    [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.