Congress May Force Health Plan Delays : Spending: New drive for more deficit reduction could cut funds counted on by Clinton to pay for reforms. Budget limits are already seen as tight.

WASHINGTON —  A renewed congressional drive for more deficit reduction--highlighted by a controversial proposal for deep cuts in Medicare spending--could force the Clinton Administration to delay or scale back its health care reform plan or propose more taxes to pay for it, Treasury Secretary Lloyd Bentsen said Tuesday.

Bentsen’s warning came just as the White House was gearing up to stop a bipartisan campaign in Congress to cut federal spending by up to $103 billion over five years. The package of cuts would be imposed on top of those already approved in Clinton’s economic plan. The Administration fears that if the spending cuts--due for a vote in the House Saturday--are approved, Clinton will be squeezed into a tight budgetary straitjacket for the rest of his term in office.

Should that occur, the President would not be able to follow through on his central campaign theme of offering a pro-growth Democratic-style domestic agenda, providing new funding for programs that had languished throughout administrations of Republicans Ronald Reagan and George Bush.

Indeed, existing budgetary limits already are so tight that Clinton has only been able to fund about 60% to 70% of his new domestic initiatives. Administration officials fear further cuts would mean that Clinton’s agenda would wither away into little more than a narrow focus on deficit reduction.

Yet the Administration is clearly most concerned about the proposed cuts in Medicare. The White House had hoped to use those savings to help finance its health care reform plan, but the legislation about to be voted on by Congress would prohibit those savings from being used for anything but deficit reduction.

The House version of the package, which is being sponsored by Rep. Timothy J. Penny (D-Minn.) and Rep. John R. Kasich (R-Ohio), includes $37 billion in reductions in future Medicare outlays as part of a broader proposal of about 80 specific spending cuts. Sen. Bob Kerrey (D-Neb.) is proposing similar legislation in the Senate.

Without the Medicare savings, Bentsen warned, the Administration may have to propose either more taxes or phase in the health care plan more slowly to reduce its costs.

The Penny-Kasich bill “strikes (at the health care plan) directly,” Bentsen told the House Ways and Means Committee in testimony Tuesday. It would “create a huge shortfall in the financing of the health care reform plan. And that shortfall would have to be made up either from additional cuts in Medicare, tax increases, scaling back the scope of benefits in the President’s plan, slowing the phase-in of universal coverage or a combination of those four options. So obviously it’s a matter of concern.”

In addition, Administration officials are concerned about the economic impact of another round of deficit reduction so soon after the passage of Clinton’s budget. Laura D’Andrea Tyson, who chairs the Council of Economic Advisers, said in an interview Tuesday that she believes Congress should hold off on further cuts until it is clear how the economy is responding to the deficit package already in place. “We shouldn’t put too much pressure on the economic recovery,” Tyson said.

But the White House clearly will have a difficult time slowing congressional demands for more cuts.

Clinton may have himself to blame for allowing the budget-cutting fervor to peak this week in Congress. Many moderate Democrats, including Penny, voted in favor of Clinton’s economic plan last summer only after Clinton and the congressional leadership promised to allow them to push for a floor vote in Congress on more budget cuts this fall.

In addition, the White House agreed to propose deeper cuts of its own. Clinton lived up to that pledge by proposing cuts first unveiled in September as part of Vice President Al Gore’s “reinventing government” plan.

Penny said he is not swayed by White House arguments that health care and the Clinton agenda should take priority over deficit reduction. “This will put a straitjacket on them, but in reality, it is the deficit that is imposing the straitjacket,” he said. “The President’s agenda has to be positioned against the larger priority of controlling spending.”