Congress Girds for Battle of Priorities

Congress returns this week to a political landscape transformed by new budget strictures that make it harder than ever for President Bush or his Democratic adversaries to bridge their differences.

Spending money is a time-tested way for politicians to squirm out of a stalemate, but this summer’s reports of a dwindling budget surplus could squeeze Congress’ wiggle room to the size of a postage stamp.

A protracted battle between Bush and Congress concerning the budget is sure to dominate after the Senate returns Tuesday from summer recess and the House reconvenes Wednesday. But lawmakers also face a backlog of other unfinished business of far-reaching consequence.

The stakes are high for patients, who could soon win new rights in dealing with their health plans; for special interests, who could lose clout in the campaign finance system; for scientists, who want more support for stem cell research than Bush has proposed; and for the president himself, who is seeking more power to forge international trade agreements.

Many of these battles will be fought across clear partisan lines and will test Democrats’ willingness to give Bush any new legislative victories to set beside the tax cut trophy he won in May.

But on other issues, both Democrats and Republicans will confront new divisions within their own parties. That is particularly true of the budget debate, now roiled by reports that Congress is at least on the brink of shattering a bipartisan commitment not to use the Social Security surplus for other government programs.

Those reports, showing that Bush’s tax cut and the souring economy have practically wiped out the non-Social Security surplus for this year and next, will have ramifications even beyond the debate on the appropriation bills that spell out the details of the budget.

That new fiscal reality--a far cry from the vision of vast surpluses that loomed at the beginning of this year--will form the backdrop of every bill that has any cost whatsoever. That includes Bush’s energy bill, his initiative to give more federal money to faith-based institutions to provide social services, and the patients’ rights legislation he supports--all of which include tax breaks that would further drain the surplus. Also affected is Bush’s school reform initiative, which includes a big bump-up in education spending.

On Saturday, Bush used his weekly radio address to try to breathe new life into his education proposal. Noting that the House and Senate had passed different versions of his reform plan, he called on Congress to put aside “political games” and act quickly to produce a single education bill.

But the Democrats, in their Saturday radio address, said Bush’s plan for improving student test scores would fail without additional funds for schools that teach students from poor families.

“Money alone won’t improve schools, but as we raise standards and increase accountability, we must also invest in excellence,” said Sen. Mary Landrieu (D-La.).

“Everything comes back to this” budget situation, said Anita Dunn, spokeswoman for Senate Majority Leader Tom Daschle (D-S.D.).

The month’s official business will begin slowly this week, with the high point coming Thursday when Mexican President Vicente Fox addresses a joint session of Congress.

But attention will turn quickly to the overarching domestic issue of the budget. Congress has to finish work on 13 appropriation bills needed to keep the government running after the new fiscal year begins Oct. 1.

Congress has not even begun work on two of the biggest and most politically sensitive of those bills, the ones that finance defense and education programs. Lawmakers will have to juggle Bush’s request to increase defense spending by $18.4 billion against pressure from both parties to add billions for education. And both parties will have to weigh those pressures against their bipartisan promise not to use Social Security surpluses for anything other than reducing the national debt.

“They can’t do everything they promised,” said a senior Democratic House aide. “They are going to spend September figuring out what promise to break.”

John Feehery, spokesman for House Speaker J. Dennis Hastert (R-Ill.), said, “I think it’s going to be pretty ugly.”

Last week’s report from the Congressional Budget Office showed that Congress was already on track to spend $9 billion from the Social Security surplus in 2001 and would have a scant $2-billion surplus outside Social Security for 2002.

Democratic leaders have responded by accusing Bush of squandering the surplus on his tax cut and demanding that he show how he can pay for his priorities without further tapping Social Security. However, not all Democrats agree with that line of attack, which is particularly awkward for the minority of Democrats who supported the tax cut. Sen. Zell Miller of Georgia recently wrote a letter to the Washington Post bitterly attacking his own party’s chairman, Terry McAuliffe, for railing against the tax cut.

“Whom does he think he is hurting?” Miller wrote. “Those 18 moderate Democrats who voted for the tax cut, that’s who. In case he forgot, nine are up for reelection next year.”

Other Democrats are urging their party to relax its commitment to fence off Social Security surpluses, especially if it would force cuts in education and other programs that could help people during sour economic times.

“If we really get into a recession, we don’t want to get into the straitjacket of saying you can’t use Social Security surpluses,” said Rep. Jerrold Nadler (D-N.Y.), who, like other liberals, wants to roll back part of the Bush tax cut.

But other Democrats have been extremely wary of pushing what Republicans would surely describe as a tax increase, especially since they have little hope of prevailing.

The budget squeeze will also likely open divisions among Republicans. GOP fiscal conservatives argue that the dwindling surplus is a reason to enforce stricter spending discipline, and they will invoke it to keep this fall’s appropriation bills from getting out of hand. But they will doubtless run into resistance from other Republicans, including members of the powerful House Appropriations Committee, who are willing to gamble that they have more to gain from spending on defense, education and home-state projects than from sticking to their commitment on the Social Security surplus.

Meanwhile, Bush and congressional leaders will be pushing for action on a number of other fronts:

* Education. Fiscal pressures may make it harder for Bush to win final approval of his cherished initiative to improve the nation’s schools. Different versions of the bill have stalled in conference, in part because of Republican resistance to Democratic efforts to greatly increase education funding. Other obstacles include disputes over proposed test standards. The result has been a surprising slowdown in a Bush initiative that a few months ago seemed practically unstoppable.

* Health. Negotiators must resolve differences between two versions of a bill that would give patients new rights to sue their health plans. Bush supports the House-passed version, which gives more limited rights to sue than the Senate bill. Both sides in the dispute expect the other to slow the process: Democrats think Bush and the Republicans don’t really want a bill to emerge from a House-Senate conference; Republicans fear Democrats want to keep Bush from scoring a victory on the issue.

* Medicare. Both Bush and congressional leaders say they want action on a bill to provide prescription drug benefits for Medicare beneficiaries. But consensus on the form of the bill still seems far away, and budget limits raise doubts about how Congress could afford such an expensive new entitlement.

* Stem cells. After Bush announced last month that he would allow federal funding for limited embryonic stem cell research, critics said his policy did not go far enough and Daschle said congressional action was likely. Hearings are planned for this week, but the timing on any legislative action is uncertain.

* Trade. Bush is seeking “fast track” power to negotiate international trade deals with limited congressional interference. House leaders hope to bring the issue to a vote this month. But Bush so far lacks enough votes to prevail and will likely have to make some concessions to win support from Democrats who want assurances that labor and environmental standards will be protected in such agreements.

* Energy. The House in July passed a big energy bill that included Bush’s proposal to open more of Alaska’s wilderness to oil drilling. The Senate is expected to act on its own energy bill in October, but the issue seems to be losing momentum as the energy crisis in California and gasoline price spikes have eased. Bush did not mention the issue in his speech last Wednesday outlining his priorities for the fall.

* Campaign finance reform. Backers of legislation to ban unregulated political contributions known as “soft money” hope for a House debate this fall, despite opposition from GOP leaders. With 218 signatures needed, 205 House members have signed a petition to force the bill to the floor.