Budget Plan Handcuffs Democrats

Democrats may now have the keys to the Senate, but they’ll be running the place with a straitjacket on.

As party leaders settle into their new majority status, they find their hands largely tied when it comes to pushing their own spending agenda because the tax cut signed Thursday by President Bush will drain revenue from the government.

The new law leaves $1.35 trillion less for Congress to spend over the next 10 years, limiting not only Democrats’ ability to pour more money into education and other social programs but also the GOP’s ability to bulk up the Pentagon budget.

“We’ve been handed control over a budget we did not write,” said Sen. Patty Murray (D-Wash.), a member of the Senate Appropriations Committee. “It will be very difficult.”

Congress will grapple with this new fiscal reality as lawmakers begin the annual process that turns the broad outlines of the recently passed budget agreement into program-by-program spending bills.

It is a process now fraught with political risks for the Democrats, who have labored for years to shed their party’s image as a pack of tax-and-spend liberals. New Senate Majority Leader Tom Daschle (D-S.D.) said earlier this week that Congress will have to “revisit” the Bush tax cut but insisted he would not try to do so any time soon.

Still, if some of the tax cuts are not rolled back, any drive by Democrats to increase spending threatens to run afoul of their own insistence that Congress not dip into reserves for Medicare or Social Security to pay for other programs.

“We have been handed a ticking time bomb,” said Sen. Kent Conrad (D-N.D.), the new chairman of the Senate Budget Committee, on Thursday. “It feels like being handed a live grenade because I know the budget doesn’t add up.”

It is no accident that Democrats are choosing as their first Senate initiatives ones that do not involve big infusions of federal spending--such as a “patients’ bill of rights,” which would impose new regulations on managed health care programs, or an increase in the minimum wage. Those also happen to be among the issues that Democrats believe helped them defeat several GOP senators in 2000--and which they hope will form the basis of their agenda as they point toward the 2002 election.

“The playbook is not amazingly complicated,” said Michael Meehan, polling director for the Democratic National Committee. “We defeated five Republican incumbents on that issue matrix.”

Bush’s Spending Limit Presents Challenge

The immediate task at hand for Congress is writing the 13 appropriation bills needed to keep the government running in the new fiscal year, which begins Oct. 1. The Bush-inspired budget passed earlier this year set an overall limit of $661 billion for discretionary spending in those bills. That closely tracks Bush’s proposal to allow spending to grow by 4% next year.

Some lawmakers and budget analysts are skeptical that Congress can hold spending to that level, noting that it represents significantly slower growth rate than the increases of as much as 8% Congress approved in the last years of the Clinton administration.

Indeed, the first two spending bills to start moving through Congress already exceed Bush’s budget requests. An appropriation subcommittee in the House--the chamber still controlled by the Republicans--approved a bill this week that would provide $15.5 billion for agriculture programs in 2002, $100 million more than Bush requested. Another House panel approved $18.9 billion for the Interior Department and a handful of other agencies--$800 million more than Bush requested.

Another test of fiscal discipline will come next week as Congress begins action on a midyear supplemental appropriation bill for 2001. Bush has requested about $6 billion in funding, mostly for defense. GOP leaders want to keep the price tag within that limit, but this is the kind of measure that Congress typically loads up with special projects.

Also, another push for additional defense spending is expected later this year after the Pentagon completes a top-to-bottom review of the nation’s military needs. Some lawmakers question whether there will be enough budget surplus left to pay for what the Pentagon will seek.

“I don’t know where the money is going to come from . . . to treat our men and women in uniform fairly,” said Sen. Joseph I. Lieberman (D-Conn.).

By the same token, Senate Democrats--even before they took over the chamber--have been winning approval of amendments to a Bush-backed education bill that would authorize more spending for schools than the administration has sought. GOP acceptance of much of this spending may be the price for getting the bill out of Congress, but if that’s the case, it is unclear where lawmakers will find the money.

Democrats argue that one of the purposes of the tax cut was precisely this--to restrain spending by taking the money out of government coffers.

“There is a far greater constraint as a result of [the tax cut] bill than there ever would have been otherwise and that, I think, in part was the design of the Bush administration,” Daschle said.

Daschle left open the possibility that Democrats would find ways to boost spending for their priorities--but acknowledged they would have to find offsetting cuts in other areas to avoid deficit spending or dipping into Medicare and Social Security reserves.

Another possibility for offsetting increased spending would be to postpone or drop elements of the tax cut, which will be phased in gradually. But that could be politically risky, given that Republicans doubtless would portray such a move as a Democratic-inspired tax increase.

Democrats See Few Good Choices

And if Congress ends up solving the quandary by overspending the budget, Republicans may try to blame Democrats in a way they could not if the GOP were in charge of both the House and Senate.

“What are our options? We have to either stop a tax cut, increase taxes or not spend,” fumed Sen. Joseph R. Biden Jr. (D-Del.). “Democrats, have at it!”

Robert Reischauer, a budget expert who heads the Urban Institute study group, added that the Democrats “are clearly between a rock and a hard place. They know full well that they will be blamed--rightly or wrongly--for appropriations bills that exceed the budget targets.”

Some Democrats argue that they would benefit politically if they can frame the coming debate as an illustration of the price that will be exacted by sticking with the Bush tax cut.

“If it turns out the reason you can’t have a generous prescription drug benefit is because Republicans went too far in cutting the top tax rate, that’s not a bad fact of life for Democrats to present to their voters,” said Geoff Garin, a Democratic pollster.