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Subject: Clinton Faces Series of Economic, Budget Challenges on Taking Oath<By Steven
Date: Fri, 13 Nov 92 04:39:11 EST
Message-ID: <29.1992Nov13.043912@AmeriCast.com>

Clinton Faces Series of Economic, Budget Challenges on Taking
Oath<By Steven Mufson=Washington Post Staff Writer=

 The day after he takes office, President-elect Clinton will face
the first of several deadlines on economic and budget issues that
could shape, or distract from, key parts of his domestic agenda.

 By mid-March, Clinton must submit a budget proposal for the 1994
fiscal year; persuade Congress to raise the nation's $4.1 tril-
lion debt ceiling for federal borrowing; decide whether to throw
out the 1994 deficit limit or endorse across-the-board spending
cuts that would start in October 1993; and win congressional ap-
proval for tens of billions of dollars to continue the savings
and loan cleanup.

 Unlike previous presidents taking office, Clinton will be writ-
ing on a relatively blank slate when it comes to the federal
budget. President Bush, unlike previous outgoing presidents, does
not plan to draw up a detailed budget proposal, administration
sources said.  Instead, the Bush administration will submit a
bare-bones document about one-quarter the usual length.

 "With a little over two months left, I believe the song of
choice is 'I haven't got time for the pain. I haven't the need
for the pain,' " said one administration official.

 Officials saidBush administration is eager to avoid the task of
reconciling Bush campaign promises that would be difficult to
keep. They said that it would be impossible to balance the budget
by 1998 without raising taxes and without touching Social Securi-
ty or veterans' benefits, while at the same time giving across-
the-board tax cuts for individuals and tax breaks for small
businesses.  "To get from (a deficit of) $300 billion-plus to
zero by 1998 under those constraints, you'd have to break a
sweat," said one administration official.  "In fact, you'd be
sweating bullets."

 Unlike past administrations leaving office, the Bush administra-
tion is not required by law to submit a budget.  Earlier exiting
presidents were required to submit budgets by the first Monday
after Jan. 3, but the 1990 Budget Enforcement Act changed the
date to the first Monday in February.

 That makes the next budget proposal Clinton's problem, due Feb.
1, only 11 days after he takes office.

 That enormous task usually begins in October and is usually
mostly completed by December, around the time Clinton will still
be selecting much of his new team.

 Since it is practically impossible to come up with the roughly
2,000 pages of proposals and tables usually included in the budg-
et by that date, most experts expect Clinton to miss that dead-
line. One possible course would be to submit a series of increas-
ingly detailed budget proposals, as President Reagan's first
budget director, David A. Stockman, did in 1981. But even Stock-
man had a far more detailed plan left over from the Carter ad-
ministration than anything the Bush administration plans to leave
behind.

 Soon after that, Clinton faces a deadline that cannot be post-
poned: raising the debt ceiling.

 By the ides of March, the federal government will have borrowed
the maximum allowed under law. To continue to borrow money needed
to keep the government running, Clinton must get Congress to
raise the debt ceiling.

"He hits the ground right after his inauguration," said House
Ways and Means Committee Chairman Dan Rostenkowski (D-Ill.). "The
first thing out of the box is the debt ceiling. I think around
February or March, the Treasury will tell me when we're going to
run out of money. That's a must piece of legislation."

 That battle could sap valuable political capital.

 Because most lawmakers do not want to be associated with mort-
gaging the federal government's future, it is not a popular vote
and often it wins support only after members of Congress tack on
various other amendments and projects. Clinton might have to
fight to keep unwanted pieces of legislation from creeping into
law along with the change in the debt ceiling.

 "It can be a very attractive instrument for everything lying
around in Congress," Rostenkowski said.

 Another tough battle that awaits Clinton is the struggle over
congressional approval for billions more to finish cleaning up
the savings and loan mess.

 Like the debt ceiling legislation, this is an unpopular measure
that lawmakers rarely want to go on the record supporting. Yet
for the federal government to meet its obligations to guarantee
thrift deposits up to $100,000, Congress must pass the measure.

 Congress balked last year, however, delaying action on failing
thrifts by the government and ultimately raising the cost of the
S&L rescue. The Bush administration did not push for the measure
in recent months, thus reducing the deficit last year and ensur-
ing that Clinton would have a record deficit of about $295 bil-
lion in his first year in office even if he takes no special ac-
tion to stimulate the economy.

 These unpalatable battles will seem remote next to the first de-
cision that awaits Clinton as soon as he takes off his tuxedo.

 The day after his inauguration, Clinton must decide whether to
adjust the maximum allowable federal budget deficit set under the
Budget Enforcement Act of 1990.

 That law set limits on the deficit, but allows the president to
change the limit because of economic conditions by Jan. 21.

 Brushing the limit aside could be tricky for Clinton, whose
election has already helped drive up long-term interest rates in
financial markets worried that he lacks budget discipline.

 If Clinton does not change the deficit target, he could choose
to allow a sequester to take effect, which would mean automatic
across-the-board budget cuts. Half the cuts would hit the mili-
tary and half nonmilitary. Medicare could not be cut more than 2
percent.  One budget expert suggested that Clinton could choose a
combination of the two, giving himself some extra room for new
programs while using the sequester as a symbol of budget discip-
line and as a tool to impose across-the-board administrative cuts
he advocated during the election campaign.<

 Staff writer Eric Pianin contributed to this report.<02:23 11-
13C9999-----

Copyright 1992, The Washington Post.  This story is from the
Washington Post's Capitol Edition On-Line and is not to be ar-
chived or redistributed.

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