As President Clinton puts his budget on the chopping block to pay for a middle-class tax cut, Cabinet secretaries are urging him to spare their agencies from the ax.
At least four Cabinet departments face reductions - and possible elimination - as the White House reviews its options for the fiscal year that begins next Oct. 1.Clinton, hoping to get a jump on tax-cutting Republicans, will outline his vision for the second half of his term in a nationally televised speech Thursday night. The centerpiece is expected to be a middle-class tax cut, costing about $50 billion.
The president met for the second day Tuesday with his economic team and heard from at least one Cabinet secretary, but he reached no decision on how to pay for the tax cut, aides said. More meetings were held Wednesday.
Administration officials said the most likely targets for budget cuts were the departments of Energy, Transportation, Housing and Urban Development, and Health and Human Services.
With Clinton considering a wide array of options, the General Services Administration and the Office of Personnel Management also are candidates for cuts, an official said Wednesday. The official, who spoke anonymously, also confirmed a Washington Post report that Clinton may seek to tighten pensions for federal workers.
Transportation Secretary Federico Pena met Tuesday with Clinton to argue against outright elimination of his department and fend off major reductions. Housing Secretary Henry Cisnaros is said to believe he has staved off efforts to eliminate his agency, but several housing programs are expected to be eliminated or consolidated.
As part of possible HUD cutbacks, the White House is considering making the Federal Housing Administration, which guarantees mortgages, a quasi-independent agency and setting up a public housing corporation to sell off some public housing to private industry. The Federal Housing Administration, or FHA, has pro-vided mortgage insurance for millions of homebuyers since it was established during the Depression.
And Energy Secretary Hazel O'Leary left a Monday meeting with Vice President Al Gore believing she had saved her agency from elimination by agreeing to major cuts.
Clinton has considered breaking up Energy, giving its authority over oil and gas to the Commerce or Interior departments and its nuclear functions to the Defense Department. But agency officials said it appeared O'Leary had saved her department after agreeing to slash $22 billion over five years from her budget, which totals $18.5 billion this year.
Of the cuts, $12 billion would come from the sale of government-run electric companies in the West, one administration official said. President Ronald Reagan met stiff resistance from Democratic lawmakers when he tried the same thing, and there is some doubt about whether the sale would generate that much money.
Clinton also may tap into savings from Medicaid and Medicare reductions once reserved for health-care reform. Officials at HHS said their operating budget is not expected to be touched.
Transportation Department officials said they now feel the agency will survive, although it likely will take a budget hit. DOT already has already promised to trim 12 percent of its work force over five years.