GOP looks to reclaim fiscal responsibility mantle

President Bush's veto of the S-CHIP bill Wednesday was the first fight over '08 spending.

With the new fiscal year under way and no spending bills completed, President Bush and Congress are heading into a fight over fiscal responsibility that is likely to dominate politics on Capitol Hill until the end of the year.

President Bush's veto of a popular bill to provide health insurance for poor children, the S-CHIP program, on Wednesday marked a first volley.

The White House says the proposed bill is $30 billion more than what America can afford. Democrats say that the veto is a sign that Mr. Bush and Republican lawmakers who refuse to back a veto override have the wrong priorities.

"Today the president showed the nation his true priorities: $700 billion for a war in Iraq, but no health care for low-income kids," said House Democratic Caucus Chairman Rahm Emanuel (D) of Illinois, in a statement.

But the 12 pending appropriations bills for fiscal year 2008 – and a new war-funding request expected this fall – will test the credibility of both sides of the aisle.

For Republicans, battered by Bush's low approval ratings, the fall budget battles are a chance to show angry conservatives that the GOP is getting back to a concern over a restraint in spending.

"This marks the president's last chance to reassert control over the budget process that's been allowed to flail along wildly for six years now," says Pete Sepp, a vice president at the National Taxpayers Union in Alexandria, Va. "If this is an effort to reestablish credentials [with fiscal conservatives], there is a lot more reestablishment to do beyond S-CHIP. The sincerity of this effort will be judged by the number of vetoes."

The 12 spending bills passed by the House are already some $23 billion more than the $933 billion that Bush requested in his FY 2008 budget in February. Bush says the increases are irresponsible and he has threatened to veto nine of the 12 bills. The overall federal budget for FY 2008 is $2.7 trillion.

But conservative activists say the cost over the next 10 years of programs set in motion this year will be hundreds of billions of dollars.

"Iraq is not forever. Any newly initiated spending project is," says Grover Norquist, president of Americans for Tax Reform, an antitax group. A big fight over spending will help the GOP rebuild bridges with the conservative movement, he says. "If the president spends the last year-and-a-half of his presidency in a knock-down, drag-out fight on spending, this will be remembered. The modern Republican Party will be regaining its brand with his leadership. The country needs an antispending party, and we lost it for a while."

In the House, some 147 Republicans have already signed a pledge with GOP leadership that they will vote to sustain a presidential veto on any spending bill. If those promises hold, that would be enough to prevent any veto override.

Last week, Congress passed and the president signed a measure to continue funding the federal government at FY 2007 levels until Nov. 16. The move gives Congress more time to finish work on spending bills. Democrats note that the 109th Congress, controlled by Republicans, never completed its spending bills, which were funded by stop-gap measures until the 110th Congress finished the work.

But Democrats are also facing important rifts in their ranks over spending decisions this fall. On Tuesday, Reps. David Obey of Wisconsin and John Murtha of Pennsylvania, top Democrats on the House Appropriations Committee, said they would not take up a new war-funding bill until Bush changes strategy on the Iraq war.

"As chairman of the Appropriations Committee, I have absolutely no intention of reporting out of committee anytime this session any such request that simply serves to continue the status quo," said Chairman Obey, at a press briefing Tuesday. At the same time, Obey and Representatives Murtha and Jim McGovern (D) of Massachusetts proposed a $150 billion tax increase for the war.

The proposed income-tax surcharge ranged from 2 percent for lower-income taxpayers to 15 percent for those in the highest income bracket. The proposal was immediately disavowed by House Speaker Nancy Pelosi. Senate Democratic leaders said they had not been briefed on the plan in advance. Majority leader Harry Reid told reporters after a caucus meeting Tuesday that he had "signed on to nothing and ruled nothing out."

But Republicans jumped on the proposal as evidence that Democrats were not serious about fiscal responsibility in the fight over spending bills.

Referring to the Obey proposal, Sen. Jon Kyl (R) of Arizona charged that at a time when Democrats are proposing to spend $23 billion more than the president has requested, they are also proposing a new tax on every American. "If a lack of revenue is the problem, then let's not spend more than is in the budget," he said on the floor of the Senate Wednesday.

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