Passing spending bills may not be as hard as it looks

On Capitol Hill, passing the 13 annual appropriations bills is never easy. Even earlier this year, when the Republicans' control of both chambers of Congress and the White House might have seemed to make for easy going, insiders predicted lots of problems. Work on the budget got off to a late start as the new administration settled in. To leave room for tax cuts, President Bush demanded fiscal belt-tightening that lawmakers of both parties said would be difficult. And the White House even threatened that Bush might veto spending bills written by his own party's congressional majority. Then, things appeared to get worse. With the Democrats' takeover of the Senate in early June, stalemates and showdowns--perhaps even government shutdowns--seemed a real possibility. Democrats could use their new Senate majority to craft appropriations bills reflecting their party's priorities and force high-profile confrontations with Bush as the new fiscal year loomed on October 1. Some members of Congress and their staffs began to wonder whether making personal plans for say, December, would be at all wise. But as congressional appropriators have waded into their work, a strange thing has happened. Some Democrats and Republicans are saying that things might not be so bad after all. In recent weeks, members of both parties have sounded conciliatory and suggested that the spending bills could be worked out in a--get this--bipartisan fashion. For the past six years that Republicans controlled Congress, Rep. David R. Obey, D-Wis., the battle-wise ranking member of the House Appropriations Committee, usually began the appropriations season with predictions of gloom and doom, and complaints that GOP leaders had woefully shortchanged key federal programs. Yet, he has recently sounded somewhat optimistic. "For a number of the subcommittees, the [spending] allocations will be reasonable," Obey told his Appropriations Committee colleagues as they met on June 13 to divvy up the pot of $661 billion in fiscal 2002 discretionary money among their 13 subpanels. "Frankly, we are close." The secret to smooth going on the spending bills this year rests with a little-noticed slush fund. In the fiscal 2002 budget resolution approved in early May, Congress gave the chairmen of the House and Senate Budget Committees the authority to release a "reserve fund"--consisting of the anywhere from $24 billion to $38 billion in federal budget surplus money outside the Social Security and Medicare trust funds--once Defense Secretary Donald Rumsfeld sent his strategic review of the Pentagon to Capitol Hill. On June 27, Rumsfeld asked Congress for $18.4 billion in additional defense spending for fiscal 2002. Congressional Democrats have said that if--and that's a big IF--Republicans are willing to spend $3 billion to $4 billion of the reserve fund on education, the appropriations bills will be sufficiently funded to move to the President's desk. "If they use that provision of the budget resolution ... then we would have an allocation that would allow us to pass these bills in a fairly orderly way and a bipartisan way," said a senior House Democratic aide. "We think we can work with them." If Republicans do not allow Democrats the education money or if, as predicted by some Democrats, updated economic estimates are so bad that surplus estimates plunge, the remaining Singing Senators may be singing Christmas carols at Senate parties while appropriators are still trying to settle their fights. So, as the Republican-controlled White House and House and the Democratic-controlled Senate prepare to get down to business on the appropriations bills after the July 4 recess, uncertainty prevails. "Not one of us has ever served in this situation," said House Majority Whip Tom DeLay, R-Texas. "Anyone who predicts that something is going to happen probably doesn't know what they're talking about." Education vs. Defense President Bush tried to lay down a few early markers when he sent his full budget to Capitol Hill in April. First, taxes had to be cut by some $1.6 trillion. Second, discretionary spending had to slow from the 8 percent it increased in fiscal 2001 to a boost of just 4 percent in fiscal 2002. Third, defense and education had to remain high priorities. And finally--something that really made members of Congress sit up and take notice--the number of earmarks for pork barrel projects had to be drastically cut. Democrats complained loudly that Bush wanted to underfund priority domestic programs in order to pay for his tax cut. Republican appropriators themselves conceded that it would be difficult to tighten the belt to the degree that Bush requested. Nevertheless, House and Senate Republicans--with some support from conservative Democrats--gave the President largely what he wanted. The final fiscal 2002 budget resolution approved by both chambers in early May indeed allowed for only a 4 percent increase in discretionary spending, although pressure from Senate moderates reduced the tax cut's 10-year price tag to $1.35 trillion. But