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Budget Busters

February 27, 2004 at 12:00 AM EDT
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KWAME HOLMAN: Despite the cold weather on the morning of Feb. 2, House Budget Committee Chairman Jim Nussle waited patiently on the steps of the Cannon Office Building for the president’s 2005 budget proposal to arrive.

SPOKESPERSON: Good morning. How are you, sir?

SPOKESPERSON: Good.

KWAME HOLMAN: It’s become an annual tradition. The White House, as a courtesy, hand delivers copies of the president’s budget to those members of Congress who’ll weigh in heavily on the spending decisions.

SPOKESPERSON: All right, look forward to working with you on it.

SPOKESPERSON: Things to read.

KWAME HOLMAN: And this year, Jim Nussle was particularly interested in reading the details, given the budget preview President Bush gave in his state of the union address.

PRESIDENT GEORGE W. BUSH: In two weeks, I will send you a budget that funds the war, protects the homeland, and meets important domestic needs, while limiting the growth in discretionary spending to less than 4 percent. (Cheers and applause)

This will require that Congress focus on priorities, cut wasteful spending, and be wise with the people’s money. By doing so we can cut the deficit in half over the next five years. (Cheers and applause)

KWAME HOLMAN: Members of Congress cheered, none louder than the fiscal conservatives within the Republican majority. With record budget shortfalls this year expected to top a half a trillion dollars, many Republicans are concerned that deepening deficits could be a big liability come the November elections. Congressman Mike Pence of Indiana:

REP. MIKE PENCE: I think the American people have a high degree of tolerance for the deficits that we have run in the last three years in the wake of recession and national emergency and war. But I think we’ve put enough time since those events that Congress now needs to put our fiscal house back in order, reassert our commitment to fiscal discipline, because it is in every sense, I believe, why people vote republican.

KWAME HOLMAN: North Carolina Republican Sue Myrick:

REP. SUE MYRICK: We in Congress and the president on his side have veered off the path. The American people, very strongly, I believe, want to see us put a lid on spending. It’s very simple to them.

KWAME HOLMAN: The renewed determination among fiscal conservatives to draw the line on spending comes only after Congress and the president approved big increases in farm subsidies and veterans benefits, and expanded Medicare to include a prescription drug program. Brian Riedl of the conservative Heritage Foundation says Republicans haven’t been making the difficult spending decisions they once did.

BRIAN RIEDL: It’s certainly a different republican party than the party that took office in early 1995. That party was calling to close down several government agencies and to really reign in government spending and balance the budget.

Unfortunately, it is the Republican Party that controls the House, Senate, and the presidency, and it is the Republican Party that increased discretionary spending 39 percent in three years, that enacted a farm Bill that was an 80 percent increase over the baseline, and enacted the largest expansion of Medicare in history. The Republicans have caused a lot of these spending increases, and they’re ultimately responsible.

KWAME HOLMAN: On the morning of Feb. 11, the congressional media corps waited almost three hours as house republican leaders met behind closed doors with their rank-and-file members to discuss what many of those members believe has been a loss of restraint in making spending decisions. Speaker Dennis Hastert:

REP. DENNIS HASTERT: We had some comments by leadership, and we spent most of that time listening to members about how we can get back to balanced budgets and how to cut back the deficit. It’s not easy. We need to listen, we need to see where there’s ability to do that. We need to do it through oversight, we need to look at programs that are… areas that we can pare back, and we can look at… everything is on the table.

KWAME HOLMAN: Hastert was asked if that included entitlement programs…

REP. DENNIS HASTERT: There are some entitlements that we’ll look at as well.

KWAME HOLMAN: …And homeland security…

REP. DENNIS HASTERT: I said "everything is on the table."

KWAME HOLMAN: …And defense.

REP. DENNIS HASTERT: We said, "everything is on the table." ( Laughter ) We’ll take a look at everything.

REPORTER: When you said, "look at," does that mean…

REP. DENNIS HASTERT: We said we’ll look at everything.

KWAME HOLMAN: But does "everything" include funding for highways? The first new spending bill out of the gate this year is a massive surface transportation measure, money to build and repair roads and bridges and support mass transit. The highway bill comes up for renewal every six years, usually with plans for big increases in spending. For Congress’ fiscal conservatives, the timing couldn’t be worse.

