07-13-2002

BUDGET: Finding It Hard to Say `No'

During the eight years of the Clinton administration, conservatives
insisted that the only way to really restrain spending in Washington was
to elect a Republican president. "If the president wants to spend,
and you have the money to spend, you will spend," conservative Rep.
John Shadegg, R-Ariz., said just weeks before the 2000 presidential
election. "If Al Gore is elected, we're going to spend more. The only
hope to stop the spending is to elect George W. Bush."


Bush was elected. But government spending, rather than shrinking, is going
through the roof-with the president's cooperation. This spring, Congress
passed-and Bush signed-a huge farm bill that critics called bloated and
that restored programs Republicans had promised to eliminate. In addition,
Congress and the administration are once again bailing out Amtrak, a
favorite target of conservative budget cutters. Congress may approve-and
Bush probably wouldn't dare veto-a costly Medicare prescription drug
benefits plan. And Congress and the White House have already agreed to
spend billions of dollars on homeland security and the war against
terrorism, without giving much indication that they're genuinely committed
to belt-tightening elsewhere in the budget. The administration has even
backed off from fighting pork barrel projects on Capitol Hill.


All of this leaves conservatives wondering about Bush's avowed fiscal
conservatism. "This president is serious about being fiscally
conservative," Shadegg said in a recent interview, but added,
"At least I think he is."


Shadegg contended that Bush and other administration officials are sending
the right signals by promising that upcoming appropriations measures will
be vetoed if they are too costly. Yet Shadegg conceded, "The farm
bill might be evidence that he didn't hold the line on spending."
Other Republicans on Capitol Hill are privately voicing similar
sentiments. "My guts tell me if they signed the farm bill, they'd
sign anything," said a veteran House GOP aide. "I don't know
what they'd veto at this point."


Almost 18 months into Bush's presidency, the government has returned to
deficit spending, and he hasn't vetoed a single bill, appropriations or
otherwise. But at the same time that Bush risks conservatives' wrath over
what they see as his lack of fiscal backbone, many members of
Congress-including conservative Republicans-are pushing for more spending
on a variety of programs. They firmly believe that their constituents
expect them to bring home the bacon. And in this election year when
control of both chambers of Congress hangs in the balance, many GOP
lawmakers will look for the administration to go along with their
requests.


Take Rep. Mark Souder, R-Ind., one of the most visible members of the
rebellious House Republican freshman class of 1994. During the early years
of the Republican revolution, Souder frequently complained that
congressional GOP leaders were not bold enough in slashing government
spending, which had soared during 40 years of Democratic rule on Capitol
Hill.


But things have changed since 1994. Last month, Citizens Against
Government Waste, a fiscal watchdog group, complained that Souder, now a
seasoned veteran, was seeking $228 million in pork barrel,
special-interest money for his Fort Wayne district. The requests included
$8.2 million for a World War II museum and $120,000 for the Mid-America
Windmill Museum. "Another good member has succumbed to the spending
cult in Washington," the group said in a statement.


In an interview, Souder said that his constituents expect Congress to
spend money, even though the government is running a deficit. "If I
were taking this money out of border security, it would be one
thing," Souder said in explaining his project requests. "But we
have a museum budget, so why shouldn't Fort Wayne get its part of the
money?"


During the debate on the last highway bill in 1997 and 1998, Souder was
criticized at home for not gaining funding for an airport road project. He
later secured money through the appropriations process to build the road,
but the criticism clearly taught him a lesson. "If you forget that
people in your district look at you in terms of what you bring home, you
get hurt," Souder said. "It's stupid to think that I'm not going
to try."


Other signs also point to a continued congressional emphasis on spending.
House Republicans have promised two former GOP members, Jay Dickey of
Arkansas and Helen Delich Bentley of Maryland, that they will get back on
the House Appropriations Committee if they recapture their old
congressional seats in this November's election. "Bringing federal
dollars back home is a valuable commodity for some members in certain
seats," said a House Republican leadership aide in explaining why GOP
leaders made the high-profile promises.


In this atmosphere, Bush may find it difficult to put his foot down,
despite his promise to veto fiscal 2003 appropriations bills that are
loaded with "unnecessary" spending. Many conservatives both
inside and outside of Congress now doubt whether the White House-faced
with a critical midterm election-is willing to expend the president's
political capital to fulfill his promise to change the way Washington
spends.