what went mostly unnoticed was that Congress included in the budget resolution several gimmicks designed to make it easier for appropriators as they struggle to write 13 spending bills that adhere to the tight--some said unrealistic--spending limits. Although the budget resolution officially sets overall discretionary spending at about $661 billion for fiscal 2002, it also gives the House and Senate Agriculture Committees the leeway to spend money beyond that limit by designating the spending as part of agriculture entitlement programs. "We've added this in the past in the appropriations process," said a senior Senate Republican aide. "It removes pressure from the appropriators." In addition, budgeteers acknowledged that some funding for natural disasters might have to be declared "emergency" spending--and therefore also outside that $661 billion budget cap. More important, the budget resolution created the "reserve fund." The idea was that Rumsfeld needed time to develop his strategic review and would not be able to estimate how much was needed for defense until that study was completed. The budget resolution put no set dollar amount on the reserve fund. Budgeteers relied on January estimates from the Congressional Budget Office to figure that the fiscal 2002 budget surplus would total $218 billion, which would shrink to $47.7 billion once the Social Security and Medicare trust funds were removed. When other re-estimates are figured in, budgeeters currently predict that the available reserve fund could total between $24 billion and $38 billion. The money in the reserve fund can be released to the appropriators now that Rumsfeld has sent his additional defense request to Congress. But the two chambers disagree on how the money can be used. The House version of the budget resolution conference report stated that House Budget Committee Chairman Jim Nussle, R-Iowa, is allowed to release the reserve money for defense or other urgent needs. (On June 27, Nussle--citing concerns that the Pentagon has not yet completed its strategic review--said that Rumsfeld would have to justify the need for the $18.4 billion before he'd release it.) By contrast, the Senate version of the budget resolution conference report states that Senate Budget Committee Chairman Kent Conrad, D-N.D., can release the reserve money only for defense. As is always the case, however, the Senate can waive that budget provision if 60 Senators vote to do so. New Senate Appropriations Committee Chairman Robert C. Byrd, D-W.Va., has been highly critical of the spending limits in the budget resolution, but has said he'll live with them--for now. "The limits are there. The budget resolution has been enacted," Byrd said, while adding that all bets were off once Rumsfeld submitted his spending request. "We'll roll up our britches when we get to the creek," Byrd has vowed. Already, plenty of lawmakers from both parties are saying that they want to devote additional money to education, as well as to defense. At his panel's first markup on June 13, even House Appropriations Committee Chairman C.W. "Bill" Young, R-Fla., indicated his interest in doing so. "With the exception of additional allowances that may be requested for education and defense," Young said, "it is my intention to report spending bills that adhere to the spending limits proposed by President Bush and ratified by Congress" in the budget resolution. Recently, both chambers overwhelmingly approved sweeping education reform legislation, which technically was a reauthorization of the 1965 Elementary and Secondary Education Act. A conference committee will reconcile the two bills. The Senate education bill would cost an estimated $37 billion in fiscal 2002 and the House version would cost $23 billion, while the White House requested $21 billion. Senate Majority Leader Thomas A. Daschle, D-S.D., has said that Democrats will insist that education funding run close to what is prescribed in the Senate's education reauthorization bill. And he said that before agreeing to any conference report on the education bill, Democrats will seek a specific funding guarantee from the Bush administration. "Education reform is not possible without the resources, and we will continue to push for the resources," Daschle recently told reporters. "We want a commitment from the administration on resources, and so far, we have not been able to come to an agreement." Likewise, House Democrats are pushing for a quick deal that would dedicate between $3 billion and $4 billion for education from the reserve fund. Appropriators acknowledge they may be swept up in a tidal wave of congressional sentiment to show a strong commitment to schools. "If the [final education] bill passes on a bipartisan basis, there will be tremendous pressure on the Appropriations Committee to fund it," said James Dyer, the House Appropriations Committee's staff director. But the Appropriations Committees seldom actually fund education programs, or many other programs, at the levels requested by other committees in their authorization bills. In an interview, Mitchell E. Daniels