Hill leaders reach deal on fiscal 2004 spending levels

In a matter of minutes Thursday, the bicameral congressional leadership and Appropriations Committee chairmen worked out a tentative deal to break the logjam that has delayed the start of the fiscal 2004 appropriations process for more than six weeks.

The four want to use up to $3 billion from defense and up to $2.2 billion from domestic accounts to effectively boost 2004 domestic spending, according to knowledgeable sources.

House Speaker Dennis Hastert, R-Ill., and Senate Majority Leader Bill Frist, R-Tenn., plan to take their agreement to President Bush early next week, to get his blessing so appropriators can start marking up bills. House Appropriations Committee Chairman Bill Young, R-Fla., said the meeting with Bush could come Monday or Tuesday.

Bush's support would enable them to counter potential complaints from defense hawks and fiscal conservatives. Republicans also are well aware that as the party in control of both Congress and the White House, they cannot allow a year-end appropriations train wreck like last year's.

Appropriators in both chambers, as well as their respective leaders, have been struggling for weeks to figure out how to divide the $784.7 billion provided under the budget resolution among their 13 subcommittees.

Because they must contend with a congressional budget that is $2.2 billion less than the Bush budget and contains $7.6 billion in spending increases that were not offset, appropriators have said they cannot make the cuts needed to stay within their limit and still write passable bills.

To avoid exceeding the $784.7 billion fiscal 2004 cap and still come up with the extra money they need, GOP leaders and the two chairmen want to rescind up to $3 billion from the fiscal 2003 wartime supplemental while reappropriating the same amount to the regular 2003 defense accounts, according to the sources.

By adding back extra 2003 money for defense, the leaders and Appropriations chairmen could then reduce the 2004 defense spending allocation by the equivalent amount, so that defense does not suffer a net loss of funds over the two fiscal years.

Lowering the 2004 defense allocation by up to $3 billion would then give appropriators that much headroom under the overall 2004 spending cap to beef up other accounts that might otherwise have to be cut.

On top of that $3 billion in headroom, appropriators may also use an accounting maneuver to "re-credit" $2.2 billion in appropriations that had been advanced into 2004 back into 2003, creating up to $5.2 billion in total 2004 headroom, the sources said.

This scenario balances out without assuming an 2004 supplemental later in the year. The White House has been adamant in saying it would not request another supplemental to cover war costs.

House Defense Appropriations Chairman Jerry Lewis, R-Calif., said he supports the proposed approach.

"It's not unreasonable at all to consider it," Lewis said. "There is little doubt-there is money in the pipeline" for multiyear contracts or other long-term initiatives that could be tapped, Lewis said.

Lewis, a defense hawk, added, "But certainly I wouldn't want to cut off our head to fill a hole in our pocket."

Despite the holdup in producing so-called 302(b) Appropriations subcommittee allocations, Young said he has already given many of his subcommittees preliminary allocations so they can begin preparing bills.

"For those where I know where I'm going to be close [to the final allocation], I gave them a number," Young told reporters.

Young added that he wants to get at least six bills through subcommittee markup before the end of June. According to one knowledgeable source, the bicameral leaders and committee chairmen are considering making the Defense, Military Construction and Labor-HHS first out of the gate.