Analysis
Last-minute GOP add-ons raise cause for concern

By Jonathan Weisman
The Washington Post

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WASHINGTON — As Congress rushes to conclude its 2003 session, Republican leaders are garnering votes for controversial legislation by loading the bills with billions of dollars in added costs that analysts said would expand the budget deficit for years to come.

The year-end binge has alarmed analysts in Washington and on Wall Street, coming as it does after three years of presidential and congressional initiatives that have substantially boosted the government's spending and shrunk its tax base.

"The U.S. budget is out of control," the Wall Street investment firm Goldman Sachs warned Friday in its weekly newsletter to clients.

In the final days of the congressional session, GOP leaders added billions of dollars to energy and Medicare bills to help persuade key factions to support the legislation. Overall, the energy bill would cost $33 billion; the Medicare bill $400 billion.

Less noticed were congressional moves to expand veterans' benefits by $22 billion and to nearly double spending on forest-thinning projects — from $420 million a year to $760 million — to assure passage of forest legislation promoted by the White House. Lawmakers are also trying to extend 14 expiring tax cuts through 2004, at a cost to the Treasury of more than $7 billion.

All of those actions come in the face of a federal budget deficit already projected to rise from a record $374 billion shortfall in the fiscal year that ended Sept. 30 to a mark close to or above $500 billion in the current fiscal year.

"The only thing I can tell you is evidently the word 'tomorrow' no longer exists in the vocabulary of otherwise responsible members of Congress," said Warren Rudman, a former New Hampshire Republican senator and long-standing budget hawk.

Former Treasury Secretary Robert Rubin said, "Our political system has simply lost its willingness to take the very difficult path of maintaining fiscal discipline."

Some rank-and-file GOP lawmakers expressed concern that the burgeoning deficit is happening under the watch of the Republican Party, which came to power in Washington preaching fiscal restraint and less government.

"I'm very troubled by the possibility that the party of Ronald Reagan, the party that came to Washington to change the welfare state, could fall into that 75-year parade of entitlement makers," said Rep. Mike Pence, R-Ind., citing the new Medicare bill.

At several points in recent weeks, when opposition to controversial legislation was voiced, congressional leaders simply increased the price.

The energy bill that passed the House, but stalled in the Senate, contains $23.5 billion in tax breaks, most of them for oil and gas producers and nearly triple the total in President Bush's original proposal.

The support of farm-state Democrats was secured by a major expansion of subsidies for ethanol, a corn-based fuel additive. Balking lawmakers from the Midwest and Appalachia were offered provisions to benefit the producers of high-sulfur coal and a last-minute $2 billion addition to help older coal-burning plants comply with the Clean Air Act.

With an eye on Louisiana's two Democratic senators, the bill would provide financing assistance for a mall in Shreveport that will house, among other things, a Hooters restaurant.

The Medicare bill took a similar tack. The concerns of worried private health plans were assuaged by $12 billion more in subsidies than the House or Senate envisioned in the Medicare bills passed in June. Rural lawmakers, concerned that any expansion of managed health care would leave their doctors and hospitals behind, won an unprecedented increase in rural health-provider payments, totaling at least $25 billion.

After health-policy experts warned that a prescription-drug benefit offered through Medicare might prompt corporations to drop drug benefits for retirees, negotiators added an $18 billion credit for employers that maintain their coverage.

When the Congressional Budget Office concluded that the cost of the Republican bill would fall $5 billion shy of its $400 billion allotment, congressional leaders could have banked the savings. Instead, they reduced patient deductibles from $275 to $250, and raised the drug coverage limit from $2,200 to $2,250.

For veterans, Congress amended rules established in the 1890s that reduced disabled veterans' retirement benefits by $1 for every dollar received in disability pay. The change, to be phased in over 10 years, will cost $22 billion, far more in the second decade once fully phased in.

Bush's $87 billion request for military operations and assistance for Iraq and Afghanistan was initially met with sticker shock and disbelief. Under pressure from constituents, the House and Senate passed versions that shaved the total slightly. But when the measure emerged from final negotiations, it had grown by $500 million. All of that has come on top of three consecutive tax cuts totaling more than $1.7 trillion over the next decade.

White House officials remain sanguine. A brightening economic picture should offset some of the additional costs, said J.T. Young, a spokesman for the White House Office of Management and Budget. The deficit will peak this year but is on course to be cut in half by 2008, he said.

Stuart Roy, spokesman for House Majority Leader Tom DeLay, R-Texas, said that the "hundreds of thousands of jobs" that would be created by the energy bill would more than offset its cost, and that by injecting free-market competition into Medicare, the prescription-drug bill should actually restrain costs.

Some budget experts say such optimism is a large part of the problem.

"It's very hard for Congress to show fiscal restraint when the White House hasn't raised the deficit as a primary issue," said Robert Reischauer, a former Congressional Budget Office director who now heads the Urban Institute.

Copyright © 2003 The Seattle Times Company