Senate plan projects balanced budget by 2013

As Americans brace for a possible war with Iraq and fret over a sluggish economy, the Senate Budget Committee unveiled a 10-year proposal Wednesday for balancing a projected record federal budget deficit by 2013.

The plan slates $726 billion for President Bush's economic stimulus package and provides healthy increases for defense and homeland security spending. But its non-defense spending cuts are deeper than those proposed by President Bush, whose budget plan would leave the deficit at $102 billion in 2013. Neither the Senate plan nor Bush's proposal includes money for a possible war with Iraq.

The Senate proposal projects a record deficit of $330 billion in fiscal 2004 that would steadily decline until the government gets back into the black with a projected $17 billion surplus in fiscal 2013. "We make progress," Chairman Don Nickles, R-Okla., said of the deficit But, he conceded, "It's not perfect. It's not easy."

Defense spending would rise to roughly $400 billion in fiscal 2004, with annual increases between 2.9 percent and 5.5 percent in the following years. The committee echoed Bush's homeland security spending proposal of $27.1 billion for fiscal 2004, a 27.5 percent increase over fiscal 2003.

The plan includes an additional $400 billion for Medicare from fiscal 2004 through 2013 to cover the cost of Bush's proposed prescription drug benefit.

The Senate blueprint projects an increase in the national debt, from $3.54 trillion this year to $5.285 trillion in 2013. But, as a percentage of gross domestic product, the debt would decrease from 35.9 percent in fiscal 2003 to 29.6 percent in 2013.

Democrats complained that there is no provision in the budget resolution for paying for war in Iraq. Citing "massive expenditures for the war that is to come," Sen. Kent Conrad, D-N.D. said that cost projections for the war-estimated by many to be around $100 billion-"should inform the work of this committee."

Democrats also argued that cutting taxes in a time of war and budget shortfalls is fiscally irresponsible. "Cutting revenues never did increase the revenues," Sen. Ernest Hollings, D-S.C., said. "We're wrecking the economy."

But Republicans staunchly defended Bush's tax-cutting plans. "The only solution is to reduce the amount of taxes to get our economy going," Sen. Wayne Allard, R-Colo., said. And Sen. Conrad Burs, R-Mont., agreed, "We do have to do something to create some excitement in the economy."

The markup consisted only opening statements, and the release of the committee's budget plan. The committee is scheduled to reconvene Thursday morning, with Nickles planning to finish work on the bill by evening and to get the measure to the floor next week.

Hollings said he plans to offer three amendments Thursday, one to cover the cost of war with Iraq, and two that would bar tax cuts.

The committee plan states that the $726 billion it provides for tax cuts is enough to accelerate marginal income tax rate cuts and "marriage penalty" relief, to increase the child tax credit, and to cut taxes on corporate dividends while increasing small business expensing limits. The plan would protect these tax cuts from filibuster.

Senators painted a grim economic picture. "The stock market has fallen dramatically. Revenues to the federal government have fallen dramatically," Nickles said. At the same time, he said, "outlays have continued to go up."

Government revenues have fallen by nearly nine percent over the past two years, and spending grew by 12 percent, according to the Senate plan. Industrial production declined at the end of 2002, while non-farm jobs declined by 38,000. At the same time, state and local governments reported budget shortfalls totaling more than $17.5 billion in November, the Senate plan states. Further complicating matters is the "uncertainty surrounding the geopolitical outlook."

Some highlights of the Senate proposal:

• Discretionary spending for defense would rise from $400 billion in budget authority in fiscal 2004 to $516 billion in fiscal 2013.
• Non-defense discretionary spending would get $384 billion in budget authority in fiscal 2004, rising to $468 billion in fiscal 2013, an average increase hovering below the current rate of inflation of about 2.3 percent.
• Science, Space and Technology would increase at an average of just above the inflation rate, from $23.6 billion in budget authority in 2004 to $30.2 billion in 2013.
• Agriculture spending would be cut from $24.6 billion in budget authority in fiscal 2004 and $24.3 billion in fiscal 2013, spending on these programs would eroded by inflation.
• The Bureau of Customs and Border Protection would see an increase of $809 million over fiscal 2003, to a net discretionary spending total of $5.6 billion in fiscal 2004.
• The Transportation Security Administration would get $2.7 billion in net discretionary funds, $279 million less than fiscal 2003 levels. The reduction is due to one-time start-up costs and equipment purchases that were necessary in 2003.
• The Coast Guard would get $5.6 billion in net discretionary funds, $500 million more than in fiscal 2003.
• The Emergency Preparedness and Response Division would get $4.2 billion in discretionary and mandatory spending. This division is designed to help the nation prepare for and deal with major domestic disasters, both natural and "man-made."