Deficit Day Of Reckoning?

By David S. Broder
Thursday, February 1, 2007

Next Monday is the real day of reckoning for President Bush and this new Democratic Congress. That is the day the president sends his budget for next year up to Capitol Hill, and you really will be able to judge by the reaction what will happen in Washington in the next nine months.

Last year, when the budget came out, Democrats hooted in skepticism and many conservative Republicans expressed dismay at the size of the projected deficits. In the end, the House and Senate could not agree on a budget resolution, and the government went on autopilot in terms of domestic spending, continuing at the same level as the year before.

This year, as I learned from conversations with two senior White House officials last week, the president hopes his budget will become a starting point for serious negotiation -- not a partisan football or simple laughingstock.

That hope was encouraged by a letter to the president last week from the Democratic leaders of the House and Senate, Rep. Nancy Pelosi and Sen. Harry M. Reid, and the chairmen of the two budget committees, Rep. John M. Spratt Jr. and Sen. Kent Conrad.

The first sentence said, "We are writing to express our strong interest in working cooperatively with you to address our nation's fiscal challenges." It acknowledged that as the process unfolds, "Democrats and Republicans will disagree about particular priorities, and we will need to negotiate our differences in deciding how to allocate scarce resources."

But it put forward four principles that could lead to a successful budget outcome this year.

· "The budget should account realistically for projected federal costs," including the billions needed for the wars in Iraq and Afghanistan and the adjustments needed in the alternative minimum tax, which otherwise would punish millions of middle-class families.

· "The budget should realistically project short- and long-term deficits," as objectively as the calculations of the Congressional Budget Office, which show the prospect of very large deficits if current tax and spending policies are unchanged.

· "The budget should provide detail throughout the entire budget period," making clear the hard choices that lie ahead.

· "The budget should be based on fiscal discipline that is sustained over the long term," underlining the fact that it will take years of effort to repair the damage done to our fiscal condition in the past six years.

The House took an important first step in repairing our fiscal health last month by reimposing the "pay-go" rule, requiring any increase in entitlements or tax relief to be balanced with tax increases or spending cuts.

While not endorsing these specific principles, the White House officials with whom I met certainly pledged to make visible the costs of the war and to be specific about the trade-offs needed to maintain budget discipline, both in the short term and the long term.

They said that the economic assumptions underlying the president's budget are modest -- if anything, an underestimate of the revenue likely to be produced by a growing economy. And the officials indicated that the president will recommend that, for a second year in a row, overall growth in discretionary domestic spending -- the part separate from Medicare, Medicaid and Social Security -- be held close to zero.

If Monday's budget fulfills those promises, the stage could be set for a serious effort to put the federal fiscal house in order.

But the warning voiced in an interview by Rep. David R. Obey of Wisconsin, the chairman of the House Appropriations Committee, must be borne in mind. Obey recalled that when the late Rep. Richard Bolling of Missouri invented the congressional budget process, he said, "It will work only if all the key players -- in Congress and the administration -- use honest figures and make a genuine effort to live within its discipline. Otherwise, the budget process will become a barrier to action."

If the congressional budget process breaks down, two Republicans, Rep. Frank R. Wolf of Virginia and Sen. George V. Voinovich of Ohio, have proposed a commission of legislators and experts to tackle the long-term budget challenges and bring back a plan that Congress would have to vote up or down, or substitute an equally effective blueprint.

One way or the other, this problem must be faced. Monday's budget message could be the first step.

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