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HEADLINE: Deficit Estimate Signals New Round in Budget Fight With Hill

BYLINE: Dan Morgan and Jonathan Weisman, Washington Post Staff Writers

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Simmering tensions between Congress and the White House over the nation's fiscal affairs boiled over yesterday as veteran senators berated President Bush's budget chief and the administration released new budget projections that foresee a $ 165 billion deficit this year.

The White House counterpunched with its own critiques of Congress, accusing legislators of lacking the fiscal discipline the country needs.

In a news conference to discuss the government's rapid shift from surplus to red ink, White House Office of Management and Budget Director Mitchell E. Daniels Jr. challenged Congress to hold the growth of domestic, nonmilitary spending to a modest 2 percent a year through 2005. But on Capitol Hill, senior lawmakers in both parties unleashed a barrage of criticism at the budget chief, blaming his rigidity for derailing a $ 30.4 billion spending bill to finance the military and homeland defense over the next few months.

In a rare personal attack from the Senate floor, Appropriations Committee Chairman Robert C. Byrd (D-W.Va.) lambasted Daniels by name, likening him to a "little Caesar" and complaining that the appropriations process was being "maimed by someone who was not elected by the people of this country." The committee's ranking Republican, Ted Stevens (Alaska), was equally blunt. "The [White House] bean counters are looking in the wrong jar," he said. "It's time for us to have it out."

At the heart of the fight are political concerns about the impact of tax-and-spending issues on this fall's congressional elections. For the White House, attacks on profligate spending by Congress -- especially by the Democratic-controlled Senate -- are a counterpoint to Democratic criticism of Bush's 2001 tax cut.

Yesterday, however, lawmakers in both parties accused the White House of posturing over small amounts of money while embracing huge new outlays for such politically powerful constituencies as farmers, the elderly and the military.

At a news conference, House Appropriations Committee Chairman C.W. "Bill" Young (R-Fla.) held up a magazine whose cover showed Bush signing the farm bill. While that measure added $ 90 billion to the budget baseline over the next decade, he said, Daniels was stalling completion of the supplemental appropriation for the Pentagon over a difference of only $ 1.5 billion.

Meanwhile, the administration has warned that the president will veto the annual appropriations bills that fund government departments and discretionary programs if their total exceeds $ 759 billion for the 2003 fiscal year. That is $ 9 billion less than has been approved unanimously by Republicans on the Senate Appropriations Committee.

The $ 759 billion figure represents about a 10 percent increase from last year, but most of the new outlays will go to the military and homeland defense. Regular domestic programs, including upkeep of national parks and education grants, rise $ 6 billion, or 2 percent.

The Office of Management and Budget "is concerned only about numbers," said Young. "We have to be concerned about what the American people are getting for these numbers."

Daniels said the differences with Congress were significant because increases over the president's proposals would carry forward for years, making the difference between budget surpluses and large, permanent deficits. He said he believed the deficit could shrink to $ 109 billion in the fiscal year that begins Oct. 1, and the government could be back in the black by 2005, but only if Congress keeps nondefense discretionary spending increases at around 2 percent per year.

In an interview this week, Daniels noted that state governments were slashing their spending much more sharply than that.

Other budget forecasters paint a bleaker picture of future deficits. The Senate Budget Committee's GOP staff predicts a deficit of $ 152.2 billion this year, rising to $ 194.4 billion in 2003.

Those forecasters "assume spending that we don't assume," Daniels said, "and we are not prepared to assume the defeat of the American taxpayer."

At a news conference Monday, Bush lectured Congress about the dangers of "excessive spending." His top aides have scolded appropriators for approving "pork barrel" projects.

But congressional budget officials noted that the White House applauded a $ 340 billion, 10-year Medicare prescription drug benefit passed last month by the Republican-controlled House, even though it would cost $ 150 billion more than the president's proposal. A White House position paper promised only to "work with Congress to ensure fiscal discipline."

The president is pressing the Senate to follow the House's lead and quickly pass a $ 40 billion increase for the Pentagon in 2003.

Over the last few months, the president has signed into law a $ 50 billion economic stimulus package and a farm bill that will substantially increase government outlays over the next decade.

By contrast, the disagreement over the supplemental appropriation for the military and counterterrorism is "a very tiny fight over tiny amounts of money," said James W. Dyer, Republican chief of staff for the House Appropriations Committee. "Clearly we are the designated bad guys for 2002."

The White House, he said, had "winked and blinked" at the farm bill and at legislation that would channel several billion additional dollars into highway projects to make up for a decline in gasoline tax receipts.

"There is a sort of guns, butter and tax cuts attitude in the administration," said Robert L. Bixby, executive director of the watchdog group Concord Coalition. "The president hasn't called for specific sacrifices. Federal budget policies are still operating as if we have surpluses. And the president is saying if there's to be sacrifice, it's to be only on things he didn't want anyway."

In fairness, budget experts say, neither side has shown much appetite for tough choices between wartime spending and popular domestic programs. The administration faces a particularly daunting task this year in reining in congressional spending.

The politically divided House and Senate have been unable to agree on a budget with strict enforcement provisions, just as the terrorist threat has brought a flood of new outlays for the military, the airline industry, stricken communities and federal agencies.

"The tax cut sort of loosed the bonds, and then the recession pounded revenues," said former representative Vic Fazio (D-Calif.), now a lobbyist. "At some point the mentality is, 'We've already blown it, so let's do it big.' "

An example came last month when the Senate rushed through an amendment ending a century-old law preventing veterans from simultaneously collecting full retirement pay and full disability benefits. (Current law reduces retirement pay by the amount of disability a veteran receives.)

Senate Republicans estimate the approval, which occurred on an unrecorded voice vote, would cost $ 45.8 billion over the next decade. The White House has threatened to veto the defense authorization bill, to which the provision was attached, unless it is removed in the final version.

White House officials say Congress is using the terrorism threat to put a priority "emergency" label on all kinds of ordinary domestic spending. A case in point is $ 2 million to design a new facility in Suitland to house the Smithsonian Institution's animal and insect specimens.

The Bush administration included the money in its budget for 2003. But rather than wait, both the House and Senate added it to the pending supplemental appropriation, which would make the money available immediately. Supporters said the 730,000 gallons of highly flammable alcohol in which the specimens are stored at the museum on the mall could be a potential terrorist target.

"This is something that involves human lives, not just worms, not just insects," Byrd said.

The White House objected, to no avail. Meanwhile, GOP budget officials questioned other "emergency" items in the bill, including $ 11 million in economic assistance to New England fishermen and $ 2.5 million for mapping coral reefs in Hawaii.



LOAD-DATE: July 13, 2002