Cuts and Cash For Everybody

WASHINGTON, D.C.: President Clinton sent Congress a $1.69 trillion 1998 budget package Thursday containing much that even Republicans will find to their liking. The White House maintains that it is setting a course that will produce not only a balanced budget, but a modest surplus by the year 2002. Taking its cue from years of GOP initiatives, the budget promises $98.4 billion in middle-class tax cuts, mostly in the form of tax credits. Republicans and professional number-crunchers, though, reacted cautiously to Clinton's package, pointing out that it rests on rosy assumptions. What's more, most of the President's spending cuts won't kick in until after he has left office, letting him take credit now before the sacrifices begin to bite. Still, the budget may sit well with a public that says it wants Congress to tackle the deficit instead of nit-picking over the details. "Clinton has the upper hand," notes TIME's Bernard Baumohl, "because the Republicans risk making themselves look like obstructionists if they don't cooperate." The centerpiece of the tax cut package is a $500-per-child credit for children younger than 13 in families with an income of up to $75,000. Cost: $46 billion. Another $36.1 billion of Clinton's tax relief stems from a tax credit and deduction for college. To offset those give-aways, the President wants to raise taxes by $76 billion, hitting multinational corporations, closing loopholes and extending existing taxes like the airline ticket tax. Maneuvering room is limited in a budget that tries to expand benefits while cutting spending. One of the biggest obligations in the budget is off-limits: 1998s $250 billion interest payments on the nations $5.3 trillion debt. That's one out of seven dollars the government spends, more than the entire defense budget. Furthering hamstringing creative budgeting, more than half the federal outlays are tied up in mandatory payments for such emotionally charged programs as Social Security, Medicare and Medicaid. Faced with these choices, the President who campaigned by capitalizing on fears that Republicans would drastically cut entitlements takes his biggest chunk of savings -- $100 billion over five years -- from Medicare.