Confronting an open revolt from congressional Republican moderates, House and Senate GOP leaders appear to have no choice this week but to scale back President Bush's proposed tax cuts or abandon many of the spending cuts they hoped would fund them.
The House and the Senate are scheduled this week to take up budget blueprints that would establish the size of any tax cut and limits on federal spending for 2004 and beyond. Once House and Senate negotiators can establish a joint budget resolution, the tax-writing committees would begin crafting tax cuts, and the spending committees would have to accommodate the budget cuts forced on them by the budget resolution's limits.
But the prospects of war and its unknown costs have bolstered opposition from Democrats and some Republicans, who say such weighty decisions should wait until the shape of a conflict with Iraq becomes clearer. For now, it is uncertain whether either body can pass the plans that were approved last week by their respective budget committees.
Both budget blueprints would fund nearly all the $1.6 trillion in tax cuts proposed in the president's budget, while giving special parliamentary treatment to the White House's $726 billion "economic growth" plan to ease its passage through the Senate. But forced to address Republican anxiety over growing budget deficits, Senate and House budget writers also decided to balance the budget. The House plan would bring the budget back into the black in 2010. The Senate plan would achieve balance in 2013.
That was a departure from Bush's budget, which the Congressional Budget Office calculated would leave the government in the red through 2013. Administration officials have said deficits of the magnitude foreseen in the president's budget are of little consequence.
"If nothing else, this should have told people, Capitol Hill believes deficits do matter," a senior GOP Senate leadership aide said. "We may have put the numbers through some real torture to get to balance, but it tells me that saying, 'Deficits don't matter,' will not work."
And because neither plan would pay for a new war in the Persian Gulf, said another Republican Senate aide, the coming week's budget battles have "a degree of unreality" to them. "There's a real Disneyland quality to debating the fiscal future of the country before we incur fiscal costs of such unknown magnitude," the aide said. "There's an inexplicable inertia that's driving these bills to the floor of Congress now. This is a case not for Alan Greenspan but for Dr. Phil."
Even without accounting for the war costs, the House Budget Committee highlighted the pain involved in trying to simultaneously cut taxes, fund Bush's military spending increases and balance the budget. To do that, the House budget would cut government programs next year that fund science, environmental protection, agriculture, education and training, and poverty alleviation. Lawmakers also would have to draft legislation by July to cut hundreds of billions of dollars from Medicare, Medicaid, veterans benefits and student loans.
On Friday, 11 House Republican moderates sent a pointed letter to House Speaker J. Dennis Hastert (R-Ill.) saying, "We cannot support a budget resolution that reflects funding levels below the Bush administration's request and that fails to meet the needs of our domestic priorities, while reducing taxes by $1.4 trillion." Given the Republicans' narrow House majority, 11 defections are one shy of the total needed to bring down the budget resolution, if Democrats remain united in their opposition. Rep. Michael N. Castle (R-Del.), one of the letter's authors, said there are more Republicans who "have serious concerns."
Rep. James C. Greenwood (R-Pa.) said he declined to sign the letter at the request of House Budget Committee Vice Chairman Christopher Shays (R-Conn.). But he made his concerns clear, especially for the provision that would simultaneously provide $400 billion for a prescription drug benefit for Medicare and ask for $214 billion in Medicare cuts.
"We've had a lot of difficulty with arbitrary numbers governing what to cut from doctors and hospitals in the past," Greenwood said. "I think it's very tough work to try to simultaneously pass an economic stimulus plan, head toward a balanced budget and make cuts in Medicare that we would just have to unmake in future dates." The House letter surfaced a day after an even more explicit letter from four Senate moderates -- two Republicans and two Democrats -- which stated they would accept no more and no less than $350 billion in tax cuts over the next decade. That number would effectively cut the president's growth package by more than half, all but forcing congressional tax writers to jettison Bush's proposal to slash taxes on corporate dividends.
Hastert spokesman John Feehery said the GOP leadership is still trying to round up the votes to pass the House budget resolution largely intact. But Republican leaders huddled Friday afternoon to come up with an alternate plan, while budget committee aides struggled to rewrite portions of the budget resolution, especially the Medicare cuts.
One alternative might be to allow the House plan to be defeated on a procedural vote, then order the Senate's version to be brought to the House floor as a substitute, a senior Senate Republican aide said. That way, House Republicans will not have to go on record as voting for Medicare cuts sure to be fodder for Democratic opponents in the 2004 campaign.
In the Senate, where the budget is scheduled for consideration today, GOP leaders are considering an immediate amendment to bring down the tax cut's size to $350 billion, a Senate GOP aide said. Republicans fear that Democrats will offer a barrage of amendments chipping away at the size of the tax cut by shifting revenue toward popular programs. That move would put Republican senators in the position of having to explicitly place the tax cuts over funding for any number of popular programs, from prescription drug coverage for seniors to AIDS relief for Africa to highway construction.
Already, bipartisan groups of senators have begun circulating letters protesting proposed cuts to foreign development aid and transportation funding, as well as a provision to raise revenue by auctioning leases to energy companies that would drill for oil in the Arctic National Wildlife Refuge.
By bringing the tax cut down to the level agreed upon by the moderates, at least some Democrats would join Republicans in opposing efforts to trim the package even more, the aide said.
Last year, the Democratic-controlled Senate and Republican-controlled House were unable to pass a budget resolution, leaving it to their respective appropriations committees to draft spending bills of conflicting size. That led to a meltdown in the budget process that was only cleared up in January, nearly a third of the way through the fiscal year. The experience has left Republican budget writers determined to reach a consensus document that would cap spending levels for the next two years, while setting the parameters of tax cuts for the next decade.
The same unease infecting the country in the run-up to war has cast a pall over the budget debate, the Senate GOP aide said. Sens. John McCain (R-Ariz.) and Susan Collins (R-Maine) have suggested that any vote to lock in the size of a tax cut should be deferred until the administration can give Congress some sense of the conflict's cost. Sen. Lincoln D. Chafee (R-R.I.) has said he will not vote for any tax cut this year.
But Republican budget writers say the need for economic growth and job creation justifies the tax cut, regardless of the war's costs.
And the proposals to trim federal spending and force reforms in entitlements such as Medicare and Medicaid are remedies badly needed now to prepare for the impending retirement of the baby boom generation.
"At some point you have to stop and ask, 'Do you want to govern for the next election or do you want to govern for the next generation?' " said House Budget Committee spokesman Sean Spicer. "We think the voters will reward us for our leadership."