GOP looks for relief from budget caps

While congressional Republicans have adopted budget resolutions that provide for a modest tax cut and spending restraint in fiscal 2000, few budget writers expect they will have to live within those limits. In fact, most concede they are counting on the CBO to give them additional money for tax cuts and spending when the Congressional Budget Office revises its fiscal 2000 budget forecast this summer.

The nearly identical House and Senate fiscal 2000 resolutions call for fully offset tax cuts of $15 billion and significantly higher defense and education spending within the discretionary spending caps, which would require steep and politically unpopular cuts in non-defense domestic programs.

But despite the party line that the caps will not be broken and that tax cuts will be paid for-a rhetorical position Democratic leaders have been quick to echo-many Republicans are banking on the CBO saving them from themselves when it releases its updated fiscal 2000 economic projections.

The CBO is widely expected to go from predicting an on-budget deficit in 2000 to predicting a modest on-budget surplus. An on-budget surplus-which excludes Social Security revenues, as opposed to a total or unified surplus which does not-is crucial to the Republicans' argument that they protect Social Security more than the president because their budget only uses non-Social Security surpluses to finance tax cuts, and sticks to the caps rather than tap the Social Security surplus to cover higher spending.

If history is any guide, Republicans are on fairly solid ground in expecting the CBO to come up with more money this summer.

The last major budget deal, the 1997 Balanced Budget Act, was made possible by revised budget numbers that the CBO provided negotiators before the final agreement was reached in May 1997. Compared to its January 1997 forecast, the CBO's re-estimate that spring projected $45 billion a year more in revenues-or $225 billion more over the five-year life of the budget deal-than anticipated.

Although congressional budget sources cite Treasury Department figures showing revenues ahead of projections, and expect to see even better numbers after the April 15 tax filing deadline, others caution against expecting lightning to strike twice.

Said one off-the-Hill budget observer: "They could get lucky again, but not that lucky. I think ... the bump isn't going to be that big [compared to $45 billion more a year]. If it's more than $10 billion, I will be shocked"-referring to the potential revenue re-estimate the CBO might come up with at mid-year.

In January, the CBO projected a $131 billion total surplus and a $7 billion on-budget deficit in fiscal 2000. Last month, the CBO bumped the 2000 numbers up slightly, estimating a unified surplus of $133 billion and on-budget deficit of $5 billion.

But in an early indication that the CBO will project an on-budget surplus for 2000, the House Budget Committee assumed a $400 million on-budget surplus-a figure they ran past the CBO-in their 2000 budget plan.