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Number crunching

$135 billion windfall could ease budget negotiations

December 12, 1995
Web posted at: 12:45 a.m. EST

WASHINGTON (CNN) -- Washington budget drafters received an early -- and extravagant -- Christmas present Monday.

Because the economy is doing better than expected, the Congressional Budget Office determined it will take $135 billion less than previously thought to balance the budget in seven years as planned.

Republican leaders in Congress have said they will rely on CBO numbers to arrive at their budget. The latest forecast showed the economy growing at a faster rate over the next seven years and predicted lower interest rates than previously expected.

The newfound treasure could ease budget negotiations this week, now that there is more money to spread around.

House Republican whip Tom DeLay of Texas suggested that the money may be allocated to Medicare, agriculture, education and other programs President Clinton has said he will protect.

Negotiators have "something to work with," said Senate Budget Chairman Pete Domenici, R-New Mexico. He added that Republicans would attempt to draft a "more attractive" budget proposal based on the new numbers in the next few days.

"This gives us an opportunity to do some hard negotiations and avoid a government shut down by Friday," said White House Chief of Staff Leon Panetta. The government's temporary stop- gap spending resolution will expire Friday at midnight raising the specter of a second round of federal furloughs.

Not all on Capitol Hill were as enthusiastic.

John Kaisch

"You've got to be very careful how you spend the money because what you don't want to do is to encourage additional borrowing costs to throw you out of whack in the last year," said Rep. John Kasich, chairman of the House Budget Committee. (238K AIFF sound or 238K WAV sound)

In other words, the money's there, but there's a catch: it must be used in the first six years of the budget. That means they cannot revise the proposals that make long-term changes in programs like Medicare or Medicaid which remain at the heart of the struggle.

Some Democrats were also muted in their response.

Tom Daschle

"The Republicans still have a dramatic and very significant deficit in the commitment to Medicare and Medicaid and education, the environment and agriculture. That deficit is not going to go away even with CBO numbers. That's something we have got to address," said Sen. Minority Leader Thomas Daschle. (162K AIFF sound or 162K WAV sound)

Budget drafters could also find more money if changes were made in the way the government figures the inflation rate figures which are then used to calculate government benefits and tax rates.

Still the bottom line in this dispute is not the bottom line but policy, not as much about how much to spend but about where to spend it.

The budget battle: CNN stories

The Associated Press and Reuter News Agency contributed to this report.



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