The Cost of Cuts


Bush has discovered that cutting spending is far tougher than he
proclaimed during his presidential campaign. But the Committee for a
Responsible Federal Budget, a Washington interest group, anticipated as
much. In September 2000, the group noted that Bush's economic plan of
large tax cuts and big defense increases "calls for much smaller
discretionary spending increases than have prevailed since the government
began running surpluses. Discretionary [spending] includes popular
programs such as education, law enforcement, and transportation. Thus, the
discretionary spending restraint implied by the Bush plan could prove very
difficult to achieve."


Bush's first budget, unveiled in early 2001, proposed to increase
discretionary spending in fiscal 2002 by only 4 percent, far less than the
8.6 percent boost during the last year of the Clinton administration.
Since high-priority programs such as education were slated for
double-digit increases, the budget included heavy hits on other programs.
The White House proposed cutting agriculture spending, for instance, by 4
percent. And the administration launched an all-out campaign against
lawmakers' practice of earmarking funds for projects in their districts.
Bush's budget identified $16 billion in earmarked projects and called for
eliminating half of them.


As it turned out, restraints on spending were significantly loosened-if
not completely abandoned-as a result of developments last year that the
White House could not have anticipated. In June, Democrats took control of
the Senate when Sen. James M. Jeffords of Vermont left the Republican
Party and became an independent. Jeffords's switch came after the
GOP-controlled Congress had already approved a fiscal 2002 budget
resolution that embraced some of the administration's fiscal controls. But
House Republicans and Bush suddenly had to deal with Senate Democrats who
had far different budget priorities.


Even in the best of times, the turn of events would have caused problems
for the administration. And the latter part of 2001 was far from the best
of times. The nation already was in a recession when the terrorists struck
on September 11. Hoping to avoid the usual partisan rancor over the budget
at a time of national emergency, the White House and congressional leaders
agreed in early October to allow a comfortable spending boost of 8 percent
in fiscal 2002. Mitchell E. Daniels Jr., the director of the White House's
Office of Management and Budget, initially resisted the deal, but he was
overruled.


Still, even late last year the administration continued to rattle its
saber against costly legislation. Reacting in October to the House's
version of the farm bill, OMB declared: "In the near term, the
administration is focusing on recovery and national security. During this
period, spending in other important areas must be balanced against these
priorities." And in December, OMB said of the Senate's farm
legislation: "The administration believes it is unwise, in this time
of uncertain and changing federal resources and priorities, to enact
policies that create unknown and potentially huge future demands on
taxpayers."


In February, Bush unveiled a fiscal 2003 budget proposal calling for big
increases in defense and homeland security, but only a 2 percent increase
in other spending-below the 3.8 percent inflation rate the administration
projected. The president's budget included cuts in programs popular on
Capitol Hill, such as highway construction and water projects. It also
singled out lawmakers who had been particularly adept at earmarking
projects. And after Michael Parker, the head of the Army Corps of
Engineers, defended earmarking and questioned proposed cuts in his
agency's budget, he was abruptly fired in March.


But then on May 13, Bush signed a farm bill that will cost an estimated
$190 billion over 10 years, including more than $80 billion in new
spending. This single act led conservatives to openly question the
president's commitment to fiscal discipline. The bill provides new federal
subsidies for New England dairy farmers and renews subsidies for wool and
mohair producers-all hot-button issues for conservatives. Subsidies for
many farmers will increase under the legislation. Although large
agricultural producers are limited to receiving $360,000 annually per
farm, down from the earlier cap of $460,000, critics charged that the bill
has loopholes big enough for the large-farm owners to drive a tractor
through.


Aware of conservatives' concerns, administration officials went so far as
to privately promise farm-bill opponents that Bush would not hold a
high-profile signing ceremony. Instead, the president signed the bill
before 8 a.m., in a low-key event broadcast mainly on radio stations in
farm states. Publicly, administration officials said the early-morning
ceremony was necessary to reach farmers, who traditionally are early
risers.


"This bill is generous and will provide a safety net for
farmers," Bush said at the signing. He claimed that the legislation
would break "a bad fiscal habit. In the past, Congress would pass a
multi-year farm bill, and then, every year after, continue to pass
supplemental bills." In defending the president's signing of the farm
bill, both Daniels and White House spokesman Ari Fleischer said the
legislation met the spending levels called for in congressional budget
resolutions.


Bush apparently felt considerable pressure in this election year to sign
the farm bill, which, after all, had passed by the big margins of 280-141
in the House and 64-35 in the Senate. The president and the White House's
political operatives also knew that control of the Senate could well be
decided in farm states such as Georgia, Iowa, Minnesota, Missouri, and
South Dakota, where Republicans are fielding strong candidates against
Democratic incumbents. But those political realities did not stop
conservative pundits and budget watchdog groups from denouncing the
bill.


