Senate budgeteers spar over issue of potential deficits

Presiding over a contentious hearing that was as much a clash of political ideologies as a discussion of fiscal policy, Senate Budget Committee Chairman Kent Conrad, D-N.D., Thursday made clear what his bottom line will be as he presides over the rest of the FY02 budget cycle--"do no further harm."

Conrad continued his warnings that the government is on track to run a deficit in the Medicare trust fund as early as this year and in the Medicare and Social Security trust funds in fiscal 2002.

He based that estimate on the recently enacted $1.35 trillion tax cut, spending assumed in the FY02 budget resolution and declining revenue estimates--even before Congress considers the administration's FY02 defense request, additional spending for education, extending expiring tax breaks or reform of the alternative minimum tax.

The fundamental question, Conrad said, is: "Do we want to use trust fund money from Social Security and Medicare to fund other programs of the federal government? I say no."

Committee Republicans and Office of Management and Budget Director Mitch Daniels, who testified before the panel, countered that the problem is the slowing U.S. economy and the need to stimulate it, while vociferously rejecting the notion that Medicare Part A (Hospital Insurance) trust fund should be treated the same as Social Security.

For his part, Budget ranking member Pete Domenici, R-N.M., said repeatedly that although "the budget is in good shape, the American economy is not," and defended the tax cut he helped enact as chairman, saying, "The tax cut did not did not get us in this situation."

Daniels urged the panel to focus on reviving the flagging economy, even as he stressed that "the nation's finances are in remarkably strong shape" and the federal government continues to run "enormous" unified budget surpluses.

Daniels said that during this year Congress should pass the FY02 appropriations at the level provided for in the budget resolution--$661.3 billion--plus the administration's FY02 defense amendment of $18.4 billion and restrain spending in the future.

At the same time, Daniels called for Congress and the administration to "collaborate on additional moves to strengthen economy," such as trade liberalization and regulatory reform.