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Lawmakers Confront Spending Trade-Offs

By Eric Pianin
Washington Post Staff Writer
Wednesday, June 17, 1998; Page A04

Despite forecasts of skyrocketing government surpluses fueled by a booming economy, yesterday began what promises to be a brutal budget season as lawmakers started to confront the reality of a virtual spending freeze for most domestic and defense programs.

It became increasingly apparent to appropriators that they would have to deal with a world in which a dollar added to one spending program would have to come out of another, setting up a series of confrontations along ideological, regional and personal lines.

Republican congressional leaders and the Clinton administration cemented last year's long-term balanced budget deal by engaging in a one-year domestic spending binge that began last Oct. 1. But now the promised fiscal discipline of the budget agreement is beginning to take hold, affecting a series of spending bills that Congress must pass before it can adjourn this fall for the election.

While the bulk of the cuts won't be felt for several more years, the appropriators clearly are beginning to feel the pain -- at the same time the Congressional Budget Office (CBO) is forecasting budget surpluses of as much as $63 billion this year and $39 billion in fiscal 1999.

The third of the $1.7 trillion annual budget controlled by the appropriators and used to cover the day-to-day operations of government departments and programs will be increased by only 1 percent next year -- which is less than half the projected rate of inflation. Just by standing still, many of those programs will lose ground as inflation eats away at the government's buying power. By contrast, such "discretionary" spending increased by 5.4 percent last year, when Clinton and the Republicans loaded up the budget with their pet domestic programs.

Because spending for government programs other than entitlements and interest on the debt essentially will be frozen in fiscal 1999, funding for most new initiatives must come out of other programs. Clinton's proposal to finance $9 billion of increased spending on education, child care, Food and Drug Administration food safety and other domestic initiatives with scores of new user fees and tobacco tax revenue has been largely rejected by GOP lawmakers.

But the challenge to keep spending below the increasingly stringent caps may be even greater if House and Senate budget conferees agree later this month to deeper cuts as part of a compromise fiscal 1999 budget resolution that is months overdue.

"This is a tight bill under a tough allocation," House Appropriations Committee Chairman Bob Livingston (R-La.) said as his committee prepared to approve a $20.7 billion energy and water development bill, one of three spending bills the panel adopted yesterday. "If there's an agreement by the House and Senate over the budget, we'll have to be tougher still."

The House committee, in its first big spurt of activity this year, also approved $13.8 billion for agriculture programs -- about $160 million less than this year -- and $8.2 billion for military construction, a decrease of about $972 million. The energy and water measure was trimmed by $78.7 million, including the elimination of a long-standing subsidy for the Tennessee Valley Authority. The Senate Appropriations Committee, meanwhile, has approved its versions of six spending bills: agriculture, veterans and housing, energy and water, legislative branch, defense and military construction.

While both Republicans and Democrats complained about having to squeeze important programs and jettison others, the most difficult decisions are ahead as legislators shape massive, politically sensitive bills for labor, health and education, housing and veterans affairs, commerce-justice-state and interior programs.

"It looks to me like we're inching closer to a train wreck on those four bills," said Rep. David R. Obey (Wis.), the ranking Democrat on the Appropriations Committee. Others say that it is inevitable that Congress will have to pass a massive "continuing resolution" or omnibus spending package before adjourning early this fall to avert another partial government shutdown.

Since the Republicans wrested control of Congress in 1994, passing a budget and accompanying spending bills has been a wild, unpredictable exercise, and this year is no different. While typically Congress first adopts a budget resolution to provide the appropriators with guidance in writing the 13 annual spending bills, this time the budget became bogged down in internecine GOP warfare and there's no assurance a final budget plan will be in place before the July 4 recess.

Unable to wait any longer, House and Senate appropriators have begun acting on their spending bills, using last year's budget deal as a guide to spending limits -- but with the understanding that they would make further adjustments after a compromise budget plan finally emerges. Because the House-passed budget calls for $101 billion more in spending cuts over the next five years than required by either the Senate-passed bill or last year's budget deal, it is possible that the appropriators will have to find substantially more in savings before the year is out.

Yesterday, the House Appropriations Committee allocated the $531.9 billion of discretionary funds available to it among 13 broad categories of domestic, defense and foreign aid spending. The Senate Appropriations Committee has approved slightly more in overall allocations. But both committees may have to make changes before too long.

For one thing, there is considerable uncertainty over the shape of the defense package. Neither the House nor the Senate committees has been willing to include the $1.6 billion of additional spending sought by the administration to keep U.S. troops in Bosnia until Congress and the White House reach an understanding over future policy.

Moreover, House Speaker Newt Gingrich (R-Ga.) and other House and Senate defense hawks are agitating for considerably more in defense spending than the $250 billion that has been allocated for the coming year. Warning that a steady decline in defense spending since the late 1980s has raised the danger of a "hollow" military force, Pentagon champions are pressing to dip into domestic accounts to bolster troop strength and upgrade worldwide military operations.

© Copyright 1998 The Washington Post Company

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