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Analyzing the Budget Cuts

Friday morning, the House narrowly passed a deficit-reduction bill. Congressional expert Norman Ornstein discusses the battle on Capitol Hill over spending and taxes. Then, New York Times columnist David Brooks and Boston Globe columnist Tom Oliphant discuss taxes and spending cuts in the budget.

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  • RAY SUAREZ:

    Now, the other battle on Capitol Hill this week: Fights over spending and taxes. Early today, the House narrowly passed its version of a deficit-reduction bill; its version differences from the Senate, particularly on spending for social programs.

    The Senate, meanwhile, approved a bill extending tax cuts, but it, too, has some big differences from what the president and House Republicans want.

    To help us understand the latest developments and what's at stake, I'm joined by Norman Ornstein, who watches Congress for the American Enterprise Institute.

    Well, Norm, for the last five years, tax cuts seem to pass pretty easily. What's different about this season?

  • NORMAN ORNSTEIN:

    We're in a very different crunch point right now, Ray. And it's basically because post Katrina with a huge increase in spending on the horizon, a combination of conservatives uneasy about the excess spending, moderates who don't like to see some of the budget cuts being put forward, and nervousness about the deficits that will ensue down the road have combined to create a different climate in both the House and Senate for spending and taxes, all coming at a very bad time because of the larger political environment.

  • RAY SUAREZ:

    The president has been steadfast about his desire to move ahead and make permanent cuts that had sunset provisions in them. Where does — where is the state of play now on making those tax cuts permanent?

  • NORMAN ORNSTEIN:

    Well, in the Senate the — one of the setbacks that the Republicans had was in the Finance Committee which handles all of these tax issues. We have a $70 billion tax cut that was promised in the budget earlier in the year. And that included extending very popular tax breaks, popular with businesses and well-to-do individuals on capital gains cuts and on dividends.

    And a Republican Olympia Snowe of Maine balked at those tax cuts going out to the year 2010, 11 and 12 in this time of austerity otherwise. They were forced to bring a tax bill to the floor that took those provisions out and also added in some revenues from oil companies, ended up with a $60 billion version, not the $70 billion that they wanted, and without the most popular provision. They got that through, but of course the House of Representatives has yet to act and is insisting on putting those tax cuts back in.

  • RAY SUAREZ:

    The leadership in the White House, House and Senate said that some of these budget woes could be answered not by turning your back on the tax cuts, but by making decreases in spending. What is happening on that front?

  • NORMAN ORNSTEIN:

    That's an even bleaker picture in many ways with tensions that boiled over. Last week before Congress went away for the Veteran's Day recess the leadership suffered a rare problem. They simply couldn't come up with the votes for what is called a budget reconciliation matter that folds together budget changes and enforces them.

    They had pledged over $50 billion, $54 billion, actually, included within it a large number of other provisions, for example, drilling in the Arctic National Wildlife Refuge that they had not been able to get through on an energy bill because under the rules of the Senate, you can make these things happen without a filibuster being allowed by just 50 votes, also offshore oil drilling in places like Florida.

    Republicans balked at those changes as well as changes in food stamps, Medicaid and many other areas. Unable to get the votes, they scrambled through the entire week and finally in the wee hours of the morning, leading into today, they managed to make it work by two votes but not before suffering another very embarrassing setback on the largest appropriations bill, Labor, Health, Human Services, which failed on the floor by a pretty substantial 15-vote margin, the first time that they've had that failure in ten years.

  • RAY SUAREZ:

    Well, you referred several times to unable to get the votes, unable to bring things to the floor. Isn't this an all Republican game at this point? Is there any role for the Democrats in passing a final spending plan for 2006 and in the reconciliation between House and Senate?

  • NORMAN ORNSTEIN:

    The role the Democrats have played at this point is as a united minority party with not a single vote going for the tax plan — tax cut plan in the Finance Committee in the Senate and not a single vote for the reconciliation budget cut plan on the House floor. That is forced Republicans to get all their votes from within their own ranks. They expressed a great deal of resentment about the Democrats refusing to come forward on the floor of the House, had difficulty because the unity that was there through the first four and a half years is starting to fade a little bit.

    Some of this, of course, is second term blues, a president who whose standing is down, a party growing nervous about the midterm elections ahead, traditionally bad ones for the president's party, and also some resentment over the strong-arm tactics that their leaders have used with some of these bills in the past: conservative resentment over tactics used to expand spending in areas like Medicare prescription drugs, moderates over plans to cut some of these very popular and difficult programs.

    The appropriations bill that went down, for example, would have cut some of the funding going to the Centers for Disease Control just at the point that we were discussing the need for increasing spending for the coming possible pandemic.

  • RAY SUAREZ:

    Now with all these matters that we've discussed so far, still unresolved, aren't there still some big appropriations looming that haven't been touched yet?

  • NORMAN ORNSTEIN:

    Well, we had major controversy over the defense appropriations, which passed the Senate, of course, with a provision banning the use of torture by American military or other agencies, the McCain amendment. The House has vowed not to approve that in their appropriations bill. That's a big one. They want to get out of here around Thanksgiving. They hope to get out for the year.

    Leaders in Congress are not going to be able to do that. And even though they finally succeeded in getting that budget reconciliation bill through the House, it is a dramatically bill than the one that passed the Senate, huge gaps in terms of Medicaid and children's health, in terms of student loans. Reconciling those will be difficult, the tax bill, very difficult to reconcile, all of these appropriations bills now six weeks into the new fiscal year undone. It's a mess for them. They can breathe just slightly easier having passed a couple of bills to move the process along. But they have big migraine headaches ahead.

