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Democrats Face Limits in Changing Bush's Budget    [

    Bush Proposes Billions for Iraq
    Reuters

    Monday 05 February 2007

    Washington - President Bush on Monday asked a skeptical, Democrat-run Congress to approve $700 billion in new military spending - much of it for the Iraq war - and to curb many domestic programs.

    Bush also warned that even more money for Iraq could be needed, as he unveiled a $2.9 trillion budget request for fiscal 2008 certain to stoke growing frustrations among Democrats and some Republicans over the war.

    Democrats, newly in control of Congress, may jettison many of Bush's domestic proposals and have pledged aggressive oversight of Iraq spending. But Democratic leaders have promised not to cut off funding for the troops.

    The military spending request comes as Democrats have expressed alarm over Bush's plan to send 21,500 more troops to Iraq.

    If Congress approves the war-funding request, the United States will have spent $661.9 billion on combat in Iraq, Afghanistan and related activities, the administration said.

    On the domestic front, Bush called for making his 2001 and 2003 tax cuts permanent and said it could be done while shifting the budget to surplus by 2012.

    The spending plan would hold growth in domestic discretionary spending to 1 percent. After accounting for inflation of 2.5 percent, that rise would amount to a cut in programs ranging from labor to education and cleaning up the environment.

    "Our priority is to protect the American people. And our priority is to make sure our troops have what it takes to do their jobs. We also have got priorities in national parks, in education, in health care," Bush told reporters at a meeting of his Cabinet.

    "But we have proven - and I strongly believe Congress needs to listen to a budget which says no tax increase and a budget, because of fiscal discipline, that can be balanced in five years," he said.

    Democrats questioned Bush's upbeat fiscal outlook.

    "The president's budget is filled with debt and deception, disconnected from reality, and continues to move America in the wrong direction," said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.

    "This administration has the worst fiscal record in history and this budget does nothing to change that," Conrad said.

    Bush's budget request kicks off weeks of hearings on Capitol Hill, where lawmakers will try to produce their own version of a budget blueprint by spring.

    Some of Bush's proposed savings would come in politically sensitive health programs. Bush would squeeze $66 billion over five years in savings from Medicare and $12 billion from the Medicaid health program for the poor.

    Bush's budget authorizes $717 billion in military spending between now and September 30, 2008, including $235 billion on the wars in Iraq and Afghanistan. Spending for diplomatic operations would boost the total to $245 billion.

    Bush requested $481 billion for the regular Pentagon budget, a rise of more than 10 percent. Some of that will pay for a permanent increase in the size of the military.

    The White House said it will weigh whether to seek even more war funding. "As activity on the ground evolves, the administration may adjust the requested amount," it said.

    Congress already has approved $427 billion for the wars in Iraq and Afghanistan, the budget document said.

    Democrats, while promising to do everything they can to help U.S. combat troops, have vowed to look closely at Bush's request for military spending.

    Brian Riedl, analyst at the Heritage Foundation, said Bush has little to lose politically and much to gain from a confrontation with Democrats over domestic spending.

    "The president can draw a line on discretionary spending and refuse to sign a spending bill that is above his stated level," Riedl said. "He can enforce that top-line number through the use of his veto."

 

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    Democrats Face Limits in Changing Bush's Budget
    By Steven R. Weisman
    The New York Times

    Tuesday 06 February 2007

    Washington - With its military spending increases, reductions in popular domestic programs and calls to extend tax cuts, President Bush's $2.9 trillion budget for 2008 drew fire from Democrats the minute it landed on Monday.

    But while Democratic critics may wish to challenge the administration's blueprint, political and fiscal constraints will make it hard for them to assert their own priorities.

    In theory, the budget presents the Democrats their first real opportunity to rewrite the administration's policies, especially on tax cuts, that they have been attacking for six years.

    But in practice, Democrats know that the only way they can find the revenue to restore the administration's proposed spending cuts would be to cut back on military spending, delay their stated intentions to balance the budget or rescind the Bush tax cuts in future years. They are not especially eager to do any of these.

    The most likely result, even some Democrats acknowledge, will be a limited reshaping of the budget by restoring some proposed cuts in a variety of domestic programs, including children's health care, Head Start and home heating assistance for the poor and the elderly.