Jr., director of the Office of Management and Budget, said that it will be difficult to meet the education spending levels included in the pending authorization legislation. "The authorizers go wild," Daniels said. "It's kind of a free gesture. Our point of reference is the budget resolution." The administration has acknowledged that some money will have to be made available for defense spending later in the year from the reserve fund. But Daniels said that the President included a large enough increase for education in his regular budget request. Moreover, any attempt to tap the reserve fund, ostensibly set up for defense, to fund education programs will meet with opposition from some Republican conservatives in Congress. "I think the conservatives have always been concerned about diverting any money from national security," said an aide to the House Republican Study Committee, formerly known as the Conservative Action Team. "Going in and raiding defense will cause a lot of concern and angst among members." After all, "tapping the reserve fund" is really a nice way of saying that Congress--yet again--is busting the pie-in-the-sky spending limits set out in the annual budget resolution (albeit in a way sanctioned in the budget resolution) and spending part of the surplus. Conservatives concede that it would have been impossible to set a defense funding level in the budget resolution before the Rumsfeld request was submitted. But they have made clear that they oppose any further gimmickry. "We have a President who is not going to spend more than the budget resolution allows them to spend," DeLay has insisted. And a group of 35 Republican Senators recently sent Bush a letter calling for fiscal discipline. "We strongly encourage you to veto any appropriations bill containing imprudent increases in spending, or bills that rely on gimmicks to mask their true cost to the American taxpayer," the group wrote. Among the Democrats, there is certainly some sentiment that, if the surplus remains large enough for the reserve fund to be tapped, it would be a convenient way to settle end-of-year battles over the appropriations measures without touching the Social Security or Medicare trust funds. But other Democrats are warning that if the economy goes south, the entire reserve fund could disappear. Conrad has said in recent days that he believes that by the time the fall rolls around, and new CBO estimates are released, there may be no surplus money left for either defense or education. "I think we're in significant trouble in terms of raiding the [Medicare] trust fund," Conrad said in an interview. In May, the CBO estimated that the surplus available for the reserve fund in fiscal 2002 is $24 billion. But Conrad predicted that, with the slowing economy, the budget office this summer could decrease that estimate by as much as $20 billion. Rumsfeld asked for $18.4 billion in additional defense spending for next year. That means that the additional defense spending, and the $3 billion to $4 billion in education spending that many Democrats want, may not be possible without drawing from the Social Security and Medicare trust funds. Conrad insisted that he is not willing to tap those trust funds to pay for defense and education programs. "I'm not playing," he flatly declared. "I'm saying it early. I'm saying it often. I'm saying it plainly." If Conrad's scenario comes to pass, and there is little or no "reserve fund" to tap, an end-of-year spending deal becomes much more difficult. "The endgame is going to be a race between education dollars and defense dollars," said a House Republican leadership aide. "The only thing that's going to stop you from spending more is the Social Security trust fund. At the end of the day, it's going to be very expensive." Stuffed Pig Before Congress gets to that endgame, however, there are hundreds and hundreds of other spending decisions to make. Some involve front-burner national issues; others deal with the parochial interests of one lawmaker's home district or state. Any one of them could stop a spending bill dead in its tracks. In June, the House and Senate Appropriations Committees divvied up the overall pot of $661 billion in fiscal 2002 discretionary money in slightly different ways among their 13 subcommittees. For instance, the Senate Energy and Water Development Appropriations Subcommittee was allocated $25.1 billion to write its spending bill; the House Energy and Water Development Appropriations Subcommittee got $23.7 billion. In most cases, the differences in allocations between the House and Senate subcommittees is less than $1 billion. But just because the House and Senate committees penciled in similar overall dollar amounts for the 13 appropriations bills doesn't mean there won't be fights over how those dollars are spent. As Obey put it: "The allocations won't be a problem. That doesn't mean they will be good bills." Many of the same old perennial partisan battles can be expected to play out this year as Congress debates the 13 spending bills. For instance, Democrats are likely to try to increase