Copyright 2002 The Washington Post  

The Washington Post
March 10, 2002, Sunday, Final Edition
SECTION: A SECTION; Pg. A05

LENGTH: 1272 words

HEADLINE: Past Rhetoric Haunts Senate Democrats in Budget Battle

BYLINE: Glenn Kessler, Washington Post Staff Writer

BODY:
Ever since the federal budget picture turned grim last fall, Democrats have repeatedly blamed the Bush administration for running the nation into a "fiscal ditch," "cooking the books" to hide its mistakes and promising much more than the nation can afford.

But as Congress this week begins drafting a budget blueprint for fiscal 2003, Senate Democrats suddenly find themselves on the spot.

Now that they have assumed control of the Senate for the first time in six years, they must produce a budget plan, rather than merely taking potshots from the sidelines. Few experts believe they can craft a budget that matches their own rhetoric, leaving them open to some of the same charges they have flung at Republicans.

Democrats are under intense pressure from interest groups to restore spending cuts proposed by President Bush, retain his boost in military spending and provide a much more generous Medicare prescription drug plan -- while at same time maintaining a commitment to fiscal discipline. The debate has exposed fissures between the fiscal conservatives and social liberals in the party which had been largely papered over when they were in the minority.

"You can't do everything that everybody wants," said Senate Budget Committee Chairman Kent Conrad (D-N.D.), who has taken the lead in attacking the Bush plan and is now shouldering the burden of creating a Democratic alternative. He said he was going "push the envelope as far as I can" but "this is a time to make choices."

With only a one-vote majority in the Senate, some Democrats fear that even if a budget plan emerges from the Senate Budget Committee, the floor debate on the budget will veer out of control. Lawmakers could approve amendments that would simultaneously extend the Bush tax cuts and create a $ 750 billion prescription drug benefit -- a deeply embarrassing outcome that would forecast huge deficits.

"There may well be votes like that," said a Democratic leadership aide. "It would be an utterly irrational result."

Republicans will start the process when the House Budget Committee on Wednesday begins drafting its budget plan, largely following the administration proposals amid a concerted media campaign to build public support for GOP priorities. But the GOP also is rather gleefully keeping a close eye on the Democratic predicament.

"It is interesting, to say the least, to listen to their dilemma," said White House budget director Mitchell E. Daniels Jr.

"Once they are done recycling last year's talking points, they will recognize we've used conservative numbers and we all are dealing with the realities of a slower economy and the exigencies of a war," Daniels predicted. "They will not have an answer particularly different from ours."

"There are some benefits from being in the minority," quipped G. William Hoagland, Republican staff director for the Senate Budget Committee.

Democrats are quick to note that if they face a problem, it is largely because of policies advocated by Bush. A year ago, the 10-year budget surplus was projected to be $ 5.6 trillion, but Democrats contend the president's tax cut has left little maneuvering room in the wake of war and recession. "They put us in this straitjacket," said Thomas Kahn, Democratic staff director for the House Budget Committee.

The White House last week released charts showing that the budget would be in deficit this year -- requiring the government to use surplus Social Security funds for other programs -- even under the budget plans proposed last year by House and Senate Democrats. "They, quote, raided Social Security like crazy," Daniels jabbed.

Democrats counter that, even so, the level of debt reduction over the next 10 years would have been $ 1.5 trillion higher than projected under Bush's current plan.

The process is complicated by the fact that neither the House nor Senate budget blueprint means very much in the legislative process, though politically they can have great significance. Few lawmakers and experts believe House Republicans and Senate Democrats -- who took five months to agree on a minor economic stimulus package -- will reach an agreement on a budget plan, known officially as a budget resolution.

In fact, it appears unlikely the two bodies will even use the same budget numbers, with the House ready to embrace White House budget estimates and the Senate using less rosy projections from the Congressional Budget Office. Under White House math, the president's budget would have a $ 3 billion deficit in 2003, not counting the economic stimulus bill that cleared Congress last week, compared with a $ 43 billion deficit under CBO estimates.

Congressional budget plans do not have the force of law, and appropriations committees, which actually set annual spending for programs, can still proceed to divvy up funds without a budget plan. Without a compromise budget plan in place, it makes it very difficult to pass new tax cuts or expand mandatory spending programs in the Senate.

Yet both sides fight fiercely over the budget priorities outlined in the plans, in part because the votes can later become potential material in political campaign ads. Neither side has much maneuvering room for the 2003 budget, but the budget plans generally are for 10 years, permitting lawmakers to promise they will take steps in the future to address current problems.

The Bush administration has proposed spending $ 190 billion over the next 10 years on a prescription drug plan, while the House GOP appears on track to suggest a $ 300 billion drug plan. Conrad would not reveal the figure he has in mind, though some Democrats want to go as high as $ 750 billion. Yet none of the plans would really kick in significantly until later in the decade.

Conrad has repeatedly charged the administration with "raiding" Social Security, and yet he conceded that under his emerging plan, part of the Social Security surplus will need to be used in the short term. He said he will suggest that Congress direct the budget committees to come up with a five-year plan that would either raise revenues or cut spending by $ 500 billion, in order to put the government back on the path of using the Social Security surplus only for debt reduction.

As measured as a share of the economy, a $ 500 billion plan would be half the size of the 1993 Clinton deficit reduction plan, which boosted taxes significantly on wealthy Americans. Bush's tax cut reduced taxes mainly for upper-income Americans, but few Democrats have been willing to suggest repealing parts of the tax cut.

Democrats also have constantly charged the GOP has refused to fix the looming problem of the alternative minimum tax -- a levy aimed at the rich but increasingly affecting the middle class. But Conrad said his plan will not address that potential $ 300 billion problem either. "We can't deal with it at this time," he said.

Robert Reischauer, president of the Urban Institute and a former CBO director, said Democrats "have a tremendous dilemma" because they have been "unwilling to bite the bullet" and push to repeal some of the Bush tax cut. Otherwise, he said, there will not be enough money to push for increased social spending and still claim the mantle of fiscal discipline.

Daniels noted that Conrad not only criticized the administration for running deficits, but that he has complained about proposed cuts in highway and water projects.

"I like Senator Conrad," Daniels said. "I admire his commitment to restrain spending. I look forward to discovering the first area he can do it in."



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