
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, April 10, 1990                   TAG: 9004100381
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A3   EDITION: METRO 
SOURCE: Los Angeles Times
DATELINE: WASHINGTON                                LENGTH: Medium

KENNEDY PROPOSES TRUST FUND

In an ambitious effort to chart a new course for the Democratic Party in the post-cold war era, Sen. Edward M. Kennedy Monday proposed creating a new federal trust fund for domestic needs to spend what he estimates could be a $170 billion "peace dividend."

By putting the money into a trust fund for such things as education and health care, the Massachusetts Democrat would keep the peace dividend from being used for deficit reduction, as many other Democrats and Republicans have suggested. Kennedy said that the $170 billion could come from defense cuts over the next five years.

Meanwhile, in Los Angeles, Sen. Alan Cranston unveiled his own approach to cutting defense and using the savings for domestic programs. He contended that the Pentagon budget could be halved by the end of the decade. The savings, he estimated, would by then total about $150 billion a year. Trying to soften the blow to defense industry-dependent Californians, Cranston said at a press conference that industries now making military planes and defense necessities could be re-tooled to build commercial jets and computers for classrooms.

The two proposals are likely to spur the growing debate within the Democratic Party about how best to take advantage of the new political realities created by the easing of East-West tensions.

Kennedy, the longtime champion of traditional liberalism, told a student audience at Georgetown University that the changed international scene could help Democrats resolve "the profound political dilemma" that has crippled the Democratic presidential chances for most of the past two decades.

"Every time we suggest a new initiative," Kennedy said ruefully, "our Republican opponents respond that what we really want is to raise taxes, or to widen the budget deficit."

But the turmoil in Eastern Europe has given Democrats new reason for hope, he contended. "Now a transformed world can also transform our politics."

Kennedy called for reducing Pentagon spending by 7 percent in real dollars in fiscal 1991 - a deeper cut than the 2 percent President Bush has said he is willing to accept - and by an additional 5 percent every year through 1995. The cumulative total, his aides estimate, would be about $169 billion by 1995.

In addition, Kennedy's proposal was distinguished by his call for a trust fund that would reserve the windfall from defense cuts for designated domestic needs. That idea is certain to be criticized.

by CNB