    But few Democrats are expected to look for new revenues by calling for an end to Mr. Bush's tax cuts, instead of extending them as the president proposed Monday, or to deal with the looming costs of Social Security and Medicare as the postwar generation retires, all of which pose huge budget problems in future years.

    "The long-term budget crisis appears so distant that it's going to be very hard to get politicians excited about it this year," said Robert D. Reischauer, president of the Urban Institute. "The economy is strong, and the deficit seems to be at manageable levels right now. No one wants to risk popular support by doing something courageous."

    Since 2001, Democratic leaders have made a point of saying that the Bush tax cuts are unfairly weighted toward the wealthy and dangerous to American solvency. But the tax cuts expire in 2010, and Democrats acknowledge that they are not ready to move on them now.

    One development could reopen the tax cuts to revision this year, Democrats say: a signal from the administration that it would be willing to consider a repeal of some cuts for the wealthiest as part of a deal to pay for other priorities.

    The issues most often mentioned that might entice Democrats to the bargaining table with the administration would be a package to finance future Social Security benefits, possibly combined with a curb on some benefits. Democrats might also want to cut a deal over the alternative minimum tax, which was devised to make sure that wealthy taxpayers with numerous deductions paid some taxes but which is increasingly ensnaring the middle class because of inflation.

    Democrats say that in both cases the administration would have to move first to put discussion of taxes on the table.

    Both Treasury Secretary Henry M. Paulson Jr. and Rob Portman, director of the Office of Management and Budget, have dropped hints of such deals, ruling out "preconditions" for talks on Social Security. The implication is that private investment accounts to replace Social Security for future retirees are not a requirement for a deal.

    "By saying there are no preconditions and we should all come to the table, that was a change in position," Mr. Portman told reporters Monday, noting that in the past the administration had pushed its plan for the investment accounts from the outset.

    He also said it was an "olive branch" to propose the accounts but to delay their enactment until 2012.

    Democrats remain skeptical and distrustful. They note, for instance, a recent comment by Vice President Dick Cheney to Fox News that overtures by Mr. Paulson and Mr. Portman did not signal a change in administration attitudes on taxes, only a desire to get Democrats to negotiate.

    Moreover, despite Mr. Portman's talk of olive branches, Democrats see only trapdoors. They say Mr. Bush's claim to reach the goal of balancing the budget by 2012 rested on what they see as shaky assumptions.

    Mr. Portman acknowledged, for instance, that the budget assumed only a nominal cost - $50 billion - for the Iraq war in 2009 and no cost after that. In addition, the administration assumes that tax increases due to kick in years from now will do so, in spite of the near certainty that Congress will prevent them from occurring, widening the deficit further.

    Another constraint on the Democrats is their adoption of a "pay as you go" approach, meaning that they have to find savings in other parts of the budget for any new spending they want to make.

    The Democrats fear after campaigning on the promise of avoiding widening the budget deficit, they cannot afford to waver on that score now.

    Still, not everyone in the party is a deficit hawk. Among the 2008 presidential candidates, former Senator John Edwards of North Carolina has already said that he would defer the goal of a balanced budget to finance health, education and help for the poor. Other Democrats, including several in the Senate, may well have to follow suit.

    Last week, without much fanfare, House Democrats passed a stopgap spending bill for the current year that increased federal spending in cherished areas by only about 1 percent - exactly the rate of increase that the administration says it seeks in domestic programs for the coming year.

    The box that the Democrats find themselves in is likely to remain a factor in their spending decisions this year.

    Even Senator Kent Conrad, the North Dakota Democrat who is chairman of the Senate Budget Committee and the biggest Cassandra in Congress about the perils of continued deficits, seemed to acknowledge that he had had trouble convincing even fellow Democrats of the urgency of the long-term fiscal problems.

    "Let me be frank," Mr. Conrad said at a recent budget hearing. "We're having a very difficult time persuading our colleagues and the administration of the need for urgent action."

    Although Mr. Bush traveled to a Democratic retreat over the weekend and promised to try to accomplish "big things" with their help in his last two years of office, Democrats and their supporters tend to view the likelihood of budget fixes to be tiny, not big.