Gingrich exults in `historic' budget win

Speaker Newt Gingrich yesterday took a clipper in his hand, went to the floor of the House of Representatives and proudly punched the first hole in the laminated copy of the "Contract with America" that he carries in his pocket every hour of the d ay.

Just as the Republicans promised in their election manifesto, the House has approved a constitutional amendment to balance the federal budget.

This, the first step towards what would be a small revolution in the way Congress handles the nation's finances, took place on Thursday evening, when, after a day of wrangling, 72 Democrats joined Republicans to adopt a final version of the amendment by 300 to 132 - 10 votes more than the two-thirds majority required.

The ball is now in the court of the Senate, which will begin discussion of the measure within the coming fortnight. Early head-counts suggest that it has only a slightly better than even chance of securing the 67 votes required in the upper chamber. Thereafter, it must be ratified by three-quarters, or 38, of the 50 states before becoming the 28th amendment to the United States Constitution since its adoption 206 years ago. The target date is 2002, or two years after final approval by the states, whichever is the later.

But any perils ahead were no match for Mr Gingrich's beaming smile yesterday, as he trumpeted a first delivery on his pledge that the Republican-controlled House would hold votes on all 10 items in the Contract by the end of March - even though a combination of Republican divisions and Democratic stalling have already probably placed that goal out of reach.

"This is a historic moment for our country; we kept our promise," he proclaimed. "One down and now for nine more."

Emphatic in the end, the budget amendment victory was a hard-won success. As was expected, Democratic opposition doomed a radical proposal calling for a three-fifths majority for any tax increase to balance the federal books. Whereupon dozens of disappointed young Republican Congressmen threatened to vote against it, in protest. But, after a pep-talk from Mr Gingrich, all but two of them went along with the milder, final version.

Although it is called a balanced-budget amendment, the measure actually does not order central government to balance its books each year, come what may. Instead, it would require a three-fifths majority of both chambers to approve a budget whose outlays exceeded revenues and any increase in the ceiling of the federal debt, now at around $4,700bn. (£2,900bn)

The real question, of course, is less whether the budget should be balanced, but how - especially since the tax cuts now sought by both parties will only make the task harder.

The Congressional Budget Office projects that on current trends, the deficit will rise from an expected $167bn this year to $322bn in 2002. $1,200bn of cuts and/or tax increases will be neccessary over seven years, the CBO warned.

As the White House and other foes of the amendment point out, the Republicans have never spelt out where the proposed cuts would come.

A Democratic version of the budget amendment that would have exempted social security, the biggest single budget item, was defeated on Thursday.

Mr Gingrich, who has called himself "a cheap hawk", does not rule out paring the second largest item, the defence budget. But even that, coupled with the welfare and foreign aid cuts that seem all but certain, would not do the trick.

It appears certain that Medicare, the federal health care programme for the elderly, will have to be slashed. This, however, would generate a fierce controversy. Further misgivings can be expected from several states, where there are fears that a balanced budget may deprive them of essential funding from Washington.

These concerns are only partly allayed by the Republican drive to outlaw "unfunded mandates," - requirements imposed by Congress on the states without the funds to pay for them. The House began debating this issue yesterday. But with 100-odd amendments tabled, it will be a long haul.

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