Congress Girds Its Loins For Budget Battle

by Mike Godfrey, Tax-News.com, Washington

11 March 2005

President Bush's ambitious twin fiscal goals, of cutting back the ballooning budget deficit and financing future social security imbalances out of current contributions, began to hit the buffers of Congressional reality this week.

The budget givens are that last year's budget deficit of $412bn should be cut in half by 2010 through constraining expenditure, while still preserving most or all of the President's treasured tax cuts. In practice this means that spending committee Chairmen must buy into the process and accept caps on benefit programs.

On the social security front, the President wants current surpluses to be used to fund individual benefit accounts which will take the strain off future 'pay-as-you-go' expenditure. The trouble is that the surpluses are being diverted to shore up other types of spending program, and no-one wants to accept the consequences of losing them.

"Everyone wants to get to heaven, but no one wants to die," said House Budget Committee Chairman Jim Nussle (R., Iowa).

Still, both House and Senate have come up with ambitious plans which would demand cuts in major spending programs through capping appropriation totals and also limiting future tax-cuts - but the detail would be left to individual spending committees. In both cases, the legislation would mandate a deficit level close to the $200bn asked for by the President.

Democrats are not - yet - in open defiance of the budgetary plans, but they are uneasy about what happens after 2010, when many of the President's cherished tax cuts come up for renewal, and may disappear into the maw of Committees, crazed with hunger to spend after five years in the wilderness.

If Congressmen are more or less behind the President's budget, the same can't be said of the social security debate, where political sensitivity ('the 3rd rail') and the Democrats' doctrinal detestation of 'private' anything combine to make meaningful reform a seeming impossibility. Go for it, Dubya!

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