Budget stuck in limbo as policy splits Republicans

By Jonathan Weisman
The Washington Post

Ex-Sen. Warren Rudman advocates fiscal restraint.

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The meltdown was triggered by a feud between conservative Republicans who favor continuing to cut taxes in the face of record budget deficits and GOP moderates who want curbs on tax cuts and are reluctant to slash spending.

Even a face-saving effort in the House to impose federal spending curbs blew up early Friday when 72 Republicans joined a united Democratic Party to torpedo the leadership-backed bill.

The collapse of negotiations is more of a political embarrassment than a practical problem for GOP leaders, who only two years ago sharply criticized Democrats for failing to pass a budget when they controlled the Senate.

	Sen. John McCain backs "pay as you go" strategy.

But some Republicans fear this year's impasse reflects an irreconcilable division within their party that will imperil the government's ability to set tax policy and address ever-widening deficits as the baby boomers begin to retire.

"For a majority of Republicans in Congress, tax cuts are now more important than budget constraints, and they've gotten themselves between a rock and a hard place because you can't have both," said former Sen. Warren Rudman, R-N.H., a prominent advocate of fiscal restraint.

Both conservative and moderate Republicans say the fight is over the future of their party. Neither side has given an inch. So two months after the House and Senate passed budget blueprints for the fiscal year that begins in October, GOP negotiators have hit a wall in trying to reconcile the plans.

Moderate Senate Republicans, key to a compromise, say there have been no budget discussions for nearly a month, nor are any planned.

Unable to wait for guidance on spending levels that a budget is supposed to provide, the appropriations committees have begun drafting 13 annual spending bills.

"Right now, it's fair to say things have moved on," said G. William Hoagland, a senior budget aide to Senate Majority Leader Bill Frist, R-Tenn.

The nonbinding budget resolution is supposed to guide Congress in setting tax and spending policy for the upcoming fiscal year. Despite the failure to agree, both the House and Senate are following the guidelines of their respective budgets, which offer similar limits on spending.

Without a budget, the Senate will lack parliamentary language that would allow it to extend three expiring tax cuts with a simple majority vote in the 100-member body. Instead, Senate leaders will have to gather at least 60 votes to ensure taxes do not rise at the end of the year.

House Republican leaders had hoped to use the budget to quietly raise the $7.4 trillion federal debt limit, which the government could hit before the end of the summer. Without a budget, that limit may have to be raised by a separate vote on the House floor, which is political castor oil for Republicans in an election year.

But the main effect of Republican failure on the budget is symbolic, fiscal experts said.

At issue is the future of tax cuts in the face of budget deficits that will swell well above $400 billion this year.

Senate Democrats, joined by Republicans John McCain, R-Ariz.; Olympia Snowe, R-Maine; Susan Collins, R-Maine; and Lincoln Chafee, R-R.I., secured an amendment to the Senate budget that would force any future tax cuts to be offset by equivalent spending cuts or tax increases.

House Republicans, pushed hard by the White House, refused to go along, demanding instead that such rules apply only to Medicare, Medicaid and other entitlement spending increases.

If it continues, the fight could eventually have significant practical implications. Since President Bush came to office, Congress has passed tax cuts worth $1.7 trillion over 10 years but all will expire by 2011, many before then.

If the Senate's "pay-as-you-go" budget rules are in place then, legislators will be faced with allowing tax levels to abruptly rise to the levels of Bill Clinton's presidency, or cutting spending by hundreds of billions of dollars a year to preserve the Bush tax cuts.

Copyright © 2004 The Seattle Times Company

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