Budget Balancing Act

Taken by themselves, many of President Bush's budget pieces make sense. There's a lot to be said for ending double taxation of dividends, for example. Even Democrats are talking about tax cuts. The problem is getting it all to add up.

The president's budget calls simultaneously for deep tax cuts and huge spending increases - especially on defense and homeland security. That would bring ballooning deficits, as the watchdog group Concord Coalition puts it, "as far as the eye can see."

The Congressional Budget Office now estimates that by 2013, the cumulative deficit under the administration's plan would total $1.8 trillion. And that's even before factoring in the as-yet-unknown costs of a war in Iraq and its aftermath.

The administration sees things differently. Treasury Secretary John Snow says that the deficit would rise a bit in the first two years, then gradually fall over the next eight until the budget is in "virtual balance." The key, he says, is spending: Congress must hold spending growth to 4 percent annually over the next 10 years.

Rep. Jim Nussle (R), the House Budget Committee chairman, agrees that spending is the crux of the problem. But he says he has "zero hope" spending growth can be held at 4 percent, given the president's proposals. After all, spending on "discretionary" items - the one-third of the budget that Congress can control - has grown at a 7.7 percent rate in recent years. Deeper spending cuts are needed, he says, and they must include mandatory entitlement spending on programs such as Medicaid and Medicare that take up 55 percent of the budget.

"The president won't get everything he wants," Mr. Nussle says flatly. Nussle wants tax cuts, too, but only if they are accompanied by spending restraint. He says he won't support a budget that doesn't balance over 10 years. Many in the House GOP conference simply won't vote for a repeat of 1981, when Congress cut taxes as President Reagan desired, but failed to rein in spending at the same time.

A responsible budget plan would have fewer tax cuts than the president wants, less spending than he suggests, and more entitlement reform than he has proposed. To achieve that, however, may require the Senate to invoke rules allowing budget bills to pass by simple majority vote, without filibusters.

That means that in the end, a budget deal may come down to what Senate Republicans can agree on.

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