Budget austerity? Only in part

Even before President Bush's $2.4 trillion budget for 2005 is handed off on the steps of the Capitol monday, many members of his own party were running from it. But in a presidential election year, they can't run too far.

That's the tough electoral calculus behind this year's budget debate, which insiders expect to be a battle largely waged within the Republican Party. .

For a party that took back the Congress on a pledge to restore fiscal discipline, there's a lot not to like in the president's budget. At the top of the list: a $363 projected deficit for FY 2005, on top of this year's record $521 billion deficit.

A $1.35 trillion five-year deficit forecast, moreover, doesn't include the cost of US operations in Iraq and Afghanistan, which are requested off budget. And a $2.4 trillion 10-year forecast would jump to $5 trillion if Mr. Bush succeeds with a increasingly imperiled plan to make his tax cuts permanent.

In short, deficits have suddenly forced their way to the top of the GOP agenda - altering prospects for everything from expanded tax-free savings plans to energy tax credits. But the new environment doesn't mean pursestrings will close altogether.

Bush is pushing for expanded military spending, and congressional leaders in both parties are seeking new outlays for items such highways and mass-transit. And beyond current agendas, the bulk of the spending increases is already locked in - a point which angers fiscal conservatives but is unlikely to change.

The biggest point of sticker shock is over the president's estimates that the new Medicare prescription drug benefit will cost some $540 billion over the next 10 years, not the $400 billion promised when Congress passed the legislation last year.

But the line item that has most riled the party's conservative activists is trivial by comparison: It's the $18 million boost for the National Endowment for the Arts - an agency long questioned by conservatives.

"Even for someone like me who is not a deficit hawk, these deficits are getting to be pretty frightening, and there seems to be no commitment from either party to do much toward conquering them," says Stephen Moore, president of the Club for Growth, a conservative group that advocates lower taxes.

In his State of the Union address, the president set a goal of cutting the deficit in half in five years. Administration officials say that much of the improvement will come on the revenue side, as the economy continues to rebound. Key spending cuts target discretionary spending, not including defense or homeland security. These include: $2.4 billion less for the environment, $1.8 billion less for community development, and $100 million less for energy.

The shadow of the budget ax is also evidence in what is not included in the documents. Last year, the Senate came within two votes of approving a $30 billion energy bill. The new budget provides only $8 billion for a new energy bill, according to early reports.

In addition, the president's budget only anticipates $256 billion for a six-year reauthorization of a highway and mass transit bill. After word leaked out, the House Transportation and Infrastructure Committee postponed its markup on a $375 billion version of that bill. In announcing the delay, committee chair Don Young (R) of Alaska cited the need for time to confer with House leaders on "possible additional ways to pay for the much needed improvements."

Still, many Republicans say budget cuts have not been ambitious enough. Last week, some 40 GOP conservatives called for a plan to balance the budget over five years, not just halve the deficit. Seventy House and Senate GOP moderates are also developing a strategy on deficits. "It's my hope that these projected deficits will scare Congress straight," said Rep. Jeff Flake (R) of Arizona, a leading conservative.

How far to take their opposition to the budget will be a tough issue for conservative Republicans. Some 30 House members opposed the president's No Child Left Behind Act, because it expanded the federal role in education. Another 25 came within a vote of scuttling the president's plan to add a prescription-drug benefit to Medicare. The budget debate raises a similar test of loyalties.

The theme of "big government Republicanism" is already working its way into GOP primaries, most notably in the challenge by Rep. Pat Toomey to a fellow Pennsylvania Republican, Sen. Arlen Specter.

Meanwhile, Democrats are protesting what they say is the biggest swing in the nation's fiscal history. "Bottom line is we've got a severe problem on our hands. It's not going away just because the economy is growing," because deficit estimates already assume "robust growth for the next 10 years," says Rep. John Spratt (D) of South Carolina, the ranking member on the House Budget Committee.

In an election year, it is unlikely that the Bush administration will ask Democrats to come to a common agreement on the issue, he adds.

But despite Republican control of the Congress, Democrats could share the blame for big deficits in the minds of voters come November, especially if GOP conservatives balk at the increases.

"The anger [on deficits] is so steep among some Republicans, that I could see many saying we have nothing to lose by voting against the budget," says Stanley Collender, a budget expert at the public-relations firm Financial Dynamics.