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Bush submits 2006 fiscal budget { February 7 2005 } Original Source Link: (May no longer be active)
http://www.washingtonpost.com/wp-dyn/articles/A3261-2005Feb6.htmlhttp://www.washingtonpost.com/wp-dyn/articles/A3261-2005Feb6.html
Deficit Worries Threaten Bush Agenda
GOP Lawmakers, Others Say War and Recession No Longer Justify Mounting Debt
By John F. Harris
Washington Post Staff Writer
Monday, February 7, 2005; Page A05
In 1992, Ross Perot likened the federal budget to a patient spurting blood in an emergency room. "Step one is to stop the bleeding, and we are bleeding arterially," the independent presidential candidate declared at one of that year's debates.
It has been a while since Americans routinely heard metaphors like that. But signs are blossoming that deficit politics is finally making a comeback -- with big implications for the expansive second-term agenda promoted by President Bush.
Concern by fellow Republicans about borrowing as much as $2 trillion in transition costs, for instance, is one of the big problems facing his plan to restructure Social Security to allow individual investment accounts.
And as Bush prepares to release his proposed fiscal 2006 budget today, some Republican lawmakers and fiscal experts are warning that the arguments he invoked in his first term for tolerating big deficits -- mainly the twin demands of war and recession -- are no longer sufficient to justify mounting debt. In last week's State of the Union address, the president himself promised a new austerity in domestic programs.
"Personally, I think we are setting ourselves up for problems" unless Republicans begin living up to their reputation as a tough-on-spending party, said Rep. Michael N. Castle (R-Del.), a former governor who since coming to Congress in 1993 has been known as one of the party's "deficit hawks."
In the decade since the GOP took power on Capitol Hill, including four years in which there has also been a Republican president, Castle said, "I can't tell you that pork-barrel spending has changed one bit from Republicans to Democrats."
Some analysts say mounting public concern over a record projected deficit for this fiscal year of $427 billion will soon have Washington reprising the arguments of the 1990s. For years, nearly every domestic policy debate was tinged by concern over the deficit, and the issue was a major engine for figures as diverse as Perot and former House speaker Newt Gingrich (R-Ga.).
A season of surpluses at the end of Bill Clinton's term meant that it "got stuck in everyone's head that we don't need to worry about the budget again," said Robert Bixby, the executive director of the Concord Coalition, a bipartisan group devoted to fiscal responsibility. "I do think deficit politics is coming back, but I don't think people have confronted what that means yet. People are still pursuing politically painless options."
Touting his agenda in Omaha last week, Bush said the fiscal and political climate is changing. "People in Congress on both sides of the aisle have said, 'Let's worry about the deficit,' " Bush said in Omaha, where he was pressuring lawmakers to allow private Social Security accounts. "I said, 'Okay, we'll worry about it again.' The last budget worried about it; this budget will really worry about it." The president has said his budget will reduce or eliminate more than 150 programs.
But this vow comes against a record in which a Republican Congress and president passed the largest expansion of a domestic entitlement program in decades -- a $500 billion prescription drug benefit under Medicare -- as well as tax cuts. Combined with other national security and domestic spending, these policies took an $86 billion surplus in fiscal 2000 to a record $412 billion deficit last year.
"Republicans are now being dragged back into fiscal restraint, kicking and screaming," said Brian M. Riedl, a budget analyst at the conservative Heritage Foundation. Although he says the annual budget deficit is "an overrated statistic," Riedl said he welcomes the return of a debate that asks "where to cut, not where to expand" the federal government.
It's not only budget numbers that are chastening the GOP. Public opinion may be doing the same. A Washington Post-ABC News poll last month found that 58 percent of people disapproved of Bush's handling of the deficit issue, while 39 percent approved. The same survey found 62 percent registering doubt that he will make much progress on the issue during a second term.
And although deficits have not been a paramount political issue during recent years, a recent survey by the Pew Research Center found that 56 percent of voters now identify the budget deficit as a "top priority," up from 51 percent a year ago and from 35 percent three years ago. Still, this climbing concern does not match the salience the deficit issue had in the 1990s: In 1994, the year Gingrich's GOP seized control in the House -- with a promise to pass a balanced-budget amendment the lead item in the "Contract with America" -- 65 percent of Americans said taming the deficit was a top priority.
"I do see a lifting of awareness about the issue," Castle said, "but nowhere near what it was [during the 1990s]. . . . It may be coming back slightly, but I don't see it back yet as a large public concern."
Rep. Jim Nussle (R-Iowa), the House Budget Committee chairman, maintains that one reason the politics of deficits are different is that the deficits themselves are different. Although he said he agrees that growth in the budget needs to be restrained, the Bush deficits are less troublesome than the deficits that generated such controversy in the late 1980s through the opening of Clinton's second term. "These deficits were created for deliberate reasons" -- to jump-start the economy and pay for war -- while those earlier ones were "neglect deficits" that reflected an unwillingness by lawmakers to make responsible choices, Nussle said.
The chairman agreed that concern about deficit spending is an important obstacle in selling his proposed changes to Social Security.
Although agreeing that the current deficit is a "gigantic number," he said as a percentage of the total economy, the figure is less worrisome. The 2004 deficit was about 3.6 percent of the nation's gross domestic product, according to the Congressional Budget Office. That's less than in 1983, when the budget soared to 6 percent of the economy, or the 4.7 percent that made the deficit a major political issue in 1992. Still, it's greater than the 2.2 percent of 1995, when Republicans forced a confrontation with Clinton over his reluctance to cut spending more.
In the 1990s, most Republicans did not make nuanced distinctions about whether some deficits were bad and some were acceptable. In March 1995, a proposed balanced budget amendment passed the House and failed in the Senate by one vote. Nine months later, the GOP congressional majority forced a government shutdown over the question of whether the budget could be balanced in seven years, as Republicans wanted, or nine, as Clinton said was preferable. As it happened, higher-than-expected economic growth, as well as a bipartisan budget deal in 1997, finished the job by 1998.
Riedl said the 1990s experience has colored the decisions Republicans have made the past few years. After being bested politically during two government shutdowns of 1995 and early 1996, many Republicans have decided there is no gain to be had in austerity politics, he said.
Now out of power, Gingrich is urging Republicans to avoid benefit cuts during the debate over Social Security, and instead emphasize the increased benefits that people might receive under Bush's plan for individual accounts if they invest wisely. A decade earlier, by contrast, he was the author of a budget strategy that emphasized slowing the rate of growth in Medicare -- confident that people would be willing to accept some sacrifice in the cause of reducing government.
Beyond political calculations, there has been an ideological shift in the party. Castle said many of his colleagues think as long as taxes are kept low, decisions about spending do not matter so much.
Nancy Belden, a pollster who is president of the American Association for Public Opinion Research and who recently studied the political implications of the deficit, said the public takes a sufficiently "dim view" of the deficit that they are not eager for more tax cuts. On the other hand, there remains strong demand for new spending -- one factor raising doubts about how strong the return of deficit politics will be.
"It's not a high hot-button issue at the moment, but it could become one," Belden said. "For it to become one, it really needs political leadership."
Staff writers Brian Faler and Claudia Deane contributed to this report.
© 2005 The Washington Post Company
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