GOP leaders agree to $596B spending plan for 2001

House and Senate GOP leaders, along with the Budget committee chairmen and chairmen of the House Ways and Means and Senate Finance panels, Thursday evening agreed to the outlines of an fiscal 2001 budget plan that would allow total discretionary spending of $596.5 billion.

Of that total, $307 billion would be devoted to defense and at least $150 billion would go toward tax cuts over five years, with another $60 billion available for either debt reduction or further tax relief, according to several knowledgeable Republican sources in both chambers.

But some crucial pieces of the puzzle still must be worked out, including how much money to devote to creating a Medicare prescription drug benefit, the rate of discretionary spending growth in the out years and a way to ensure the final FY2001 discretionary appropriations tally does not balloon up from $596.5 billion, as Senate conservatives have insisted upon.

Although the Senate recessed Thursday until March 20, aides will continue to work through the remaining differences in advance of the House Budget Committee's expected markup Wednesday, in hopes of making "our budget resolutions to be as similar as possible," said one Republican budget aide. The Senate Budget Committee plans to hold its markup March 22-23.

The bicameral leadership and chairmen nailed down the particulars on the FY2001 spending numbers in their Thursday meeting, but made less progress on the mandatory side of the budget. In particular, they agreed to a total discretionary spending level of $596.5 billion in budget authority and $624.9 billion in outlays.

In comparison, conservative members in both the House and Senate have pushed to limit spending to $586 billion in budget authority, which the CBO estimates represents a freeze in enacted FY2000 spending. The CBO's inflation adjusted baseline would allow FY2001 total appropriations of $606 billion, while Senate Budget Committee Chairman Pete Domenici, R-N.M., and other pragmatists have called for a spending level of about $600 billion.

Of the $596 billion total the leadership has agreed to, $307 billion would be devoted to defense programs, making good on Republican's promise to increase President Clinton's defense number of $306 billion. Non-defense discretionary spending would get $289 billion in budget authority and $329 billion in outlays under the GOP plan.

On tax cuts, the bicameral leadership agreed to a bottom line, but not much more because of House and Senate leaders' differing strategies for moving tax cut legislation. Specifically, they agreed to move $150 billion in tax relief over five years under reconciliation, which in the Senate protects the bill from being filibustered.

Because reconciliation measures can take up a week of floor time, Senate Majority Leader Trent Lott, R-Miss., and Domenici do not want to do more than one reconciliation tax cut. House leaders have committed to moving a number of small tax bills rather than one large package.

Since the five-year on-budget surplus number would be more than $150 billion, up to $60 billion more would be available to devote to tax cuts, provided any House-passed tax cut could pass the Senate without the reconciliation shield.

If not, a "lockbox" provision would direct that money to paying down the nation's publicly held debt. Ways and Means Chairman Archer had asked the Budget Committee for $209 billion over five years for tax relief.

No agreement was reached on a common number for a Medicare prescription drug benefit. The House is talking about $40 billion over five years--even more than Clinton, whose plan would cost $31 billion--while the Senate Budget Committee and Senate leaders are still working through its position.