SEN. JOHN McCAIN: When does it stop? When does the Republican Party find its soul? And this bill… and this is an outrageous manifestation of how badly we have left our moorings.

KWAME HOLMAN: Two weeks ago on the floor of the Senate, Arizona Republican John McCain pleaded with colleagues to keep increases in future transportation spending within the budget parameters they set last year. McCain argued the cost of new highway projects members were requesting would drain the federal highway fund, money collected through the 18.4 cents a gallon gasoline tax, and then some. New Hampshire’s Judd Gregg joined the fight.

SEN. JUDD GREGG: Who is going to be paying this bill? Well, it is going to come out of the general fund, which means it will be added to the debt, which means that our children are going to pay the bill.

KWAME HOLMAN: But despite the efforts of Gregg, McCain, and others, and despite the president’s threat to veto any transportation bill exceeding $256 billion, a majority of senate republicans and democrats went ahead and set a higher price tag of $318 billion. Opponents charged Finance Committee Chairman Chuck Grassley was relying too much on future tax collections to pay for the increased highway spending.

SPOKESMAN: Somebody can say, "we think it is paid for," but I can tell you it is not paid for.

SPOKESMAN: This is, in my mind, a ponzi scheme. It is wrong.

KWAME HOLMAN: To which Grassley calmly responded:

SEN. CHUCK GRASSLEY: What do you want me to do? Last week I said, "if you don’t like what we did, I am open to suggestion."

KWAME HOLMAN: But the overwhelming support the Senate gave for more transportation spending was driven by one four-letter word: "Jobs."

SEN. JIM JEFFORDS: There’s no doubt in anyone’s mind that this Bill will create many, many jobs.

SPOKESMAN: Everybody knows that $1 billion invested in transportation infrastructure creates 47,500 new jobs.

SEN. MAX BAUCUS: This is a no-brainer. If we’ve lost– and nobody disputes this figure– a couple to three million jobs in this country in the last couple of years, we need to pass a Bill that creates jobs and provides jobs. That’s a highway bill.

KWAME HOLMAN: But Brian Riedl of the Heritage Foundation disputes the jobs claims.

BRIAN RIEDL: Highway spending doesn’t create jobs, because the federal spending that goes into the building of these roads and creates jobs building roads is money that comes from other taxpayers that would have been used to create jobs elsewhere in the economy.

KWAME HOLMAN: Still, a big increase in new transportation spending cruised through the Senate with a veto-proof majority, and it appears it could coast through the House of Representatives as well. Ohio Republican Steve LaTourette recently issued this warning to the fiscal conservatives who might try to slow it down:

REP. STEVE LATOURETTE: If you want to draw a line in the sand on spending, this is the wrong beach to draw that line on. If we can spend money building roads in Baghdad and Tikrit and Um Qasr, we should be able to spend money in this country building roads in anchorage and up in Duluth and in Portland and in Chicago and in Washington, D.C., And in Cleveland, Ohio.

KWAME HOLMAN: House Transportation Committee Chairman Don Young agrees and originally proposed spending much more on transportation than the president wants and more even than the senate agreed to. Young wants $375 billion over six years.

REP. DON YOUNG: This is not an artificial number. This is the number we were given that said this is what was needed– needed, not wanted– needed to maintain and improve a very small part of our infrastructure system. Anything less than that will not be able to do the job, and that’s the reason I set the 375 figure.

KWAME HOLMAN: But Don Young’s plan to pay for it all with an increase in the federal gas tax ran into a roadblock at the White House.

KWAME HOLMAN: And what was the response from the…?

REP. DON YOUNG: Well, in the first place, say no tax, period. But I tried to explain to them that 2 cents makes sense, that was the first proposal. It was 2 cents every year for the next six years would put the final tax of 30 cents per gallon for highways and transportation needs.

Then that was not well thought of, and I said, "all right, let’s try 5 cents, one time, one year." And, of course, that wasn’t accepted. But I think– and I will tell you right up front– they’re wrong, I’m right, and because it’s done with facts, it’s not done with smoke and mirrors.

KWAME HOLMAN: Chairman Young will try to write a transportation spending bill next week. But without an increase in the gas tax, it’s unclear just how much House Republican leaders will allow him to spend. Those leaders worry that a big highway spending Bill now will outrage fiscal conservatives, and cause an even bigger squeeze on those spending priorities outlined in the president’s budget proposal for 2005.