Republican congressional leaders and President Clinton today announced they have agreed on a five-year plan to balance the budget that will slow entitlement spending by between $600 billion and $700 billion over 10 years while also providing tax relief and increased domestic spending to reflect the president's priorities.
In a joint statement, the GOP leadership said: "We have developed a bipartisan plan that keeps faith with our fundamental principles while at the same time addressing Republican priorities and those of the president. This plan reflects the seriousness of the effort that has been made on both sides." But the leadership's statement noted that the broad budget agreement is only a beginning and that "a lot of work is needed to implement this plan and keep it intact."
The agreement provides for $115 billion in Medicare savings over the next five years, with $85 billion in net tax relief over the same period. That tax relief will include a $500-per-child tax credit, expanded individual retirement accounts, estate tax and capital gains tax relief, as well as educational assistance. The agreement would produce smaller deficits every year until the budget reaches balance in FY2002.
"We have reached agreement in broad but fairly specific terms" to reach a balanced budget, Clinton said in Baltimore this afternoon, while flanked by Senate and House Democrats. Senate Budget Chairman Pete Domenici, R-N.M., said, "I'm very happy." And House Republican Conference Chairman John Boehner of Ohio said, "This balanced budget and these tax cuts create a spark that will ignite America's engine of economic opportunity."
The announcement came after weeks of negotiations that were particularly intense in recent days. Administration officials and Democratic and Republican budget writers met for lengthy and often secret meeting in Domenici's Capitol hideaway office.
The talks neared a boiling point this week, as negotiators strained to complete a deal before Clinton left for Mexico next week. A deal had been expected each day, with aides and negotiators working feverishly. Some speculated Republicans wanted to announce a deal before Clinton began meeting with Senate Democrats in Baltimore today. Congressional leaders announced the accord during a hastily planned news conference in the Capitol rotunda.
Some last minute glitches developed over the past two days. Republican leaders of the tax-writing committees exerted their independence and told negotiators they would not accept a strict list of tax cuts they must pass. In addition, disputes arose over the scoring of the tax cuts. And, finally, the CBO reported Thursday night that it is willing to update its economic estimates -- a move administration officials said gave the negotiators an additional $225 billion to use.
The deal means that whatever budget resolution goes to the House floor likely will contain agreed-upon numbers. Although specific appropriations bills and budget reconciliation measures will be considered later this year, congressional leaders hope the budget accord will ease passage of those measures. However, many House Democrats have said they are unhappy with the details of the agreement and the process used to cut the deal.
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