NEWS ANALYSIS : Nearing Budget Wire, GOP’s Fiscal Austerity Dissolves : Congress: Many of the tactics once employed by Democrats are now being used by Republicans who earlier pledged discipline. Critic calls it ‘Ponzi scheme.’

As the Republican-controlled Congress enters the home stretch in the annual battle over the budget, it is preparing to scrap many of its promises of fiscal discipline and employ “smoke-and-mirror” gimmicks similar to those the GOP once criticized Democrats for using.

After overshooting spending targets on defense and dozens of other items, GOP leaders are abandoning austerity pledges, which they loudly proclaimed only six months ago, in order to pass their appropriations bills by the beginning of the new fiscal year, Oct. 1, and to adhere to the spending caps that Congress set for itself in 1997.

Republicans have found themselves in a fiscal and political box and now are embracing some of the same budgetary legerdemain that Democrats employed when they controlled Congress before 1995.

On Wednesday, the Senate passed a bill to fund veterans’ and housing programs that would add $600 million to the regular operating budget for Veterans Administration hospitals by designating the money as “emergency” spending, which is exempt from normal budget limits.

Today, a House Appropriations subcommittee will begin drafting a spending bill covering the major labor, human services and education programs by using accounting techniques that enable it to “borrow” $15 billion worth of spending from the budget for fiscal 2001.

“It’s like a giant Ponzi scheme,” said Stan Collender, analyst for the Federal Budget Consulting Group, a fiscal watchdog firm. “They’ll borrow $15 billion now from the coming year’s budget and then have to borrow it again next year from the budget for 2002.”

He added: “These are the same people who said only a few months ago that they wouldn’t do these kinds of things. They’re just as disingenuous as the Democrats.”

The GOP’s budgetary tactics have drawn fire--and some derision--from Republicans and Democrats alike.

Sen. Charles Hagel (R-Neb.) wrote a scathing letter to senators earlier this month decrying a spate of proposed GOP budget tricks, including one proposal that would have inserted a 13th month in the federal fiscal year to help accommodate lawmakers’ overspending.

“We are living a charade, which demeans our country and our Congress,” Hagel said.

On Wednesday, Senate Minority Leader Tom Daschle (D-S.D.) lambasted the Republicans for “raiding” the labor, human services and education bill by previously allocating money from those programs to finance overspending in defense and other areas--a major reason the GOP leadership now wants to “borrow” $15 billion from the fiscal 2001 budget.

The GOP budget facade began crumbling early in the year when House and Senate leaders tolerated huge increases in spending for defense, transportation and airports--while siphoning off billions of dollars for a proposed GOP tax cut--insisting that they would adjust the imbalances later this year.

Now, with the 2000 fiscal year about to begin, the Republicans have had to drop all pretense of completing work on the funding bills on time and hewing to the 1997 spending “caps” agreed to as part of that year’s balanced-budget accord.

For the fourth straight year, meanwhile, they seem almost certain to become trapped in broad end-of-session budget negotiations with President Clinton--with the White House clearly holding most of the leverage in the bargaining.

Clinton has already warned that he will veto several big appropriations bills, setting the GOP up for an eleventh-hour showdown in which he can threaten to shut down the government if Republicans do not pass spending bills that he finds acceptable.

A similar face-off in 1995-96 ended in two government shutdowns that sparked a public backlash against Republicans that GOP leaders do not want to repeat. Because of that, many analysts believe a shutdown is unlikely.

To be sure, Republicans assert that it still is too early to call their effort a bust. John Czwartacki, spokesman for Senate Majority Leader Trent Lott (R-Miss.), conceded that Congress will exceed the budget caps. But Czwartacki insisted that the party will not violate its pledge to leave intact the growing budget surplus generated by Social Security taxes.

Admittedly, GOP lawmakers have not been alone in straining credulity on the fiscal front. Clinton complicated the picture by proposing billions in new domestic spending, to be paid for by an increase in tobacco taxes that the White House knew stood little chance of passage.

He also has proposed about $19 billion in spending increases using the same forward funding projections as the Republicans--borrowing from fiscal 2001 to finance extra spending now.

Robert D. Reischauer, a budget specialist at the centrist Brookings Institution think tank, argued that the real-world consequences of the budget mess are not likely to be severe.

For all the budget gimmicks, the federal government still will run an estimated $100 billion surplus in fiscal 2000. And the outlook for the coming fiscal years looks reasonably good.

But, as Reischauer and Collender both pointed out, the Republicans have veered far from the fiscal goals they set for themselves at the beginning of the new session. “There’s going to be a lot of finger-pointing after this session,” Reischauer said.