December 8, 1995
Web posted at: 12:30 a.m. EST
WASHINGTON (CNN) -- In his new seven year balanced-budget plan, President Clinton Thursday proposed about $140 billion more in net savings than in his 10-year plan unveiled last June.
One big portion of those savings, $32 billion, will come from adjusting the Consumer Price Index (CPI) to reflect lower inflation projections than in the earlier plan. That means millions of Social Security and other entitlement recipients will receive smaller annual increases than under the earlier plan.
There will also be an additional $64 billion across-the-board cut in non-defense spending. Education and environmental programs will be exempt.
White House officials say they now believe it will be impossible to reach a balanced-budget agreement before December 15, when a temporary spending resolution to keep the government running expires.
Clinton will ask that Congress approve another temporary spending measure, called a continuing resolution, that will allow the government to operate until January 26. During this interim period, negotiations to achieve a balanced budget would continue.
As part of his new proposal, Clinton is asking that any budget agreement include a line-item veto, which would allow presidents to veto specific spending measures included in broader appropriations bills.
Clinton's plan also calls for an agreement increase the nation's minimum wage from $4.25 an hour to $5.15.
This will be the president's third budget plan this year. In January, he released a budget that did not reach balance. In June, he released a 10-year plan that would balance according to economic forecasting data from the Office of Management and Budget (OMB). However, Congressional Budget Office (CBO) estimates indicated it would not.
His new plan also uses OMB estimates, which the Republicans argue are too optimistic. The CBO will release its revised estimates next week, and many officials believe they will be closer to the OMB numbers, though still not as optimistic.
The White House is also ready to accept a mutually agreed-upon enforcement procedure to make sure there will be additional savings if the economic assumptions prove incorrect.
The new Clinton plan includes the same $124 billion Medicare and $54 billion Medicaid savings the president proposed in June. It also includes the same $98 billion middle class tax cut. The Republicans want the tax cut to be twice that much, and want twice as much reduction in the projected growth of Medicare and Medicaid spending.
The new Clinton cuts include:
These cuts come to $151 billion, but the administration is also proposing another roughly $8 to $10 billion increase in some spending, including for student loans and veterans' benefits.
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