funding for federally financed family-planning clinics, something conservative Republicans will try to block. Democrats are also likely to bring the battle over funding for the arts and humanities to the floor. And Democrats are likely to continue to push for more money to help Californians and other Westerners cope with high energy prices. The fights won't all be Democrats versus Republicans, however. House and Senate Republicans are not in perfect agreement with the Bush administration on federal spending. In fact, in the very first appropriations markup of the year, the Republican-led House Appropriations Committee restored funding for energy research that Bush had wanted to cut as part of the Interior appropriations bill. Intraparty fights also loom over any attempt to designate additional spending as "emergency," and thus exempt from the budget resolution's spending caps. Republican leaders have used this gimmick in past years, over the strong objections of some GOP fiscal conservatives. Of course, not all of the fights will involve money. Time and again, appropriations bills become controversial because lawmakers use them as a vehicle to try to set federal policy-by attaching legislative riders dealing with everything from abortion, to gun control, to the environment, to international relations. House Democrats are closely watching the Treasury, Postal Service, and General Government Appropriations Subcommittee, where conservative Rep. Ernest J. Istook Jr., R-Okla., has taken over as chairman. During the previous Congress, when Istook chaired the District of Columbia Appropriations Subcommittee, he used his perch to push a string of ideological riders. Traditionally, the Treasury-Postal Service spending bill that Istook now oversees serves as a battleground over the issue of whether health insurance plans for federal employees should cover the cost of contraceptives. Democrats are also watching to see whether Republicans will try to add a rider to a spending bill to codify the White House's highly controversial proposal to allow drilling in Alaska's Arctic National Wildlife Refuge. Bush included the authority to drill in his budget request, but the House and Senate ducked the issue this spring by not including it in the budget resolution. The Clinton administration successfully insisted that many of the riders that congressional Republicans added to appropriations bills be stripped out. And interestingly, OMB's Daniels said that the Bush administration is continuing the Clinton policy of encouraging "clean" appropriations bills free of policy initiatives. "I think the Clinton people had a good idea," he said. That clearly will please House Republican moderates, who in past years have been pressured by the GOP leadership to support appropriations bills containing conservative riders that they opposed. "We're going to be far less inclined to do that," contended Rep. James Greenwood, R-Pa., a key moderate. "We're going to dig our heels in." Meanwhile, the Bush administration faces a decidedly uphill battle in trying to cut back on the number of earmarks for lawmakers' home-state pork projects in the spending bills. Earlier this year, OMB identified some $16 billion in earmarks for members of Congress in the fiscal 2001 budget, and proposed cutting approximately $8 billion of them. But lawmakers love earmarks because they allow them to claim credit at local ribbon-cutting ceremonies for bringing home the federal dough to pay for roads, bridges, community centers, and the like. Daniels says he realizes the enormity of what the administration is asking. "We do think this trend ought to be reined in, but we're realistic," he said. "To the extent that this is a lubricant to the [legislative] process or a bipartisan process, we realize that a lot of it will go on." Already, Congress has made clear that the administration should mind its own business when it comes to pork projects. Take this hands-off language that the House Appropriations Committee included in its report on the Interior appropriations bill: "When congressional instructions are provided, the committee expects these instructions to be closely monitored and followed. In the future, the committee directs that earmarks for congressional funding priorities be first allocated to the receiving units, and then all remaining funds should be allocated to the field based on established procedures." In other words, fund our earmarked projects first--and use any money left over for other priorities. And when Senate Appropriations Committee ranking member Ted Stevens, R-Alaska, an acknowledged pork master, was asked what he is doing about Bush administration attempts to cut pork, he responded curtly: "I'm saying, `Thank you very much. I'll do what I can.' " To make its point that pork must be pared back, the House Appropriations Committee has sitting on a table in its office a small, pink stuffed pig that walks--and oinks--when wound up. "He's currently reviewing all of the projects," quipped Staff Director Dyer. "That pig has to go public. It takes some of the heat off the committee."