Updated 8-21-97

full story Sealing The Deal

The Spending Side

The Tax Side


The Balanced Budget Amendment


Key Terms

Appendix: Clinton's Feb. 6 Budget

Related Stories

The Budget Deal: A Conspiracy Of Celebration Yep, Congress and Clinton finally balanced the budget. But in their haste to hand out goodies, they missed a chance to defuse some time bombs. By Nancy Gibbs/TIME, 8/11/97

The Tax Bill: Money In Motion Why some of the "wealthy" have nothing to gain. By Daniel Kadlec/TIME, 8/11/97.

Related Sites

The Office Of Management and Budget

The Congressional Budget Office Gopher

The National Debt Clock Counterpoint

Did Congress Approve Tax Measures Favoring The Well-Off? Iris J. Lav, associate director of the Center on Budget and Policy Priorities believes so, while J.D. Foster, executive director and chief economist for the Tax Foundation says the big winners are middle-class families.

Does The Budget Deal Address The Long-Term Entitlement Spending Crisis? -- John Tottie, Senior Economist with Citizens for a Sound Economy says the deal only worsens entitlement spending, while Brookings Institution Visiting Fellow Joseph White argues policymakers can't plan now for problems that are still 30 years off.

Is A Balanced Budget Amendment A Good Idea? Heritage Foundation senior fellow Daniel Mitchell takes on Robert Greenstein, executive director of the Center on Budget and Policy Priorities.



Balancing The Budget

The Spending Side

The budget accord substantially hikes spending for children's health and welfare recipients. Meanwhile, Medicare savings portend a restructuring of how seniors get their health care.

Children's advocates are rubbing their eyes in disbelief. Families USA, a health care interest group, called the budget "the most significant advance in funding for health care coverage since the Medicare and Medicaid programs were enacted 32 years ago."

Medicare changes

Though lawmakers punted on the long-term financial crisis the retiring baby-boom generation poses to Medicare, they say they've extended the life of the program by at least 10 years, through $115 billion in savings. That money will be squeezed from Medicare over the next five years, mainly through lower payments to hospitals, doctors and other care givers.

That, predicts John Rother of the American Association of Retired persons, will likely ratchet up competition for seniors' business "in a major way."

In addition to traditional fee-for-service plans, lawmakers are allowing seniors to choose from more health vendors like health maintenance organizations (HMOs). Some 390,000 experimental medical savings accounts would allow seniors to purchase high-deductible catastrophic-care policies. Republicans have argued the approach puts the consumer more in charge of how health dollars are spent, and could help contain costs.

By 2002 the $43.80 monthly premium for doctors' visits will rise to about $63. But lawmakers dropped controversial provisions that would have gradually raised the age eligibility from 65 to 67, imposed a $5 fee for home visits, and raised premiums for upper-income seniors.

Children's health

While $13 billion was squeezed from Medicaid, Democrats were gleeful over $24 billion in new funds for states to expand health care coverage for poor children. The funds can be pumped into Medicaid or other existing insurance programs, and can also be used to create new ones.

"This historic investment in children's health is a major victory for America's children and working families," said Children's Defense Fund President Marian Wright Edelman.

Changes to welfare reform

Few thought Clinton could overcome Republicans' objections to reopening the new welfare reform law, but the president won $13 billion in restored disability and Medicaid funds for noncitizens currently on the rolls. And, legal immigrants who were in the country before the law was signed will be eligible for aid if they become disabled. An addition $3 billion was allocated for welfare-to-work programs.

What has some Republicans fuming are provisions that would force states to pay the minimum wage to welfare recipients' who have state jobs. "It's going to be terrible for everybody, including welfare recipients," Rep. Clay Shaw, a Florida Republican, told The Associated Press. "The states are simply not going to be able to afford to produce as many of the jobs that are needed."


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