Clinton Warns GOP to ‘Back Off ‘ From Cuts : Budget: Setting the stage for a veto, President says he’d rather default on U.S. debts than accept plans to cut Medicare growth, other programs.

WASHINGTON — President Clinton, promising to stand fast in the face of “extraordinary blackmail” by congressional Republicans, said Saturday he will not accept GOP budget-balancing measures in their present form just to keep the federal government running smoothly.

Setting the stage for a veto message unless Senate and House conferees work out a package more acceptable to the White House, Clinton said budget bills approved in each chamber last week violate traditional American values and are “bad for our long-term interests.”

The President, in his weekly radio address, voiced his strongest objections yet to congressionally approved cuts in the growth of Medicare for the elderly, in health care for the poor and disabled, and in educational and environmental programs. Both of the budget blueprints adopted separately in the Senate and House represent “an extreme budget” that would double health care premiums for senior citizens, reduce scholarships for needy students and raise taxes on working people, he said.

*

Warning GOP leaders to “back off your cuts,” Clinton said he is prepared to reject their budget legislation--even if doing so causes the government to default on its debts for the first time--rather than to approve “devastating” cuts in social spending.

He accused GOP leaders of “playing political games with the full faith and credit of the United States of America” because the budget-balancing bills are tied to a required increase in federal borrowing power.

Responding to the President, Senate Majority Leader Bob Dole (R-Kan.) said Republicans “kept our promise to end years of deficit spending” by passing legislation to curtail the growth of Medicare and to make changes in Medicaid, welfare and educational programs.

“We kept our promise to preserve, protect and strengthen Medicare,” Dole said.

House Speaker Newt Gingrich (R-Ga.), joining Dole in a radio response to Clinton, offered an olive branch.

“We are ready to sit down with President Clinton, any time, anywhere,” Gingrich said. “And if he has specifics to offer, we’re ready to listen.” But he added: “We won’t retreat from saving Medicare from bankruptcy. We won’t retreat from the promise of a better future for America.”

*

Gingrich said the President “would be wise to think twice about vetoing the balanced budget and jeopardizing long-overdue, revolutionary change.”

The prospects favor a negotiated bipartisan agreement later this fall because Republicans lack the votes to override a veto. House and Senate conferees are expected to meet early this week to begin ironing out differences in their budget packages.

The House and Senate bills project the federal budget deficit, currently estimated at $164 billion, will grow over the next two years before beginning a gradual decline that would produce small surpluses by the year 2002. In addition to mandating an array of spending cuts, the bills would reduce taxes for families, businesses and others by about $245 billion through 2002.

To achieve Medicare savings, the Senate and House measures would trim payments to health care providers and encourage the elderly to switch to private, managed-care plans. Both bills would raise Medicare premiums, now $46.10 a month, to about $54 a month in January and about $90 a month by 2002.

*

The bills would convert Medicaid, the federal-state health insurance program for low-income adults, children, the elderly and persons with disabilities, into block grants to the states, cutting the 10% annual growth in spending roughly in half. The program is known as Medi-Cal in California.

Other savings would be achieved in each bill by such means as broad changes in the guaranteed student loan program, new restrictions on welfare payments, and proposed sales of oil-drilling leases in the Arctic National Wildlife Refuge.

Clinton, adopting a tough stance, said in his address that “before or after a veto, I am not prepared to discuss the destruction of Medicare and Medicaid, the gutting of our commitment to education, the ravaging of our environment or raising taxes on working people.”

But the President insisted he strongly favors a balanced budget “so that we don’t pass a mountain of debt onto our children and we free up more funds to be invested in our economy.”

His own budget plan, he said, “secures Medicare into the future, increases our investment in education and technology [and] protects the environment.”

The Republican plans, the President said, “impose billions of dollars in new taxes and fees directly on working people. On average, families who earn less than $30,000 a year get a tax hike, not a tax cut, under their plan.”

Gingrich, speaking later Saturday at a town hall meeting in his Georgia district, said Republicans would be willing to slightly modify their budget plans to get Clinton to sign the bills.

“I do believe that, in the end, he will sign it,” the Speaker told a roomful of constituents in Roswell, Ga. “We may have to modify it very marginally. But the core principles of a seven-year balanced budget, tax cuts for children and for economic growth and jobs, reforming the welfare system and saving Medicare--I don’t believe those core principles will be affected at all, and I think we’ll be basically negotiating around the margins.”

Republicans also gave a chilly reception to the Administration’s Friday offer to accept a temporary $85-billion increase in the government’s debt limit to keep it operating through mid-January.

Dole said, “That would be too long.” Gingrich said he is holding out for discussions with Clinton.