Senate Approves Revolutionary Bill to Balance Budget : Government: The Republican-backed measure includes $245-billion tax cut and sharp curbs on spending, social programs. Clinton repeats veto promise.

WASHINGTON —  The Republican-controlled Senate, moving toward a major confrontation with President Clinton, approved a revolutionary budget plan early today that would provide for a $245-billion tax cut at the same time that it sharply curbs federal spending and social programs.

The legislation, approved by a 52-47 vote--Republican William S. Cohen of Maine joined all 46 Democrats in opposition--would reverse three decades of nonstop deficit spending and is intended to deliver a balanced budget for the first time since 1969 by the year 2002.

“This will be a radical change in the way this government is operated,” said Senate Majority Leader Bob Dole (R-Kan.).

But the plan is far from its final form. Congress must first reconcile differing House and Senate versions of the legislation into a final bill that is acceptable to both houses. Then the measure will be sent to the President, who has said he will veto it. Republican leaders then would have to negotiate changes with the White House, since they do not have the two-thirds majority needed in both houses to override his veto.

Clinton urged Democratic leaders Friday to tell the party’s legislators “not to worry about it--I’m going to veto it anyway.”

Speaking in a conference call with Senate Minority Leader Tom Daschle (D-S.D.) and House Minority Leader Richard A. Gephardt (D-Mo.) that was monitored by reporters, Clinton characterized the GOP effort as “excessive” and “wrong.”

The President, however, also pledged to work with Congress after a veto so that “we’ll make it work out for America.”

Daschle called the measure “fundamentally flawed” and said that it would weaken rather than strengthen America.

“This budget is mean and extreme,” Daschle said. “It rewards the rich and ravages the rest. It punishes families who need our help most--to pay for tax breaks for those who need handouts the least.”

But, said Dole, “it is a vote for putting America on a path to a balanced budget. . . . It is a vote for real, meaningful and fundamental change.”

Passage of the landmark bill came on the Senate’s 39th roll call vote of the day--a single-day record for what is often called the world’s most deliberative body. The previous record of 34 votes came on June 16, 1964, when the Senate considered the Civil Rights Act, according to Sen. Robert C. Byrd (D-W.Va.), a keeper of Senate history who was a senator in 1964.

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Just before final passage at 10 minutes after midnight, Democrats used a technical parliamentary procedure that forced out of the huge bill numerous provisions of a previously adopted welfare reform bill, which also had been wrapped into the reconciliation measure.

But Dole said this morning that that action could be remedied later during a conference committee with House members to iron out the differences in the budget details.

Sen. Pete V. Domenici (R-N.M.), the bill’s floor manager and budget committee chairman, said the vote sends a message to the world that America is “just not going to continue to borrow to give people what they can’t afford.”

Dole also said the Democrats would like to see the welfare reform bill passed and signed by Clinton as a stand-alone measure, thus allowing the President to claim the credit.

The House passed its version of the bill Thursday on a 227-203 vote that largely followed party lines. Rolled into both the House and Senate budget bills are provisions to cut the growth of Medicare, Medicaid, welfare and an array of other assistance programs.

The Senate plan would trim $482 billion in projected spending for Medicare and Medicaid over the next seven years. It also would scale back the earned-income tax credit, which provides assistance to the working poor, convert federal welfare spending into block grants to states, open the Alaska wilderness to oil and gas drilling, virtually eliminate the Commerce Department and impose new fees on student loans.

The House and Senate versions of the plan have far more similarities than differences. But there are important distinctions and how they are resolved will say a great deal about the direction and cohesion of the Republican majority that took control of Congress in January for the first time in 40 years.

On one end of the GOP spectrum are half-a-dozen or so moderates in the Senate who increasingly have been able to soften an array of social-spending cuts.

At the other extreme are a larger, equally committed group of conservatives in the House, led by Speaker Newt Gingrich (R-Ga.) but perhaps influenced more by 73 zealous first-year members who often have preferred fighting to compromise.

On numerous issues, including farm policy and welfare, the Senate bill proposes less sweeping changes than the House bill.

“It won’t be easy at all,” Sen. Connie Mack (R-Fla.) said Friday, referring to the upcoming House-Senate conference committee that will attempt to resolve differences between the two measures.

