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E.J. Dionne Jr.

Destined for Deficits

By E. J. Dionne Jr.
Friday, March 18, 2005; Page A23

The sexy issues in budget fights get the headlines, and, Lord knows, drilling for oil in Alaska's Arctic National Wildlife Refuge is a big deal. But the budget's most revealing details are hidden in plain sight and thus ignored.

Here's a little-known fact symptomatic of everything wrong with the way Congress has dealt with our nation's finances over the past four years. Writers of both the House and Senate budget resolutions were careful to make sure that Congress would not consider budget cuts and tax cuts at the same time.

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The House budget resolution requires the Ways and Means Committee to report legislation on tax cuts by June 24. But bills that will enforce cuts in entitlement programs aren't called for until Sept. 16. The Senate reverses the order: spending cuts by June 6, tax cuts on Sept. 7.

Why is this important? Because there are a couple of things our legislators and our president do not want citizens to do: (1) link the big deficits with the big tax cuts, or (2) notice that if the tax cuts weren't so big, cuts in domestic spending wouldn't have to be so big. The nice separation of those dates is just the ticket for obscuring the obvious.

Republican majorities in both houses want to go full speed ahead with tax cuts. But when it comes to domestic spending, they want to change their story entirely: "Oh my, oh my, look at those dreadful deficits! Really, we'd rather not make all these cuts, but we must bring down that terrible, horrible, awful debt."

It's particularly outlandish that Congress is about to extend cuts in taxes on capital gains and dividends at the same time that it's considering big cuts in Medicaid and the children's health insurance program. Tax cuts for the wealthiest Americans can't wait, so we have to cut health services to the poorest.

Overall, the House resolution calls for $106 billion in tax cuts over five years, the Senate some $70 billion. The dividends and capital gains cuts alone amount to $22.8 billion, of which $10.4 billion will go to Americans earning more than $1 million a year. The Medicaid cuts in the proposed Senate resolution amounted to $14 billion over five years. No wonder these guys don't want us to compare their tax cuts with their spending cuts. No wonder that in the Senate, at least, Oregon Republican Gordon Smith was able to persuade enough of his colleagues to join with the Democrats and stage a successful rebellion yesterday against the Medicaid reductions.

The truly shameful thing is that despite the cutbacks in domestic spending, these budgets actually add to the deficit. Why? Because the tax cuts, increased spending on defense and international programs, and the resulting increases in interest costs on the national debt amount to more than all the spending cuts combined. According to the Center on Budget and Policy Priorities, the proposed House resolution would add $126.9 billion to the deficit over the next five years; the Senate resolution would add $129.8 billion. You would not know this from all the bragging these politicians are doing about how frugal they are.

But not all of them are bragging. Quietly, sober Republicans are challenging these budgets in bits and pieces. Smith's Medicaid proposal is one sign. Sen. Norm Coleman of Minnesota has taken on the president's cuts in the Community Development Block Grant program. Five brave Senate Republicans -- George Voinovich, John McCain, Olympia Snowe, Susan Collins and Lincoln Chafee -- bucked their party on Wednesday to vote for budget rules that would have required any new tax cuts to be paid for with savings elsewhere in the budget. The measure fell just one vote short.

Rep. Mike Castle of Delaware is an old-fashioned Republican who can't understand why his own party wants to leave a legacy of debt. "Tax cuts and no tax increases are the driving principle of the Republican Party at this point," Castle says, "and if they have to borrow money to do that, they will do it."

And Castle is willing to say what many Democrats, for political reasons, are reluctant to utter out loud: that even the Pentagon ought to be challenged on "the efficiency side." Castle says that you can believe in a strong defense and still wonder why "we seem to form our budgets without asking defense to contribute to our savings at all."

In other words, if all tax cuts and all defense dollars are sacred, there is no way the budget will ever be balanced. That's why the congressional leadership and the White House are doing all they can to obscure the choices they are making.


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