"I've covered federal budget issues for nearly two decades,"
Stephen Moore, a senior fellow at the Cato Institute, wrote on the Web
site of the conservative National Review. "If the farm bill wasn't
the most fiscally rancid legislation I have seen, it's certainly in the
top three."


The National Taxpayers Union called regional dairy compacts, which the
bill expanded, "one of the most reprehensible forms of government
intrusion in the marketplace." Taxpayers for Common Sense echoed
those sentiments. "This is a disingenuous attempt by many farm-state
lawmakers to bring home the bacon in an election year, and represents
little more than a politically motivated grab bag of special-interest
handouts," said Joe Theissen, the group's executive director.
"This is the biggest corporate welfare handout in recent
history."


Even humor columnist Dave Barry got into the act. "Powerful
congresspersons from both parties, as well as President Bush, believe that
if they dump enough of your money on farm states, the farm states will
re-elect them, thus enabling them to continue the vital work of dumping
your money on the farm states," Barry wrote in a column last month.
"So, as we see, it's not welfare at all! It's bribery."


Some conservative members of Congress were more understanding. "The
politics of the farm bill are very difficult," said Shadegg, the
chairman of the Republican Study Committee, a group of conservative House
members. Added Rep. Patrick Toomey, R-Pa., who monitors appropriations
issues for the study group: "The president has got to pick his
battles. I understand that."


Sen. Bill Frist, R-Tenn., the chairman of the National Republican
Senatorial Committee, said he did not advise any GOP senators who are up
for re-election this year on how to vote on the farm bill, and he never
discussed the legislation's political implications with the White House.
"In none of my conversations did it come up," Frist said. He
added that he voted for the bill "in part, for my constituents,"
but he called it "one of the toughest votes I have
taken."


The farm vote is gaining attention in several pivotal Senate campaigns.
For instance, in Minnesota, where Democratic Sen. Paul Wellstone is in a
tight race with Republican Norm Coleman, a former St. Paul mayor, the
Democratic Party has run a television ad touting Wellstone's support of
the legislation.


The political wisdom of supporting or opposing the farm bill may face its
toughest test in Iowa, where Democratic Sen. Tom Harkin, the chairman of
the Senate Agriculture, Nutrition, and Forestry Committee, has run a
television ad contending that he "wrote a bill that not only helps
farmers, but all of Iowa." Harkin's opponent, Republican Rep. Greg
Ganske, voted against the farm bill, declaring, "I think the
substance of the farm-bill conference report is not in the nation's or
Iowa's long-term interest."


Mixed Expectations


Even if the ultimate political test must wait until November,
conservatives contend that Bush's signature on the farm bill shook their
confidence that he will ever take tough positions on spending. "I
don't think there's any fiscal conservatism in this administration,"
said James L. Payne, a former political science professor at Texas A&M
University and the author of The Culture of Spending. Payne added that
Bush "absolutely laid down and played dead" on the farm bill.
"He's very eager to maintain ... national popularity, so why rock the
boat?"


Pete Sepp, vice president of communications at the National Taxpayers
Union, said that Bush's earlier veto threats "could have looked a lot
fuller if there had been follow-through on the farm bill." Sepp
added, "What's the purpose of saving your political capital if you
can't spend it on a bill that costs billions of dollars?"


To be sure, Bush still could wield considerable leverage during this
appropriations season. The divided Congress was unable to agree this
spring on a compromise fiscal 2003 budget resolution that would have set
spending guidelines for the 13 appropriations bills. The lack of a budget
resolution produces a shift in power from Capitol Hill to the White House,
if the president wants to take it, according to Dan Crippen, the director
of the Congressional Budget Office.


"Without some congressional budget process in place, the veto will be
the power in town," Crippen said in a recent interview with National
Journal reporters. Crippen said he expects Bush to veto bills "both
on substance and on power," and to use the veto "to get
[Congress's] attention."


During his July 8 news conference, Bush continued to push Congress to
adequately fund defense and homeland security, while warning that
"excessive government spending ... will be a drag on our
economy." OMB Director Daniels has repeatedly contended that the
president will not hesitate to veto spending bills this year. Daniels
vowed during a May interview with National Journal that Bush would remind
appropriators that "there's a war on, and that there shouldn't be
business as usual." Daniels added: "If they don't agree, we'll
have to work it out. This president will use his authority."