Mack also expressed concern that the GOP-controlled conference may take longer than a week to complete its work. He conceded that the longer the conference lasts, the more likely Americans are to perceive that the Republican majority is less effective than they once had thought.

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Indeed, for all the hoopla over sweeping legislation considered by the new GOP Congress, most bills so far have either been passed only by one chamber, or are now stalled in conference committee. The list includes welfare reform and regulatory reform.

“In the end, we’ll get it done. But it just won’t be easy,” Mack, secretary of the Senate GOP Conference, said.

A list of the noteworthy differences between the House and Senate budget plans probably begins with Medicare--although one major division was eliminated Friday. The Senate, acting on a proposal by Sen. Edward M. Kennedy (D-Mass.), dropped a plan to raise the age of Medicare eligibility from 65 to 67. The increase would have been gradual, beginning in 2003.

The House version would not increase eligibility age.

Among the significant remaining differences:

* The House version contains a “fail-safe” mechanism that would force further reductions in payments to Medicare fee-for-service providers if spending targets are not met. The Senate bill does not have this provision.

* The House bill contains medical malpractice reform that would impose a cap of $250,000 for pain and suffering awards to victims of malpractice. Punitive damages would be limited to $250,000 or three times the amount of the economic loss, whichever is larger. The Senate bill does not address malpractice changes.

* The House would extend a $500-per-child tax credit to families with incomes of up to $200,000. The Senate caps the benefit at $75,000 for single-parent families and $110,000 for other families.

* Both the Senate and House bills seek savings over seven years of about $13 billion in agriculture. The House version would replace traditional subsidies to farmers with a declining payment to ease the switch to free-market agriculture. The old system of dairy price regulation would end. The Senate measure would keep traditional crop subsidies that increase when crop prices fall but would make less cropland eligible. The government would stop requiring farmers to idle some acreage. Dairy pricing would be regulated, but price supports would end.

* The House would eliminate the federal nursing home standards under Medicaid. The Senate, at the insistence of GOP moderates, reinstated some of the standards that had been eliminated by the Senate Finance Committee. Many Democrats said the restorations did not go far enough.

The concession on nursing home standards is just one of many Dole has had to make to win the support of the chamber’s Republican moderates--Ben Nighthorse Campbell of Colorado, John H. Chafee of Rhode Island, Cohen of Maine, James M. Jeffords of Vermont, Nancy Landon Kassebaum of Kansas, Olympia J. Snowe of Maine and Arlen Specter of Pennsylvania.

With Republicans holding a Senate majority of just 53 to 46, Dole could ill afford more than three defections.

Dole also agreed to add $10 billion for Medicaid funding to the states, a step taken to ease the concern not only of moderates but also of such GOP conservatives as Sens. Phil Gramm and Kay Bailey Hutchison, both of Texas, and Alfonse M. D’Amato of New York.

The additional funds are to come from a change in projected savings from a recent Labor Department adjustment in the 1996 cost-of-living increases in Social Security and other federal retirement and entitlement programs, according to senior GOP Finance Committee aides.

Dole also agreed to provide $1.2 billion more than the measure originally provided in Medicare funds for teaching hospitals and to restore $5.9 billion of the $10.8 billion that was to have been cut from various college student loan programs.

Although Senate adoption of the bill was never in doubt, the final vote was delayed for hours because Democrats insisted on roll-call votes on dozens of amendments they proposed to ease a variety of spending cuts--amendments that had no chance of passage.

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The daylong tactic was intended to force Republicans to go on the record choosing between cuts in their plan and more modest Democratic reductions. On Medicare, for instance, Republicans voted to approve their seven-year, $270-billion reduction instead of the Democratic alternative, which would trim $89 billion over the period.

“Obviously it has campaign implications,” Senate Minority Leader Daschle said.

Among other defeated Democratic amendments were ones that would have restored $125 billion of the $187 billion in cuts for Medicaid, that would have required the government to achieve a balanced budget before granting the $245 billion in GOP-favored tax cuts, would have restored $43 billion in spending for the earned-income tax credit for the working poor and that would have killed a provision that permits oil and gas drilling in the Arctic National Wildlife Refuge in Alaska.

* CONSUMER IMPACT

How the budget bills affect families, investors. D1