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WITH LITTLE FANFARE, THE WHITE HOUSE, in the person of Chief of Staff Leon Panetta, took another step in the direction of the GOP budget last week. He allowed as how a budget package offered by conservative House Democrats — the 20-odd group that has dubbed itself the Blue Dog Coalition — might form the basis for negotiations on a final package with Republicans.

It’s an interesting adventure in Budgetville. Not that anyone paid much attention, but for a couple of hours before the Republican budget bill passed the House on Oct. 26, there actually was a serious budget debate on the floor between full-blown competing alternatives.

As is the custom in the House, the majority Republicans let the minority offer a substitute budget bill. Such a bill must always be a true substitute for its majority-sponsored counterpart. That meant the Democratic alternative had to balance the budget in seven years, as determined by the “scoring” of the Congressional Budget Office, just like the Republican bill.

Those rules were fine with the deficit hawks of the Coalition, under the leadership of Budget Committee member Bill Orton of Utah. The package they put together offered $ 858 billion in deficit reduction in seven years, enough to yield a budget surplus of about $ 35 billion in its last fiscal year. The most striking and important feature of the Coalition budget is that it includes no tax cut. Since the GOP plan calls for a $ 245 billion tax cut that has to be ” paid for” by offsetting spending cuts, that’s $ 245 billion in spending cuts Democrats don’t have to make.

So the Coalition budget slows the growth in Medicare spending by only $ 168 billion, instead of the GOP’s $ 270 billion. Medicaid also takes a much smaller hit: $ 85 billion versus $ 169 billion. The Coalition plan funds job- training and other “investment”-style programs at much higher levels. Cuts in discretionary spending total $ 69 billion instead of the GOP’s $ 143 billion. And the Coalition cuts the popular student loan program exactly zero dollars, in pointed contrast to the GOP’s $ 10 billion.

It’s a serious budget-balancing plan — a fact that sheds a little light on all the moaning about how diffcult it is to balance the budget. Look at the features of this plan: You can balance the budget and let Medicare premiums paid by oldsters actually fall from 31 percent of costs to 26 percent.

Not that “cuts” like this were acceptable to most Democrats — including, preeminently, the House Democratic leadership. In fact, minority leader Dick Gephardt and whip David Bonior took a pass on the whole thing. They just handed over the Democrats’ time on the floor to Orton and the Coalition. We thus had the curious spectacle of a Democratic substitute that was not supported by Democratic leaders in the House. The Coalition budget attracted 73 votes, including four Republicans.

All year at the White House, the administration has divided its time between denouncing Republicans and conceding ground to them. First, the administration proposed a budget that never would balance, nor was meant to. Then came a plan to balance the budget over 10 years — except that it relied on rosy administration assumptions, and the CBO determined that it would actually yield $ 200 billion deficits in perpetuity. Then the president said maybe nine years — then maybe eight, then maybe seven. But all along the administration was still unwilling to say it would play by CBO rules instead of its own. Now, by its possible embrace of the Coalition budget, the administration can get the blessing of the CBO.

What about a tax cut, which the president has said he wants? How to pay for it? Well, there’s the $ 35 billion surplus in the Coalition budget. In addition, the reduction in Medicare growth the administration itself has proposed is about $ 20 billion higher than the Coalition’s. That’s $ 55 billion for cutting taxes with no pain and suffering at all. It’s a start.

What’s odd is this: If this is where the administration has been going, why did it take so long to get there? Had the White House recognized it sooner, the Coalition budget could have served as a serious political bulwark against the Republicans.

Accepting their rules, it would try to beat them at their own game, trading in the end a smaller but still substantial tax cut for more spending on key constituencies. Pick the constituencies correctly and you have a decent shot at splitting the Republicans. It could have been a model for Clinton administration legislative strategy.

It’s too late for that. Momentum matters. Rather than a bulwark, the Coalition budget is likely to be the latest in a series of administration concessions, concessions that seem never to end.