Democrats Plan to Restore Budget Discipline
House, Senate Consider How To Reduce Deficit

By Lori Montgomery
Washington Post Staff Writer
Thursday, March 22, 2007

Over the past decade, budget discipline on Capitol Hill collapsed under the desire for tax cuts and the pressure of war spending, analysts say. Now, the new Democratic majority says it is ready to put congressional budget-making back on track and, in the process, reduce the budget deficit.

The Senate is debating a plan to balance the budget by 2012, allow modest increases in some programs and require, for the first time in years, that revenue lost to tax cuts be made up elsewhere. House leaders announced a similar plan yesterday.

The Democratic proposals, like President Bush's latest budget request, would rely on accounting gimmicks. But supporters say that even with their flaws, the plans would force Congress to do a better job of living within its means.

Passing a credible budget would also enhance the Democrats' stature for next year's elections, strategists from both parties said.

"If they can at least tout that they've got a balanced budget put together, then I think they undermine the Republicans and set themselves up well to claim the mantle of fiscal responsibility going into 2008," said G. William Hoagland, a former top Republican aide on Capitol Hill.

Congress is supposed to be subject to an elaborate budget procedure that imposes discipline. Created in 1974 to settle a power struggle with President Richard M. Nixon, the procedure requires lawmakers to write a broad framework for federal spending known as a budget resolution, setting limits on spending and targets for revenue.

Before each budget year begins Oct. 1, Congress is supposed to consult that broad plan and pass 11 specific bills to appropriate money.

The procedure has never worked exactly as planned. For example, Congress has met the deadline for approving spending bills only four times in three decades. But for more than 20 straight years, it approved budget resolutions, often with the aim of limiting the deficit.

That discipline essentially collapsed late in the Clinton administration, budget analysts said, when a booming economy produced a budget surplus in 1998.

"We had finally gotten to the point where we could see surpluses and everybody said, 'Let's party,' " said John R. Kasich, the Ohio Republican who was House Budget Committee chairman at the time.

Arguments broke out over whether to spend the surplus or return it to taxpayers. Paralyzed by a fight between the House and Senate, both under Republican control, Congress failed for the first time to agree on a spending plan.

After that, "all those disciplining rules went by the wayside," said Rudolph G. Penner, a former director of the Congressional Budget Office and a senior fellow at the Urban Institute.

President Bush took office in 2001 and pushed tax cuts without cutting spending to cover the cost. The security and war spending that followed the 2001 terrorist attacks added to the budget deficit.

Republicans, historically seen as the party of fiscal discipline, added $2.2 trillion to the national debt between 2001 and 2006 through tax cuts and new spending, according to the nonpartisan Congressional Budget Office. The national debt is more than $8.8 trillion, about $29,000 for every person in the country.

Robert L. Bixby, executive director of the deficit-fighting Concord Coalition, calls 2003 the "absolute low point, the nadir, the Marianas Trench of budgeting." In a single year, the federal government cut taxes, invaded Iraq and approved an expensive prescription-drug benefit for Medicare recipients, the biggest expansion of the program since its creation in 1965.

As surpluses turned into ballooning deficits, lawmakers lost the will to enact budgets in election years, finding it too difficult to endorse decisions that could be used against them in campaigns. The Republican Congress failed to set an overall budget during three of its last five years in power, including 2006. Now, the doors are open in much of official Washington only because Congress passed a giant stopgap measure to make up for its failure to enact nine of 11 appropriations bills last year.

Unable to make short-term budget decisions, Congress has done little to address the nation's long-term fiscal problems, including the demands that will be placed on Social Security and Medicare by retiring baby boomers. Although the deficit is expected to shrink over the next few years due to a strong economy and surging tax collections, it is projected to rise again in coming decades, as health-care costs swamp the rest of the budget.

Now Democrats promise a fresh start. Since taking control of Congress in January, they have proposed budget plans that would restore pay-as-you-go rules prohibiting new tax cuts and new spending from increasing the deficit.

Republicans have said the rules would force Bush's signature tax cuts to expire in 2010 and require the biggest tax increase in U.S. history. And some rank-and-file Democrats are unhappy that increases for popular programs such as children's health insurance would have to be offset by spending cuts elsewhere.

Senate Budget Committee Chairman Kent Conrad (D-N.D), chief author of the plan the Senate is debating this week, said it would be tough to "hold the discipline of this budget together" in the face of expensive amendments from both parties.

"It's very difficult to get colleagues to face up to the truth of our fiscal condition," Conrad said.

Conrad and his counterpart on the House Budget Committee, Rep. John M. Spratt Jr. (D-S.C.), resorted to gimmicks in their plans. To achieve balance, the Democratic plans, like Bush's proposal for next year, would allocate less than $200 billion for the Iraq war over the next two years, low by most estimates.

Like Bush, the Democrats rely on hundreds of billions of dollars over the next five years from the unpopular alternative minimum tax, which Democrats and Republicans alike have vowed to reconfigure or abolish.

And while Conrad said his plan leaves room for extending some of the Bush tax cuts, Spratt acknowledged that his relies on the extra revenue that would result from letting them expire.

Still, Bixby and others said it is better to set targets and enforce budget rules than to ignore them.

While acknowledging yesterday that the House plan is "no grand solution," Spratt called it a step in the right direction. "In three or four years," he said, "we can say a balanced budget is once again within our grasp."