Democrats Pledge to Restrain Spending

Democrats say the annual deficit is kept artificially low with cash borrowed from the Social Security trust fund. The nation's overall indebtedness is approaching $9 trillion, and interest on that debt grew by 23 percent last year, making it the fastest-growing part of the budget.

Less than 20 percent of the budget is available for education, highways, housing and courts, discretionary programs that are being further squeezed by an increasingly expensive military. In the session that just ended, Congress failed to pass budget bills for most domestic agencies, in part because lawmakers refused to support painful spending restraints.

Two weeks ago, Democrats announced plans to plug some of the most difficult holes in the current fiscal year by stripping funds for lawmakers' pet projects, known as earmarks, from the bills. For next year, Spratt and Conrad said they plan to keep the purse strings pulled tight on discretionary programs and apply a pay-as-you-go rule to changes in tax policy and mandatory programs such as Social Security and health care.

That will force Democrats to find spending cuts or new revenue to pay for some big-ticket items: They have promised to halve interest rates for federal student loans, which would cost as much as $60 billion over five years. They want more money for border and port security, first responders and the National Guard. They say health programs for children and veterans need more cash to avoid dropping thousands of people from their rolls. And they want to extend some of the Bush tax cuts that are set to expire in 2010, including an expanded child credit, a reduction in the so-called marriage penalty and the new 10 percent tax bracket.

Plus, Democrats have promised to freeze the alternative minimum tax, a parallel tax structure that will add thousands of dollars to the tax bills of millions of families unless Congress comes up with about $50 billion to halt its expansion for another year.

Democrats say they will cover that cost by ending tax breaks on foreign profits of U.S. businesses, closing corporate tax shelters, cutting subsidies to oil and gas companies and giving the federal government authority to negotiate lower drug prices for Medicare. They would also tap the vast amount of uncollected tax revenue known as the tax gap, which has been projected at $300 billion a year.

But some of those funding sources are highly uncertain. The nonpartisan Congressional Budget Office has said negotiating drug prices is unlikely to produce much savings. Past attempts to harness the tax gap have produced little new revenue.

Without more money, Democrats will face "a real struggle for which wins out: the political promises or the fiscal-responsibility promise," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan group that opposes deficits. "If the public perceives that they're making real choices and cutting back on some things they want to do politically because they're trying to be fiscally responsible, then they can declare victory." But if people perceive that they're honoring fiscal restraint in word but not in deed, then they'll look pretty silly, Bixby said.

So far, Bixby said, he has been impressed by Democratic leaders' commitment to deficit reduction, calling the elimination of earmarks "rather stunning." Another Blue Dog leader, Rep. Dennis Cardoza (D-Calif.), said the Democrats' conservative wing will block any effort in the House to backslide on those promises.

"Yes, there's going to be tough medicine," Cardoza said. "But we are incredibly united behind these goals. And they need us to do anything."