[A Citizen's Guide to the Federal Budget]
[5. The President's 1998 Budget]
[From the U.S. Government Printing Office, www.gpo.gov]


This budget fulfills the President's firm commitment to reach balance in
2002, building on the balanced-budget proposals that he outlined in his
negotiations last year with the bipartisan leaders of Congress. Having cut
the deficit by over 60 percent in his first term, the President is determined
to finish the job.

Specifically, the President continues to seek cuts in unnecessary and
lower-priority spending in both discretionary and mandatory programs, and
to eliminate unwarranted tax and other preferences for corporations and
others. The cuts would generate enough savings to provide tax relief to help
middle-income Americans raise their children, send them to college, and
save for the future; and to restore some harsh cuts in anti-poverty programs
that Con~gress attached to last year's welfare reform bill.

Reaching Balance

Among its major elements, the budget:

. saves $137 billion in discretionary spending, cutting unnecessary and
  lower-priority programs while investing in education and training, the
  environment, science and technology, law enforcement, and other
  priorities that would raise living standards and the quality of life for
  average Americans;

. saves $100 billion in Medicare, ensuring the solvency of the Part A trust
  fund until 2007 while maintaining the essential quality of Medicare
  services for the elderly and people with disabilities;

. saves $22 billion in Medicaid, building upon the substantial savings that
  Federal and State experimentation in this jointly-run program is already
  generating, and continuing the guarantee of essential health and
  long-term care coverage for the most vulnerable Americans;

. saves $76 billion by ending corporate subsidies and other tax loopholes,
  extending expired tax provisions, and improving tax compliance;

. saves $36 billion by continuing the Administration's successful policy of
  auctioning segments of the broadcast spectrum;



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. provides $18 billion to correct the harsh provisions that Congress
  attached to last year's welfare reform law; and

. cuts taxes by $98 billion, providing tax relief to tens of millions of
  middle-income Americans and small businesses.

Investing in the Future

Balancing the budget is not an end in itself. Rather, it helps fulfill the
President's main economic goa~l--to raise the standard of living for average
Americans, both now and in the future. So do his spending priorities.

The budget continues the President's policy of shifting Federal resources to
education and training, science and technology, and other investments to
enable Americans to get the skills to acquire good jobs, and to give
businesses the tools to become more competitive, in the new economy. It
also continues to shift resources to the environment and law enforcement,
raising the quality of life for average Americans.

For education and training, the budget proposes to fulfill the President's
commitment to put one million disadvantaged children in the Head Start
program by 2002; to create safe learning environments for more children;
to help more school systems extend high academic standards, better
teaching, and better learning to all students; to enable more Americans to
serve their communities and earn money for college; to bring technology
into more classrooms; to create a $1,000 merit scholarship for the top five
percent of graduates in every high school; to let more parents, teachers, and
communities create public schools to meet their own children's needs; to
make it easier for parents and students to borrow and repay college loans; to
create the largest increase in Pell Grant scholarships in history in 20
years; and, finally, to provide Skill Grants to adults for job training.

The budget proposes to maintain environmental enforcement; protect
national parks and other sensitive resources; and provide tax incentives to
encourage companies to clean up ``brownfields''--abandoned, contaminated
industrial properties in distressed areas. It would put 17,000 more police on
the street, bringing the total to 81,000 and moving closer to the President's
goal of 100,000 by the year 2000; and it would provide more funds to
combat juvenile crime and step up the fight against drugs, largely by
focusing on treatment and prevention aimed at young Americans. It would increase the number of Border Patrol agents and workplace investigations to
prevent illegal immigration and deter the hiring of illegal immigrants.



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The budget invests in research, including biomedical research at the National
Institutes of Health, in programs to combat infectious diseases at the
Centers for Disease Control, in the Ryan White AIDS program that provides
potentially life-extending drug therapies to many people with AIDS, and in
community health centers and Indian Health Service facilities. The budget
funds full participation in the Special Supplemental Nutrition Program for
Women, Infants, and Children (WIC), which would serve 7.5 million people
by the end of 1998.

Over the last year, the President also has proposed a series of initiatives
to more quickly, and more effectively, meet his goal of higher living
standards and a better quality of life for all Americans.

. Along with his earlier call for a tax deduction of up to $10,000 for
  college tuition and job training, the President proposes a new $1,500-a-
  year HOPE scholarship tax credit to make two years of college universal.
  The budget also proposes to increase Pell Grants for lower-income families
  who lack the tax liability to benefit from the tax cuts.

. The President proposes America Reads to help ensure that all children
  can read by the third grade, and a five-year, $5 billion school construction
  fund to help States and communities address the serious problem of
  dilapidated school buildings.

