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House Democrats Propose More Spending for Military and Education
GOP Says Plan Would Imperil Efforts to Balance Budget

By Jeffrey H. Birnbaum and Jonathan Weisman
Washington Post Staff Writers
Wednesday, November 1, 2006

As part of their midterm election push, House Democrats are promoting a wide-ranging legislative agenda that would add tens of billions of dollars a year to the federal budget for the military, homeland security and education yet still impose a new budget restraint that would make it harder to widen the annual deficit.

Republicans and budget experts doubt that Democrats could do both simultaneously. When price tags are attached to their six-pronged agenda -- named Six for '06 -- critics say the Democrats will be forced to choose between keeping their pledge of fiscal rectitude and their promises of federal largess.

"There's a trade-off that's being left unspoken here," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan opponent of deficits. "To pay for their new spending, they would have to cut programs, raise taxes or be unable to do what they want."

Republicans also scoff at the plan. ""It's schizophrenia in '06 is what it is," said Rep. Patrick T. McHenry (R-N.C.), a member of the Budget Committee. "You cannot balance the budget by vastly increasing spending."

This week, President Bush blistered Democratic policies and argued that voters would be better off if they kept Republicans in charge of Congress. He charged in a series of speeches that the Democrats would undermine America's fight against terrorism and would raise taxes if they won congressional majorities on Nov. 7.

Democratic leaders dispute the accusation and have been talking up Six for '06. The plan would allocate billions of dollars to build up the military, subsidize student loans and bolster port security. It would raise the minimum wage, make college tuition payments tax-deductible, repeal oil-company tax breaks and expand incentives for personal savings accounts, among many other provisions.

The program would prohibit the House from approving new spending or tax measures that widen the budget deficit. It would do that by restoring budget rules requiring that all future spending increases and tax cuts be offset by equivalent tax hikes or spending cuts.

"It's a road map to how Democrats would govern" if they win a majority in the House, said Jennifer Crider, spokeswoman for Minority Leader Nancy Pelosi (Calif.).

The agenda represents a consensus between the House Democrats' disparate factions. The final plan came together this summer after numerous meetings among Pelosi, other Democratic leaders and Democrats from the liberal, conservative and business-oriented factions of the party, as well as the Congressional Black Caucus and Congressional Hispanic Caucus.

In putting the agenda together, Democrats dropped several proposals that proved too controversial or costly, such as broad and expensive relief from the alternative minimum tax, which threatens to raise taxes on middle-income earners; filling a major gap, or "doughnut hole," in prescription-drug coverage under Medicare, which would cost $427 billion over 10 years; and rolling back Bush's tax cuts for wealthy Americans.

The final product contains plenty of pricey measures, including a commitment to "rebuild a state-of-the-art military capable of projecting power wherever necessary." The plan would also double the size of the military's special forces.

No dollar value is assigned to the provisions. But if Special Forces double through additions to the military and not through a reshuffling of personnel, that would mean 35,000 new active-duty troops and 15,000 reservists, at a minimum cost of about $5.8 billion a year, said Steven M. Kosiak, director of budget studies at the Center for Strategic and Budgetary Assessments.

To fortify the Army, several Democrats have proposed increasing troop levels by 40,000 at a five-year cost of $20 billion, the Congressional Budget Office said.

On the home front, House Democrats would tighten border and port security by screening all containers that enter the country -- a multi-billion-dollar project. The plan would also step up training and equipping National Guard forces and first responders.

A 2004 study by the Council on Foreign Relations estimated that covering the budgetary shortfall for first responders alone would take a fivefold increase in funds, to $25 billion from $5.4 billion a year.

The Democrats' plan would boost federal spending on college education. It would allow some families to write off their children's college tuition payments (up to $3,000 per student), a now-expired tax break that cost the government $4.7 billion in revenue last year.

Democrats also hope to expand federal assistance for needy students under the Pell Grant program and to cut in half interest rates for federal student loans. House Budget Committee Republicans have put the cost of the interest rate cut at $60 billion over five years. Democrats said the cost would be lower, but not by much.

Other pieces of the agenda appear to be paid for, and Democrats are proposing policy changes that would raise substantial revenue. They would couple a minimum-wage increase to ending tax breaks that they say reward companies for sending jobs overseas. Under a plan set out by Democratic presidential nominee John F. Kerry in 2004, U.S.-based companies would be forced to pay taxes immediately on virtually all foreign profits that are not taxed by another country, raising $12 billion a year.

The Six for '06 plan would promote renewable energy sources and would fund the effort by cutting tax subsidies to oil and gas companies. According to Bush's budget, $1.83 billion in tax breaks will go to oil and gas companies next year to subsidize energy exploration and development.

The biggest savings in the Democrats' plan would be a pledge to give the federal government the authority to negotiate lower drug prices for Medicare. Sen. Edward M. Kennedy (D-Mass.) and Rep. Henry A. Waxman (D-Calif.) have estimated that Medicare could save $190 billion over the next decade if the seniors' program adopted the price-negotiating model of the Department of Veterans Affairs.

To finance any remaining budget shortfall created by the agenda, Crider said Democrats would tap the vast amount of tax revenue owed to, but uncollected by, the government -- the "tax gap," which has been projected at $300 billion a year. Crider was not specific about how that money would be brought in except to say that the Internal Revenue Service would be given more manpower.

In his last budget, Bush also recommended closing the tax gap, but nothing came of his suggestion.

Some Democrats acknowledge that compromises are likely to be needed on the spending side of Six for '06 to make good on its pledge to restore strict budget rules -- the "pay as you go," or "paygo," requirement for offsetting tax cuts or spending hikes.

"The Blue Dogs are very strong on paygo," said John S. Tanner (Tenn.), a leader of the conservative "Blue Dog" Democrats. "If you have to cut spending, you have to cut spending."

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