Clinton Budget Seeks Boost in Student Aid

WASHINGTON — President Clinton outlined sweeping plans Tuesday to make college more affordable for poor and middle-class families, to offer capital gains tax cuts to homeowners and to provide health insurance for the unemployed.

The president’s initiatives include a previously undisclosed plan for the largest expansion in 20 years of the Pell grant program, which helps finance college educations for low-income Americans.

“The budget finally moves us beyond the false choices that have held us back for too long and shows that we can cut our debt and invest in our children,” Clinton said during a White House press conference in which he previewed the budget he is to submit to Congress next week.

Most of the initiatives Clinton described are outgrowths of campaign promises--and they seemed nearly certain to draw fierce opposition from the Republican-controlled Congress, despite repeated pledges of bipartisanship from both sides since the November election.

The president opened the news conference by outlining his plans to help Americans pay for higher education while encouraging students to excel. They include:

* Expanding the Pell grant program by increasing the maximum annual benefit from $2,700 to $3,000 and providing it to an additional 130,000 students whose families meet the program’s low-income requirements. The cost: $1.7 billion a year above 1997 spending levels.

Clinton also wants to extend the grants to an additional 218,000 students, many of them older, who are not dependent on their families. The cost would be $3.9 billion over five years.

* Offering “Hope Scholarship” tax credits of up to $1,500 per student annually for two years, with students eligible for a second year only if they maintain a B average the first year. The program would reach an estimated 4.2 million students in 1998. The cost: $18.6 billion over five years.

* Granting tax deductions of up to $10,000 for higher education and training, at a cost of $17.6 billion over five years.

* Providing new “presidential honors scholarships,” which would reward the top 5% of each high school’s graduating class across the country with $1,000 merit scholarships. Some 132,000 students would benefit. The cost: $132 million in fiscal 1998.

* Allowing tax-free individual retirement account savings plans for families with incomes lower than $100,000. Families could withdraw funds for higher education from the new IRAs without penalty. Cost estimates were not available for the proposal.

Advocates of higher education praised the president’s ideas.

“If enacted, this plan would ensure that a college education is within the reach of virtually every American,” said Stanley Ikenberry, president of the American Council on Education, umbrella association for all colleges and universities.

“These provisions should help to alleviate fears expressed by many Americans that they will not be able to afford to send their children to college and should make it easier for students to attend the institution most appropriate to their needs.”

Although it is unlikely that the GOP-controlled Congress would embrace the president’s proposal in its entirety, earlier in the day, Senate Majority Leader Trent Lott (R-Miss.) said “Republicans are willing to consider” the tax breaks for education.

The GOP-led House gave a chillier response. Rep. Bill Goodling (R-Pa.), chairman of the Economic and Educational Opportunities Committee, said he was pleased with the president’s enthusiasm for education, but was wary of creating new programs.

“We must first take a close look at our existing 760 federal education programs to see what works and what is wasted,” Goodling said.

In response to questions, Clinton touched on other elements of his budget--which also seem destined to draw GOP opposition.

Also included in the president’s budget, according to administration sources familiar with it, will be a proposal to restore $13 billion to $15 billion in benefits for legal immigrants, who were denied most forms of federal assistance under the welfare reform overhaul passed last year.

The president also firmly planted himself in opposition to Republican calls for a capital gains tax cut and a balanced-budget amendment to the Constitution, which the Republicans have identified as one of their highest priorities.

“When you amend the Constitution, you do it forever,” Clinton said. “No one can foresee the circumstances that will come up a generation from now or 50 years from now or even 10 years from now.”

If the economic assumptions used to prepare the budget for a given year proved to be wrong and the budget were thrown out of balance, the president and the Treasury Department would be required “to impound Social Security checks or to turn it over to courts to decide what to be done,” Clinton said.

On capital gains tax cuts, Clinton again rejected the idea of the broad slash Republicans support. The president’s budget does, however, include a provision to allow individual taxpayers to exclude up to $250,000 in capital gains for selling a house (up to $500,000 for married taxpayers).

The GOP version from last year, Clinton said, was “was entirely excessive and would really almost squander money by having it be retroactive.”

Yet despite his clear difference with GOP leaders on Capitol Hill, Clinton said at the conclusion of his press conference: “What we need to do is to meet each other in good faith. This and all other issues can best be resolved by an early attempt to work through to a balanced-budget agreement.”

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The President’s Plan

Among the new programs and changes announced Tuesday:

Welfare tax credit: Include a provision offering businesses as much as $5,000 in tax credits if they hire perennial welfare recipients off the dole. The plan would allow employers to take a credit of 50% of the first $10,000 in wages paid to employees that had been on the dole for 18 months or longer.

Pell grants: Expanding the current Pell grant program for college students to $3,000 a year per student from $2,700. The grants go to low- and middle-income students at most universities across the nation.

College IRAs: Allow familes with incomes of up to $100,000 to set up IRAs that could be used for higher education.

Technology in education: More than double funding to a program that teaches teachers how to use technology in the classroom.

Education deduction: Also a working family to deduct up to $10,000 a year for taxes for the cost of any college tuition or job training.