Both Sides Seek to Spell Out Contrasts in Fight on Budget

It all sounds so familiar: Republicans demanding the biggest possible tax cut while Democrats denounce the idea as a boon to the rich and a threat to cherished social programs.

But the fiscal debate that began in earnest with the release of President Bush’s budget outline Wednesday promises new contrasts between the parties that could reshape the battle for public support.

While pledging spending restraint, Bush is looking to blunt Democratic attacks by emphasizing his plan’s new money for such liberal priorities as education and health research. And while insisting that Bush’s spending is inadequate, Democrats are presenting themselves as the guardians of fiscal responsibility, arguing that far more of the national debt can be paid off than he proposes.

As they jostle for public allegiance and the few genuinely swing votes in Congress, both parties are unfurling plenty of traditional arguments. But the key to the political battle may be which side has more success at dislodging the other from the new ground it has claimed.

Bush’s admirers have taken to comparing him with Ronald Reagan, another president who focused on a few big issues and delegated freely. But the new administration’s emerging strategy in the tax and spending fight seems to owe less to Reagan than to Bill Clinton.

Reagan proudly presented his budget and tax plans as an ideological referendum on the role of the federal government--which he memorably indicted as “the problem, not the solution.”

But Bush is pursuing a more complex strategy. Like Clinton, he seeks to blur distinctions on issues that have benefited the other party and sharpen differences where he believes he holds the advantage.

This alternating clinch-and-contrast approach runs through Bush’s budget plan. Drawing bright lines with Democrats, Bush’s speech to Congress Tuesday night and the budget document that followed portray him as the enemy of “unrestrained government spending” and a resolute advocate of tax cuts for ordinary Americans. In his speech’s most memorable line, Bush declared, “The people of America have been overcharged and on their behalf, I am here to ask for a refund.”

But significantly, that dramatic declaration came only halfway through Bush’s address. That was no coincidence, White House aides say. Rather than leading with his demands for a tax cut, Bush began his speech by focusing on the areas where he would increase spending.

“There was another way to do this speech, which we actually considered at the beginning, which is to lead with the state of the economy and tax cuts,” said one senior White House official who asked to remain anonymous while discussing internal deliberations. “And we chose to lead with spending . . . [and] human needs, because it is our whole persona, it is the way we have tried to change the American political discourse.”

Bush’s budget outline takes a similar tack. The blueprint seems designed to inhibit Democrats from portraying the tax cut as a threat to popular domestic priorities--the argument Clinton used to undermine support for the GOP’s 1995 tax and budget plan.

Though Bush’s document declares his intention to hold the growth in federal discretionary spending to 4%--just slightly above the inflation rate--it lavishes much more attention on the programs the president proposes to increase than those he would cut. And Office of Management and Budget Director Mitch Daniels insisted Wednesday that Bush’s aim was not to reverse the domestic spending increases that accelerated through Clinton’s second term.

“We did not come here to go to war with the spending run-up of the last few years,” Daniels said, “only to moderate it.”

Many of the programs the budget favors with spending increases reflect priorities popular with Democrats: education, health research, Medicare, drug treatment, home ownership for the poor, community health centers that serve those without insurance. Another Bush intimate said the White House carefully scrutinized the budget to minimize the opportunities for Democrats to assert Bush had abandoned his promise of “compassionate conservatism” by targeting programs for the poor.

Despite that care, Democrats believe Bush’s plan may still leave him vulnerable to charges of misplaced priorities. Bush, for instance, sets aside $153 billion over the next decade to reform Medicare and provide a prescription drug benefit; Democrats believe twice that much is necessary to offer comprehensive drug coverage.

And although the 200-page budget outline didn’t identify many specific cuts, Democrats believe they can find vulnerabilities once Bush fleshes out the spending reductions he’s slated for nine departments and agencies, ranging from the Environmental Protection Agency to the departments of Justice and Interior.

Although it wasn’t specified in Wednesday’s document, for instance, administration aides say the budget contains significant cuts in Clinton’s program to help local communities hire more police--an idea likely to draw substantial Democratic fire. The squeals also could grow louder in future years, when Bush’s plan projects squeezing discretionary spending to little more than the inflation rate.

Even so, at this early stage few in either party believe the budget debate will turn primarily on spending levels. That’s because the surplus projections are large enough to allow Bush to generally avoid the sharp spending cuts that Republicans, led by then-House Speaker Newt Gingrich (R-Ga.), needed to project a balanced budget while seeking to cut taxes in 1995.

“It is a very different environment, and [Democrats] are not going to be able to make George W. Bush the next Newt Gingrich,” says lobbyist Rick May, former Republican staff director for the House Budget Committee.

With Bush’s spending plans less vulnerable to charges of unfairness, Democrats are being compelled to stress a different line of attack.

In their initial reactions to Bush’s plan, leading Democrats have argued mainly that it risks a return to the budget deficits of the 1980s and fails to pay down the national debt quickly enough. The late Hubert H. Humphrey, the classic Great Society liberal, probably never imagined that a fellow Democrat would thunder, as Sen. Kent Conrad (D-N.D.) did at a news conference Wednesday, that a GOP president’s budget plan was flawed because “he is far short of reducing all the national debt that can be retired.”

The debt argument could emerge as the debate’s unexpected fulcrum. In his budget document, Bush argues that Washington can only pay off $2 trillion of the $3.4 trillion in publicly held national debt over the next decade; doing so faster would require paying premiums of $50 billion to $150 billion to investors whose bonds won’t come due by then, the administration estimates.

But Democrats are arguing already that Bush is exaggerating the amount of debt that can’t be retired. Gene Sperling, director of the White House’s National Economic Council under Clinton, maintained Wednesday that only $410 billion to $500 billion of the outstanding debt would be difficult to retire by 2011. “They are creating a smoke screen,” Sperling charged.

This sounds like the sort of academic argument that could excite only accountants. But in truth the answer could have formidable political consequences.

Analysts like Sperling and May agree that many congressional centrists in both parties want Washington to pay down as much debt as it feasibly can; if it’s possible to redeem as much as $800 billion more in debt over the next decade than Bush now says, he may face considerable pressure to redirect surplus dollars toward that goal. That would leave Bush with much less money for his other priorities, and immediately increase pressure to scale back his tax cut.

“It is obscure and it is a classic Washington budget-nerd debate, but it has a potential . . . to be some sort of a pivotal point,” May says.