Fiscal 2005 budget battle gears up on Hill

President Bush's call for limiting discretionary spending growth to less than 4 percent in his fiscal 2005 budget is up for election-year scrutiny from both sides of the aisle, and preliminary exchanges are leading up to the delivery of Bush's budget blueprint Feb. 2 and the adoption of a budget resolution in April.

"It seems to me the president is just divorced from the reality of the fiscal condition of this country," Senate Budget ranking member Kent Conrad, D-N.D., said in an interview. "If he's got a plan to cut the deficit in half, it appears to be a secret plan."

Debate over the budget resolution will be colored not only by election-year politics, but by downbeat projections of future deficits -- a topic Bush largely avoided Tuesday during his State of the Union address.

The nonpartisan Congressional Budget Office is slated Monday to release its latest 10-year deficit forecast. The agency predicted a $480 billion fiscal 2004 deficit last year. Some observers say despite recent economic growth -- an 8.2 percent increase in GDP for the third quarter last year, according to the Bureau of Economic Analysis -- and a related rise in tax revenues, the 2004 deficit could approach or eclipse previous estimates.

CBO Director Holtz-Eakin is scheduled to testify Tuesday before both House and Senate Budget Committees.

But the real grilling is expected when Office of Management and Budget Director Joshua Bolten -- speaking for an administration that forecast a deficit in excess of $500 billion in 2004 while promising to cut the deficit in half over five years -- testifies Feb. 3 before the congressional budget panels.

Conrad said the 2005 budget almost certainly would not include spending in Iraq and Afghanistan and predicted at least one more supplemental appropriations bill would be necessary.

Conrad has said the deficit could reach $535 billion in 2004 if supplemental spending is taken into account, or $696 billion excluding the Social Security surplus.

"It's so utterly irresponsible, it's breathtaking," he said.

Members and aides on both sides of the aisle said getting an 2005 budget resolution by April 15 might be difficult this year, given the competing pressures of trying to hold spending to the rate of inflation -- around Bush's target of less than 4 percent -- while making tax cuts permanent and introducing a host of new spending initiatives.

House Budget ranking member John Spratt, D-S.C., circulated a "Dear Colleague" Wednesday, with an accompanying report describing "hollow promises" made by the administration on job creation, deficit reduction and funding priorities.

The report said 2.3 million jobs have been lost since Bush took office, despite his claims that tax cuts create jobs; that Bush's budget proposals would add more than $2 trillion to the deficit over 10 years; and that his FY05 budget would fail to provide needed social services such as job training, education and health care.

According to Spratt's report, for example, Bush's four-year, $300 million "prisoner re-entry initiative" would amount to $10.42 per month per inmate. "It is difficult to imagine a program that can provide meaningful mentoring, transitional housing and job training and placement services for $10.42 per month," the report states.

OMB spokesman Chad Kolton declined to comment on specific budget proposals before Bush's budget is released Feb. 2. But he noted Bush had said in his Tuesday speech, "We can cut the deficit in half if we keep spending under control and continue to grow the economy."

Thomas Kahn, minority staff director for the House Budget Committee, said Bush's pledge to cut the deficit in half would be impossible if he continues to push tax cuts and new spending initiatives. "It will be very difficult to write a budget that stays within 4 percent without making deep cuts in vital social services the American people want," while making large increases in defense and homeland security spending.

"We've got our work cut out for us," said a spokesman for House Budget Committee Chairman Jim Nussle, R-Iowa, acknowledging the difficulty of enacting a budget resolution in an election year.

Nussle declined to comment without first seeing Bush's budget proposal. But his office noted economic indicators, such as the growth in GDP, low inflation and interest rates, plus rising consumer confidence as evidence that Bush and GOP fiscal policies are working.

Nussle will begin the process next week during the bicameral Republican retreat in Philadelphia by making a budget presentation to colleagues to gauge their concerns about the deficit and tax and spending initiatives for the new fiscal year.

As in previous years, House Chief Deputy Majority Whip Eric Cantor, R-Va., said the GOP whip operation has assembled a budget task force to solicit the budget views of the rank-and-file.

"For everyone it is imperative [to get] some kind of control on the growth of spending. You need a budget to impose control," Cantor said.

Rep. Rob Portman, R-Ohio, a member of the GOP leadership team, said it would be among the most difficult votes of the year, but a budget resolution was necessary to maintain fiscal discipline. Otherwise, Portman added, "we'd have a hard time keeping the appropriators in line."

Rep. Charles Stenholm, D-Texas, co-chairman of the moderate-to-conservative Blue Dog Coalition, said GOP leaders no doubt would muscle a budget resolution through this year.

"I have to believe [Majority Leader] Tom DeLay will be able to crack the whip and get 218 Republican votes," he said, expressing little confidence many Democrats would get on board.

But the election-year concerns of GOP moderates, to whom DeLay has made a point of reaching out, will have to be addressed.

Rep. Michael Castle, R-Del., a key Republican moderate, said enacting a budget would be very difficult because of "genuine concern" spending needs to be reined in. But he said he and other moderates would raise questions if spending increases are limited to defense and homeland security and cuts are made to social services.

Rep. Fred Upton, R-Mich., another moderate, said he does not want to upset the recovery, but he sees little urgency to make tax cuts permanent.

"The tax cuts don't expire until 2010. I don't really see anything getting to the president's desk this year," Upton said.

Conservatives, especially in the House, are clamoring for some controls on spending, although it remains to be seen if they will take on Bush in an election year. Rep. Sue Myrick, R-N.C., who chairs the conservative Republican Study Committee, brought members of her group to a retreat Tuesday afternoon and today on Maryland's Eastern Shore to discuss how to achieve the goals of deficit control and lower taxes.

"I support making tax cuts permanent, but we have to pay for them," she said.

One aide attending the retreat said a number of conservatives might push this year for a lower spending increase than the 4 percent Bush has called for, although the aide noted broad support for making the tax cuts permanent.

And Rep. Jeff Flake, R-Ariz., who regularly rails against new spending initiatives, said he would urge colleagues to stand up to arm-twisting by GOP leaders and oppose rules for floor debate on spending bills, among other procedural tactics.

Mark Wegner contributed to this report.