  • RAY SUAREZ:

    Norm Ornstein, thanks for joining us.

  • NORMAN ORNSTEIN:

    Sure, thank you.

  • RAY SUAREZ:

    And again to David Brooks and Tom Oliphant.

    Well, Tom, you heard Norman Ornstein refer to the difficulties of a majority party. Now, I was always told that running everything is actually easier than being in the minority. What is going on?

  • TOM OLIPHANT:

    Bill Clinton could tell you from 1993 that it isn't easy. And the experience this year has been pretty horrendous. And I think it tracks rather easily with the falloff in the support for President Bush as his troubles have mounted.

    This is a borderline dysfunctional Congress. And I think I can sum it up with basically three numbers. I mean you have Katrina happens. And up it all goes by about $60 billion. This hits some conservatives the wrong way, demanding action to reduce expenditures and they sort of cut by 50.

    But then coming up behind it is this strange tax cut, primarily geared toward investment income that is at least at this point another $60 billion. So by my calculation, the minority leader in the House, Nancy Pelosi, is off by quite a bit. The deficit is going way up. This concern about spending is almost belied by the focus on the tax cut that is coming in right behind it. Dysfunctional is the right word.

  • RAY SUAREZ:

    David?

  • DAVID BROOKS:

    I don't totally disagree with that. Yeah, I think what strikes me is that the budget deficit has gone up. The big budget items are off limits. Some of them are the tax cuts. Some of them with the prescription drug plan, things like Medicare where the real money is. I mean, one of the things that struck me is, is watching the Congress, it is like watching two people in New Orleans debate about whether their fishbowl is overflowing when the Mississippi River is coming down on them.

    And a lot of these cuts, these cuts are like a few billion here and a few billion there, while you have this massive tax cut, massive Medicare spending plan, and then the normal entitlement problems that have been our permanent problems all coming down.

    So there is a great deal of angst about the deficit and the long-term entitlement problems. But because so many things in the budget are off limits that we with can't even talk about, there is really no addressing the real issue, and dysfunctional is not a bad word for that.

  • RAY SUAREZ:

    Well, how much of this is an appearance problem, not wanting to be seen continuing to cut the taxes on the profits on investments while you are cutting food stamp eligibility, not wanting to make tough choices about entitlement programs while you are giving a couple of 100 million bucks to build bridges to tiny islands in Alaska?

  • DAVID BROOKS:

    There's a lot of that. There's also — to be fair, the Republicans believe that the tax cut for captain gains help economic growth and are good for the country.

    But, you know, the fundamental thing driving this is the moderate Republicans who are flaking off, and who are just tired of towing the line.

    Somebody said that when moderate Republicans revolt, it's like Indian summer, it's nice while it lasts but you no know it's not going to last forever. But I'm not sure about that. I have been spending a lot of time with moderate Republicans and when they talk about the president's reputation in their districts, they use words like poisonous, radioactive, hated, loathed. They're in districts often in the Midwest and the Northeast, these moderate Republicans where they have to be against the president. They just have to. And so you are beginning to see that on issue after issue.

  • RAY SUAREZ:

    So if you are running, Tom, in the Chicago suburbs or upstate New York, the president's woes become your own?

  • TOM OLIPHANT:

    It almost becomes a substitute. President Bush was re-elected a year ago. He's never going to be on any ballot again. If you are frustrated at the way things are, you really have no alternative to taking it out on your local Republican Congressman or senator or governor or school board member or what.

    Now the way the system has trumped these problems in the past, is when you put everything on the table, not merely the expenditure side that David mentioned but with presidents like Reagan and Clinton, you put taxes there too, or the first President Bush. But as long as this thing is off limits in large part where taxes are concerned, but are you trying to do it all on the spending side, you will by definition fail because the cuts are too severe to have broad political support.

  • RAY SUAREZ:

    And some of the advocates of not cutting entitlement spending out point out the burden of those cuts land on many of the people that you are trying to help in the Gulf Coast so the money comes out of one pocket and into another.

  • DAVID BROOKS:

    And as more money gets sucked up by entitlement programs, which are untouchable, the rest of the money really tends to be the money that's focusing on helping the poor; and when you make these cuts on the year-to-year program, the non-entitlement programs, you're cutting the poor.

  • TOM OLIPHANT:

    I mean, just in the last couple days to show, it even goes further than that, the money to fund the speech that the president just made about bird flu disappeared this week. There are really severe crimps being put in the National Institutes of Health, the Centers for Disease Control. There is no money for the much higher heating bills that people who experience cold weather will have this year particularly because natural gas prices have gone through the roof, not just oil prices, dysfunctional in terms of doing its work, dysfunctional in not being able to address the issues that are on kitchen tables in America.

  • DAVID BROOKS:

    I do feel compelled to add that federal domestic spending has increased faster under Bush than under LBJ. I mean, we are coming off a bunch of years of incredibly high spending increases, the Department of Education is up, what, 50 percent, roughly in that, so if they don't get an increase, it is not like you are cutting into bone in a lot of these programs but, nonetheless, it is not a rational way to do budget.

  • RAY SUAREZ:

    Well, can they solve what is bedeviling them this week and get this all done before the end of the year?

  • DAVID BROOKS:

    Well, I think the lesson of these appropriations is that they can win off enough folks to get two-vote majorities, maybe. But, you know, this is not a Congress where the Republican leadership can run rough shod any more, that's for sure.

  • RAY SUAREZ:

    Well, when you are relying on the absence of a Democrat from Brooklyn to win your majority, your vote, you are already skating on pretty thin ice. Thanks fellas.

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