With hurricanes, war, inflation, rising interest rates and a possible pandemic threatening to explode budget deficits, Congress struggled to reconcile its impulse to spend more with a mandate from voters to tax less.
Republicans remain badly divided -- budget hawks versus tax cutters, House leaders versus Senate, White House versus Congress. Meanwhile, Democrats hope to use the divisions to stave off cuts in poverty programs and win concessions on non-budget items like the minimum wage.
The White House signaled it would scale back the next tranche of Katrina spending to $20 billion to $30 billion, with indications the total federal hurricane allocation will come in at $125 billion, far short of what Gulf Coast states had requested. It's also becoming clear that any new spending will need to be offset by cuts in other programs.
Those cuts won't be easy to find, as Sen. Tom Coburn, the freshman Republican from Oklahoma, discovered. During Senate consideration of a spending bill, Coburn proposed to strip out $453 million earmarked for two Alaskan bridges -- including the now-infamous "bridge to nowhere" -- to free up funds to rebuild a bridge over Lake Pontchartrain on a key highway leading into New Orleans. But Sen. Ted Stevens (R-Alaska) vowed to quit the Senate if it passed, warning other senators that a threat to one member's "pork" projects is a threat to them all. Coburn's proposal was handily rejected, 82 to 15.
Even more telling was the fate of a seemingly modest and reasonable administration proposal to close 713 of the 2,351 county offices of the Department of Agriculture's Farm Service Agency. Most were one-person outposts located within 20 miles of another office. But after protests from farm groups and farm-state legislators, the department scuttled the plan.
House leaders now seem to have focused their attention on cuts in entitlement programs. They sent committee chairmen back to look for another $15 billion in spending cuts over the next five years on top of the $35 billion already demanded by the five-year budget blueprint. The House Ways and Means Committee considered cuts in rate increases for doctors under Medicare and drain billions from that portion of the new Medicare drug program designed to protect insurance plans from unanticipated losses. The Senate Finance Committee, meeting tomorrow, is likely to have other ideas.
Florida, meanwhile, won approval for an experimental plan that would transform its Medicaid program by transforming it from an open-ended entitlement into a fixed-cost voucher to buy health insurance from participating managed care plans. Other states are eager to win similar waivers as a way of capping open-ended Medicaid spending that has swamped their budgets.