Democrats, the deficit, and all they want to achieve

Congress's new party of power faces a challenge in achieving their goals amid the current budget crisis.

Lower interest rates on student loans. More special forces for the military. Expanded prescription drug benefits for senior citizens. Greater federal support for renewable energy and alternative fuels.

Congressional Democrats have a long list of priorities they'd like to enact when they assume the power of the majority in January. After all, they've been wandering in the political wilderness for 12 years. They've had lots of time to scribble down stuff under the heading "to do."

But faced with record federal deficits and the expense of the war in Iraq, Democrats have also vowed to be more fiscally responsible than their Republican predecessors. Handling this impending collision could be one of the first big tests for the party's House and Senate leadership teams.

"Maybe [incoming Speaker of the House Nancy] Pelosi can really curb the tendency of Democrats to spend money, but there is a lot of pent-up desire," said Ron Haskins, codirector of the Brookings Institution's Center on Children and Families, at a recent seminar.

As yet, Democrats have hung no price tag on their forthcoming agenda. Many of the high-priority items they have pledged to enact in the first 100 hours of the new Congress, such as an increase in the minimum wage, wouldn't cost Washington lots of money.

In addition, incoming Speaker Pelosi said in a statement last month that the party is committed to "no new deficit spending." She said Democrats intend to restore pay-as-you-go rules, which require increases in the federal budget to be offset by either tax hikes or cuts in spending elsewhere.

It is true that the expansive list of party action items, as contained in the House Democrats' 31-page document, "A New Direction for America," is something of a catchall. For instance, will Congress really get around to voting to make college tuition tax-deductible for students studying math, science, technology, and engineering, as the document vows?

But some of the prospective legislative changes at the very top of the Democratic list would be undeniably expensive. Depending on how eligibility is structured, reductions in student loan interest rates could cost $10 to $50 billion over the next five years. Doubling special forces could cost $25 billion over five years.

Then there is the Alternative Minimum Tax (AMT), which has long been criticized by Democrats and Republicans alike. Designed to apply only to the wealthy, the tax now affects many who would call themselves middle class. Raising the income level at which a taxpayer is subject to the AMT could cost at least $40 billion a year.

And Democrats may want to expand federal health spending. The most common suggestion in this area is closing the "doughnut hole" in Medicare's prescription drug benefit, under which beneficiaries receive help for their first $2,250 of purchases in a year, then must buy prescriptions entirely on their own until their annual spending total hits $5,100.

The reason the doughnut hole exists in the first place was to pare the program's predicted cost. Its elimination would probably cost an estimated $5 billion annually.

"If you do make the prescription drug benefit more generous that could get very, very expensive, and there's no obvious way to pay for that," says Bob Bixby, director of The Concord Coalition, a budget watchdog group.

However, Mr. Bixby says he is encouraged by some budget actions Democrats have vowed to take. This week party leaders vowed to enforce a moratorium on the special-interest spending provisions known as "earmarks" until lobbying reforms can be enacted. And the incoming chairmen of the House and Senate Appropriations Committees have jointly said they will extend current funding levels for much federal spending until the 2008 fiscal year begins next Oct. 1.

The just-adjourned Congress only completed work on two of the 11 spending bills for fiscal 2007. As a short-term fix they extended current funding levels until Feb. 15, 2007.

Prolonging the life of this continuing resolution is the moral equivalent of a budget freeze, notes Bixby. "That was an encouraging sign," he says, "because they are doing a long-term continuing resolution at a lower level than many rank-and-file Democrats would like."

Of course, a year is a long time in terms of a Congressional budget. And after Democrats assume power, pressure may build from members used to minority status to reinsert treasured earmarks into spending bills.

Emergency spending legislation, such as that which has been used so far to fund much of the Iraq war, can be particularly attractive to lawmakers who want to get earmarks through as quickly as possible.

"The job of a budget watchdog is never done," sighs Bixby.

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