The crux of U.S. budget battle: How to pay?

The federal budget is on an unsustainable path, according to a new report by the Congressional Budget Office.

from the December 17, 2007 edition

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It's a cost that's largely invisible to the public now, but will be much more evident as interest rates increase. That's why it's important for Congress to take steps to address such issues now, say budget watchdog groups. Instead, they worry that Congress will abandon the principle of finding offsets for new taxes and spending, if it passes an AMT fix this week without offsets.

"It's going to be very difficult to build a sustainable fiscal future if you insist you can't have a rational discussion about all parts of the budget," says Robert Bixby, executive director of the Concord Coalition, who was on Capitol Hill last week to make a case for the pay-as-you-go principle. "Then, you're going over a cliff."

Since taking control of Congress in January, Democrats have aimed to win over GOP votes on issues ranging from taxes and spending to oversight of the war in Iraq. But, with rare exceptions, that has not been the case.

"We are about to lose our economic freedom and we can't find a single Republican with us," says Rep. John Tanner (D) of Tennessee, referring to this week's expected vote on the AMT.

In the Senate, Democrats say they want to abide by the pay-as-you-go rule, but don't have the Republican votes needed to demand offsets for changes such as the AMT fix.

Senate Republicans say the AMT was too big a problem not to fix. "It would be foolish to have to pass a permanent tax increase to make up for a tax that Congress never intended to collect," says Sen. Jon Kyl (R) of Arizona, commenting on the AMT fix.

Senators on both sides of the aisle note that, for now, federal revenues are higher than expected and make up for the AMT fix. But they admit that the 110th Congress has made little headway in dealing with America's longer terms fiscal problems.

"I hope that the next president plays a big role in helping us get it all in balance. It takes a president," says Sen. Max Baucus (D) of Montana, who chairs the Senate Finance Committee.

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