Senate Republicans Unveil $1.6 Trillion Spending Plan with Growth Controls

Strategic Insights -

Senate Budget Committee Chairman Pete Domenici, R-N.M., unveiled a $1.6 trillion spending plan that aims to cut nearly $1 trillion in spending, bring the budget into balance at $1.9 trillion in 2002, and eliminate annual spending deficits projected to be about $200 billion a year under President Clinton's budget. The plan includes eliminating the Commerce Department, cutting congressional staff and freezing congressional salaries for seven years. Domenici claimed that his budget would deliver a balanced federal budget within seven years, a feat that has eluded Congress for three decades.

Key Takeaways:

  • The plan aims to cut nearly $1 trillion in spending and bring the budget into balance at $1.9 trillion in 2002.
  • The plan includes eliminating the Commerce Department, cutting congressional staff, and freezing congressional salaries for seven years.
  • The plan aims to cut annual spending deficits from $200 billion to $0 by 2002.
  • The plan includes adopting the defense spending scheme proposed by President Clinton in his fiscal 1996 budget.
  • The plan would transform Medicaid into block grants, with control turned over to the states.
  • The plan does not include a tax cut, but does contain language to make available for tax cuts a $170 billion 'fiscal dividend'.
  • The plan does not alter Social Security benefits or cost-of-living increases.
  • The federal share of Medicare spending would increase from $172 billion in 1996 to $283 billion in 2002.

Statistics:

  • The plan aims to cut $1 trillion in spending over the next seven years.
  • The plan would bring the budget into balance at $1.9 trillion in 2002.
  • The plan aims to eliminate annual spending deficits of $200 billion.
  • The federal share of Medicare spending would increase from $172 billion in fiscal 1996 to $283 billion in 2002.
  • Medicaid spending would increase from $96 billion in fiscal 1996 to $125 billion.
  • Defense spending would average $265 billion a year over the next five years.

Sources:

  • JUSTIN SUPON, "Senate Republicans Unveil Budget Plan," Washington, May 9.