Bush Calls for Cuts to Offset Relief Plan

President Bush, confronting a brewing rebellion within conservative ranks, promised Friday to help Congress cut spending in other areas to try to offset the cost of Hurricane Katrina reconstruction.

Bush said he still intended to spend whatever it took to finance the massive Gulf Coast rebuilding effort he outlined in Thursday night’s address to the nation. White House officials acknowledged that the government would cover most costs in the short term by running up the federal debt.

The president ruled out tax increases to reduce red ink. He said the Office of Management and Budget would help lawmakers trim federal programs to help offset reconstruction costs that independent analysts predicted would exceed $200 billion.

“You bet it’s going to cost money,” Bush said at a White House news conference.

“The key question is to make sure the costs are wisely spent and that we work with Congress to make sure we are able to manage our budget in a wise way,” he said. “And that’s going to mean cutting other programs.”

GOP lawmakers and conservative activists had been expressing misgivings about what they perceived as an open-ended federal commitment to borrow and spend to rebuild New Orleans and nearby coastal communities in Louisiana, Mississippi and Alabama.

“This isn’t the first time an American city has been devastated,” said former Rep. Pat Toomey (R-Pa.), who heads the economically conservative Club for Growth. “We’ve had great disasters, and the federal government didn’t always come in and rebuild these cities. We shouldn’t assume the only way to do this is through Uncle Sam.”

Rep. Shelley Moore Capito (R-W.Va.) expressed concern about the potential for waste in Bush’s reconstruction plan. “We don’t want to turn rebuilding the Big Easy into the Big Dig,” she said, referring to Boston’s costly underground-highway project.

Rebuilding after Katrina, Capito said, “is going to require efficiency, which is not something synonymous with the federal government.”

The debate reflected a schism among conservatives pitting advocates of a limited federal government against supporters of a more expansive GOP agenda.

The president’s reconstruction proposal -- expected to cost roughly twice as much as the post-World War II Marshall Plan to rebuild Europe -- intensified the anxiety of fiscal conservatives who already deplored the rapid increase in deficit spending under Bush.

“Among advocates of limited government, there is despair,” said David Boaz, executive vice president of the Cato Institute, a libertarian think tank. “This is the biggest-spending president since Lyndon Johnson. And if he spends the kind of money that’s being talked about here, I don’t know if there will ever have been a president who increased spending as fast as this one did.”

The government recorded a $128 billion surplus in 2001, the year Bush took office. But a variety of factors plunged the government back into debt -- the big tax cuts Bush pushed through Congress, the 2001 recession, and the costs of the Sept. 11 terrorist attacks and the wars in Afghanistan and Iraq. The Treasury posted a record $412 billion deficit last year. The Congressional Budget Office projected this year’s shortfall at $331 billion, but that projection was released Aug. 15, two weeks before Katrina.

Bush did not specify the kind or extent of budget cuts he wanted Congress to consider, saying the White House budget office would “work with Congress to figure out where we need to offset, when we need to offset,” he said.

But administration officials said a good place to start would be reducing discretionary and entitlement spending proposed in the president’s budget for the 2006 fiscal year, which begins Oct. 1.

Legislation approved by the House contains about $20 billion in discretionary spending cuts, but the House and Senate have not agreed on the proposed reductions.

Several Republicans expressed disappointment that Bush had not pressed harder for spending cuts to keep the government’s hurricane response from ballooning the budget deficit.

Rep. Jeff Flake (R-Ariz.) said he thought Bush should have called on Congress to sacrifice some spending priorities to help pay for Katrina cleanup.

“It’s unconscionable to pass this burden on to our kids,” Flake said, noting that Congress had cut spending in other areas to pay for other emergencies, including the 1994 Northridge earthquake.

Budget watchdogs urged Congress to cut back on the billions of dollars for lawmakers’ pet projects packed into a recently approved highway bill. But that appeared unlikely, given the political popularity of highway projects.

J. William Lauderback, executive vice president of the American Conservative Union, said Bush’s pledge to find offsetting spending cuts was encouraging but should be followed by aggressive efforts to enact them.

He said he was disappointed that Bush had not mentioned spending cuts in his speech Thursday night.

“In the absence of offsets to help keep the already ballooning deficit as low as possible, we can only conclude what the president has proposed is irresponsible,” Lauderback said.

“You see people like Celine Dion contributing a million dollars of their own money,” Lauderback said. “Maybe some of these members of the House and Senate could give back some of the $25 billion in pork in the highway bill to help pay for Katrina relief.”

Eric Ueland, chief of staff to Senate Majority Leader Bill Frist (R-Tenn.), said he thought lawmakers would try to heed the president’s advice to cut spending.

“Offsets could be warranted, and I think the Congress will take a hard look at anything the administration might propose going ahead,” Ueland said.

But getting Congress to agree on cuts will be no easy task, as illustrated by Capito, the West Virginia lawmaker.

She said she had no desire to remove local projects from the recently passed highway bill. “I don’t like that idea,” she said. “It took three years to get it done. It’s a jobs bill.”

Capito also didn’t like the idea floated by some of her Republican colleagues to delay implementation of the Medicare prescription drug benefit. “I worked hard for that,” she said. “It took a lot of time and effort to squeeze it through.”

Sen. John McCain (R-Ariz.), who welcomed Bush’s invitation to offset Katrina spending, said the first test of Congress’ will to cut spending could come next week, when the Senate takes up some of the remaining appropriations bills for the fiscal 2006 budget.

But congressional aides said it was unrealistic to think lawmakers could find Katrina offsets this year, noting that appropriators were having a hard enough time trying to keep fiscal 2006 spending within the budget’s limits.

Keith Ashdown, spokesman for the budget watchdog group Taxpayers for Common Sense, also expressed skepticism.

“The only thing I think can happen is that [Congress enacts] a very large, across-the-board cut,” he said, “and nobody is talking about that. Every major program has an 800-pound gorilla protecting it.”

Meanwhile, a Bush proposal to provide hurricane tuition relief for families that send their children to private schools drew a sharp rebuke from teachers unions.

Among Education Department proposals for relief is a plan to disburse as much as $488 million, up to $7,500 a child, to compensate families that enrolled children in private schools. (It proposes to reimburse K-12 public school districts that accept displaced students at the same rate, at a cost of about $1.9 billion.) In severely hit areas of Louisiana, about a third of K-12 students attend private schools, compared with 11% nationally.

“At this time, the most urgent need is to restore a sense of normalcy for the more than 300,000 students displaced by the storm,” said National Education Assn. President Reg Weaver in a statement. “It is just simply not the time to open up a policy debate on vouchers.”

The American Federation of Teachers opposed the proposal as well.

Education Secretary Margaret Spellings defended the plan. “We are not provoking a voucher debate as much as trying to provide aid for these displaced families, whether they have been in public school or private school,” she said.

Times staff writers Mary Curtius, Ricardo Alonso-Zaldivar and Ryan G. Murphy contributed to this report.