aide put it -- if the White House and Congress can't solve their differences by year's end, the only winner will be Colin Powell.

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