. Building on his earlier proposal to help the unemployed keep their health
  care for six months, the President now proposes to help expand health
  care coverage to uninsured children.

. Having taken the first step to reform welfare, the President now proposes
  to enhance the Work Opportunity Tax Credit to encourage employers to
  hire long-term welfare recipients.

Improving Performance in a Balanced
Budget World

``We still have work to do,'' the President declared in late 1996, ``for while
the era of big Government is over, the era of big challenges is not.''

Over the last four years, the President has used Federal resources and the
power of his office to begin achieving educational excellence, expanding
opportunity, cleaning up the environment, investing in promising research,
ending welfare as we know it, protecting health care and pensions, making
the tax system fairer. and keeping America strong. Americans want more



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progress on these and other issues and, with limited funds, the Federal
Government must be able to respond effectively.

Led by Vice President Gore's National Performance Review, the
Administration promised to create a Government that ``works better and
costs less.'' It is saving money, cutting the workforce, eliminating needless
regulations and improving the necessary ones, streamlining bureaucracies,
cutting red tape, and finding ways to better serve Government's
``customers''--the American people.

In 1993, President Clinton pledged to cut the Federal workforce by
252,000 full-time equivalent (~FTE~) positions. A year later, the President and
Congress enacted the Federal Workforce Restructuring Act, requiring cuts of
272,900 FTEs by the end of this decade. (An FTE~ is not necessarily
synonymous with an employee. One full-time employee counts as one FTE,
and two half-time employees also count as one FTE.)

To date, the Administration has cut the work force by over 250,000
employees out of 2.2 million in January 1993, creating the smallest Federal
workforce in 30 years and, as a percentage of all civilian workers, the
smallest since 1931. The cuts correspond to a reduction of over 250,000
FTEs (see Chart 5-1).

But, while Americans want a smaller Government, they also deserve one
that works better--that treats them as valued customers at Social Security,
veterans', and other offices; that uses their tax dollars wisely; and that
makes a real impact on their lives when it addresses the problems of crime and poverty and the challenges of work and education.

The Administration has found many ways for agencies to improve their
performance and cut costs. Some of them focus on eliminating obsolete
processes, others on improving the ones they have. Because agencies and
programs are so different from one another, not every tool, technique, or
strategy applies to each agency and department. But every agency and
program can benefit from a number of them.

Based on lessons learned over the past four years, the Administration plans
to use the following seven tools.

Restructure Agencies: Agencies are streamlining their workforces;
eliminating redundant layers of bureaucracy; closing small, inefficient field
offices; and creating partnerships with State and local governments and the
private sector to focus on joint goals and the progress toward meeting them.

Improve Effectiveness of the Federal Workplace: Federal workers
are working harder and smarter each and every day, but the Government
must continue to downsize the workforce to live within the means of a



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           Chart 5~-1. Cuts In Civilian Employment

balanced budget. The Administration will continue to closely manage and
target its downsizing, while agencies work to avoid employee disputes and
resolve them quickly when they occur.

Reform Federal Purchasing Practices: Before President Clinton took
office, efforts to make Government work better and cost less were often
hindered by the Government's unique acquisition system. But now, with
strong bipartisan support from Congress, the Administration is transforming
the system into one that operates much more like those of our most
successful companies.

Expand Competition to Improve Services and Reduce Costs:
Competition spurs efficiency. The Administration is encouraging agencies to
compete with one another, and with the private sector, to provide common
administrative support ser~vices. More competition will bring new technolo-
gies, capital, management techniques, and opportunity to Federal employees
~and their customers.

Follow the Best Private Sector Practices in Using Information
Technology: Well-managed information technology should improve
Government's productivity while cutting costs. Agencies are copying the
successful practices of private firms to ensure that the technology provides
workable solutions to real problems at a reasonable cost.



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Improve Credit Program Performance: The Government must
manage its cash and loan assets as wisely as possible. It must design and
administer its loan programs prudently, and provide incentives to ensure that
it can collect its ``receivables'' (the amounts owed) in a timely fashion.

Improve Business Management Practices: An efficient, effective
Government needs sound financial management, reliable information, and,
where appropriate, fees from those who benefit from Government's
business-like activities.

These tools are designed to do more than let agencies function better for
their own sake. Ultimately, they are designed to help agencies provide
better, more effective services to the American people.

Already, agencies are assessing what their programs actually accomplish and
what they must do to improve their performance. The Government
Performance and Results Act (GPRA)--the landmark legislation that enjoyed
broad bipartisan support in Congress before the President signed it in
1993--makes agencies more accountable for, and focused on, what their
programs achieve.

Agencies now have many of the tools they need. Others will require
legislation. The President wants to work with Congress to help agencies
improve their performance in a balanced budget world.