Senate Backs Clinton’s $1.5-Trillion Budget Bill : Economy plan: Stimulus package meets resistance, with chance it could be scaled back in showdown next week.

WASHINGTON —  In a key test of strength for President Clinton’s economic program, the Senate Thursday approved the broad outlines of his long-term plan for the tax increases, spending cuts and new domestic outlays that are designed to reduce the budget deficit by $500 billion over the next five years.

The 54-45 vote on the $1.5-trillion budget bill--with every Republican and two Democrats in opposition--followed House approval last week of a similar spending blueprint. Minor differences in the two versions are expected to be resolved soon by a Senate-House conference committee, while specific legislation to enact the various programs will be voted on in the months to come.

“I think the American people want change, and this Senate has taken a step toward giving it to them,” said an elated Senate Majority Leader George J. Mitchell (D-Me.).

But the Senate immediately became embroiled in a major debate over Clinton’s troubled $16.3-billion short-term stimulus package, which encountered strong resistance from conservative Democrats and Republicans, who appear to have a better chance of scaling it back than did their counterparts in the House, which passed the measure last Friday.

Mitchell, in fact, openly called on the President to lobby for the stimulus program among wavering senators in his own party before a showdown on the bill, expected sometime next week.

“There’s no rest for the weary,” Mitchell told Clinton after receiving a congratulatory telephone call from the White House following Senate passage of the budget bill. “I’ll have a list of people for you to call on the supplemental (stimulus package).”

Clinton’s allies said that the package is needed to create jobs this year and provide an insurance policy against a faltering recovery.

“The President believes that this stimulus package is the bridge to get us from today’s weak and sluggish economy onto stronger and higher ground,” argued Sen. Robert C. Byrd (D-W.Va.), chairman of the Senate Appropriations Committee and floor manager for the stimulus bill.

Critics said that the funds, labeled emergency expenditures, would add to the deficit without providing sufficient impetus to spark a lagging economy. Some Republicans, while claiming that they do not want to stage a filibuster against the measure, indicated that they would prolong the debate on the Clinton request.

While the House approved the stimulus package after two hours of debate, the Senate appeared likely to stretch out its debate far longer, with several Democratic senators seeking to delay its full impact or offset it with spending cuts elsewhere.

In the battle that ended Thursday, Democrats for six days fought off a series of Republican attempts to whittle away at Clinton’s budget plan, narrowly prevailing on votes to preserve a proposed tax increase for the wealthiest Social Security recipients and a proposed energy tax.

Two Democrats--Sens. Richard C. Shelby of Alabama and Robert Krueger of Texas--voted against the budget plan favored by Clinton. Krueger, who was named to fill the vacancy created by the resignation of Lloyd Bentsen, who is now Treasury secretary, is the only senator who faces an election contest this year.

One frustrated GOP lawmaker, Sen. Hank Brown (R-Colo.), said that the Senate action would trigger “the largest increases of taxes in history as well as the biggest increase in the marginal (top) tax rates since President Herbert Hoover.”

Senate Minority Leader Bob Dole (R-Kan.) added: “We want him (Clinton) to succeed but we don’t want bad policy.”

Democrats, however, declared that passage of the budget resolution so soon after Clinton took office is an indication that Congress and the President are working together to end political gridlock.

In one surprising development, the Senate went on record, 73 to 24, in support of a line-item veto on taxes and appropriations for the President, a procedure that Clinton has endorsed, for this session of Congress. The vote is not binding, although it clearly indicated that the concept has overwhelming support in the Senate, despite the opposition of some powerful Democratic leaders.

The Senate budget resolution, which calls for $63 billion more in tax increases and spending cuts than Clinton originally proposed, otherwise follows the outlines of his economic program. Senate Democratic aides said that there would be little difficulty in reconciling it with the House version of the budget, which also proposed deficit-reduction measures of $63 billion more than the President first sought.

Under Clinton’s plan, the deficit for the fiscal year starting Oct. 1 was projected at $258 billion, while the Senate version estimated red-ink spending at $247 billion and the House figure was $254 billion. All three project a gradual decline in the deficit to about $200 billion by 1998.

The congressional budget resolution, which does not require Clinton’s signature, does not have the force of law. It does set spending ceilings for Senate and House committees, however, and instructs tax-writing committees on the amount of revenues that they must raise.

Each committee will have flexibility to decide how to allocate funds within its control, and the tax-writing committees may raise revenue however they wish. As a practical matter, however, the Democrat-controlled Congress is expected to follow the main lines of Clinton’s economic program as it carries out its work.