Before the Fourth of July congressional recess, the Senate Appropriations
Committee unanimously approved spending nearly $10 billion more in fiscal
2003 than Bush or the House Appropriations Committee have proposed. (See
chart, this page.) Daniels made clear that the White House sides with the
House on appropriations matters and will use the House figures as its
spending guidelines during the remainder of the year.


At the same time, Daniels has taken a softer line on congressional
earmarks of late, despite his earlier vigorous campaign against them. He
admitted that Bush accepted a higher level of earmarks last year than the
administration wanted. Indeed, Citizens Against Government Waste has
estimated that earmarks accounted for about $20 billion in fiscal 2002,
compared with $18.5 billion in fiscal 2001 under Clinton. "The
subject is just about used up," Daniels conceded. "I don't think
earmarks is going to be a life-and-death issue."


Budget hawks are worried about such administration backpedaling, because
Congress is clearly in a spending mood. Since 1991, the National Taxpayers
Union has computed a "net annual agenda cost" for members of
Congress by looking at whether bills they sponsored would increase or
decrease spending. The group recently reported that the 2001 congressional
session was the first in a decade in which both parties in both chambers
had net bill averages that would increase spending. "The war on
terror has taken the political edge off unrelated spending programs that
otherwise would bear more scrutiny," said Sepp of the NTU.


In an interview, Sen. John McCain, R-Ariz., a longtime foe of pork barrel
spending, strongly voiced the same opinion. He contended that lawmakers
are cloaking as many of their projects as possible with the "homeland
security" mantle. "The war profiteering has got to stop,"
McCain declared.


But with members of both parties clamoring for more spending, close
partisan divisions in each chamber, and a tight election approaching,
insiders are divided over whether the president will actually veto any
funding bills. "I don't think they will veto anything that will cost
them politically," said a House Democratic leadership aide. "I
don't think the administration has expended any political capital on
anything."


Any spending bill that Bush vetoes is likely to anger some voters in key
states. If he rejects the Agriculture appropriations bill, he risks
congressional seats in farm states. If he vetoes the Energy and Water
appropriations bill over pork barrel infrastructure projects, he could
alienate voters in the South. And if he vetoes the Labor-Health and Human
Services-Education appropriations bill-the Democrats' chief focus for
spending on social programs-opponents will portray him as anti-education.
The House Democratic aide joked that the administration probably would
like Congress to pass the appropriations bill for the District of Columbia
early, just so Bush can veto something that won't hurt him
politically.


Others, however, suggest that the president and his party will pay the
price if he continues to condone a Washington spend-a-thon. "It is a
problematic political strategy in terms of getting core Republican voters
excited about their candidates," said Cato's Moore, who also heads
the Club for Growth, a political action committee that supports
conservative candidates.


Core GOP voters might get excited, on the other hand, if Bush were to
forcefully hammer at the Senate Democrats' big-spending ways and
silly-sounding pork projects. Writing on the National Review Web site,
Moore argued, "History proves that strong presidents ... make strong
use of the veto. Mr. Bush can make a powerful case for rejecting obese
spending bills: They are not just economically wrongheaded, they weaken
the critical war on terrorism by diverting scarce dollars away from our
vital national security needs."


House Republicans insist they do not want to send Bush a spending bill
that he has to veto. "I hope our discipline will be enough to keep
Senate spending in line," said House Appropriations Committee
Chairman C.W. "Bill" Young, R-Fla., in an interview. Young
acknowledged that the lack of a budget resolution makes the job more
difficult, but he added, "I'm not going to support a [spending] bill
at a level that I think he will have to veto."


Even a key Senate Democratic appropriator acknowledged that senators will
have to take the president's position into account when working on funding
bills. "With the closeness we've got here, of course you have to
worry about a veto threat," said Harkin, who chairs the Senate
Labor-HHS Appropriations Subcommittee. "I would hope that the
president will adhere to his campaign promise that he wants to be a
uniter."


But House Appropriations Committee ranking member David R. Obey, D-Wis.,
professes to be unconcerned about what the president might do. After all,
the spending bills must be enacted sometime or the government will shut
down, posing risks for both parties. "The administration can huff and
puff and turn blue, or they can strike a cooperative mode," Obey
said. "What counts are results. I don't pay attention to the
atmospherics between now and then."


But this year, the atmospherics are even more unpredictable than in the
past. "We will be, unfortunately, in new, uncharted territory
here," Daniels said in May. "I'm not sure what the process will
be, let alone the outcome." Or when it will all be over, for that
matter. The showdown that is beginning this summer surely will intensify
in the fall-and it may even resume after the election in a lame-duck
session-before Congress and the administration finally determine who will
blink first over spending.


David Baumann

National Journal