Democrats, GOP Parry Over Bush’s Budget Cuts

President Bush’s budget would impose much deeper long-term cuts than he has proposed for next year in domestic programs such as the environment, community development and law enforcement, according to an analysis by congressional Democrats.

But senior Bush administration officials contend the Democratic analysis is based on faulty assumptions about the White House’s long-term budget plans, and they dismiss its conclusions as erroneous.

Behind the dueling numbers, the Democrats’ report highlights larger questions of political strategy and priorities. And it foreshadows battles over “discretionary” spending, which accounts for a third of the federal budget and includes all domestic and defense programs except Social Security, Medicare and other entitlements.

The report, which is scheduled to be released later this week by Democrats on the House Budget Committee, concludes that, over the next decade, Bush’s budget plan would leave domestic programs $78 billion short of the funds they would need to maintain existing services at current levels.

But some programs favored by the president, such as education and medical research, would receive significant funding increases under the White House budget. For that reason, the cuts would be much deeper in other areas, such as the environment and transportation, according to the Democratic study, a copy of which was obtained by The Times.

“To even attain the average level of discretionary spending they propose, you have to make significant reductions in most programs in order to favor the few programs they single out,” said Rep. John M. Spratt Jr. of South Carolina, the ranking Democrat on the House Budget Committee.

But Mitchell E. Daniels Jr., director of the White House Office of Management and Budget, said those calculations are erroneous. The numbers Bush’s budget lays out for domestic spending beyond next year, he said, are only place-holding estimates that the administration expects to revise.

Daniels noted that the administration has set aside a $1-trillion “contingency fund” from the anticipated budget surplus over the next decade. That money, he said, would be available to increase discretionary spending above the levels calculated by the Budget Committee Democrats.

“You can’t make the comparisons they are making,” Daniels said. “The whole idea of preserving so much--a trillion dollars as a contingency fund--is we don’t know, and nobody can know, what eventual increases might come above this baseline level.”

Curbing New Spending

Looking at the long-term spending estimates in Bush’s plan, some Democrats believe the administration is pursuing a camel’s-nose-in-the-tent strategy: proposing relatively modest reductions in next year’s budget while envisioning deeper cuts later as the annual cost of Bush’s proposed tax cut rises.

Some critics say that, whatever the actual level of reductions, the larger point is that the administration’s plan would preclude significant new spending initiatives to address domestic needs at a time when Washington is awash in surpluses.

“You have to put this in the context where they are talking about meeting domestic needs,” said Richard Kogan, a budget expert at the left-leaning Center on Budget and Policy Priorities. “It turns out . . . their view of meeting needs means cutting back in aggregate.”

The administration argues that it is trying to stem a torrent of new domestic spending over the last few years that threatens to explode the size of government and consume the surplus. “Last year, discretionary spending grew 8%,” said Karl Rove, a senior political advisor to Bush. “If you keep doing that for nine years, you would double the [discretionary] budget.”

In the budget resolution it approved earlier this month, the Senate called for discretionary spending increases next year also in the range of 8%, according to OMB calculations. Increasing discretionary spending by 8% annually over the next decade would consume 45% of the $5.6-trillion federal surplus anticipated over that period, Daniels said. “This was proof positive of the president’s point: If the money is left in Washington, it will be spent.”

These arguments will come to a head in the next two weeks as House and Senate conferees meet to reconcile their contrasting budget resolutions. Earlier this spring, the House approved a plan that mirrored the president’s proposal, featuring a $1.6-trillion, 10-year tax cut and a tight rein on domestic spending. The Senate approved a smaller, $1.2-trillion tax cut, combined with much more spending.

Shortfalls Seen

For next year, Bush’s budget proposes to increase discretionary spending by 4%, only slightly above the expected inflation rate.

Because the discretionary spending total includes larger increases in defense and international affairs, funding for domestic programs would grow only about 2%--or less than inflation--according to Kogan’s calculations.

And because Bush’s domestic priorities would receive more substantial increases, other programs are facing absolute reductions, he said.

The administration’s budget does, in fact, project much smaller increases in discretionary spending after 2002. While it seeks a 4% increase next year, only once in the following decade does it call for an increase of as much as 3%.

To reach its conclusions, the House Budget Committee compared those projected increases with the amount of money the Congressional Budget Office estimates will be needed to maintain services at current levels when variables such as inflation and population growth are figured in.

By that comparison, the Bush budget would impose significant cuts over time: It would leave environmental and natural resources programs nearly $45 billion short of the amount needed to maintain services over the next decade, transportation programs would fall $24 billion short, Justice Department efforts nearly $18 billion short and community development programs about $14 billion short.

While providing education, training and health programs about $80 billion more than needed to maintain services over 10 years, the budget would cut all other discretionary domestic programs by roughly twice that amount, the study concluded.

“The bottom line is that domestic discretionary spending gets squeezed well below what is needed to maintain constant purchasing power,” said Tom Kahn, the Budget Committee’s Democratic staff director. “As you go out, it gets worse, and the problem becomes even more acute because [Bush] protects certain programs, such as education, which means that all the others are going to take even a bigger hit.”

Daniels, the OMB director, said the Democrats’ calculations ignore the possibility--even the likelihood--that funds from the $1-trillion contingency fund proposed by Bush would be diverted to domestic and defense needs in the years ahead. But Daniels also refused to foreclose the possibility that the administration would seek to hold discretionary spending to the lower levels forecast in the budget plan.

Reining in discretionary spending that much “is not impossible,” he said. “This administration will seek to restrain the overall growth of discretionary spending.”

Tough Balancing Act

Spratt, the House Budget Committee Democrat, said the administration will have to impose cuts of that magnitude if it wants to keep the federal budget in balance while implementing a $1.6-trillion tax cut.

According to Spratt, the contingency fund may be only about one-third as big as the White House says it will be. Spratt said about half of the $1 trillion would come from the expected surplus in Medicare’s hospital fund account, which the House has already voted not to spend for any purpose other than Medicare or debt reduction.

If Bush can’t gain access to that money, Spratt said, he will be forced to substantially reduce domestic spending in the coming years.