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Budget Battle

Kwame Holman reports on the latest congressional skirmish over the proposed federal budget for fiscal year 2005.

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  • KWAME HOLMAN:

    Every year at this time, House Budget Committee Chairman Jim Nussle has to turn out a federal budget blueprint for the year ahead. But faced with record budget deficits, Nussle this year is being pulled in several directions. Republican leaders pressured him into giving up on his plan to limit increases in defense spending. He's trying to hold the line on all other spending, and still find room to make the president's tax cuts permanent.

  • REP. JIM NUSSLE:

    Now this is clearly not the budget any one of us ideally would want to write if we were king for a day. I can tell you that I would have gone a little further in few areas. I might have gone a little more dramatic in others.

  • KWAME HOLMAN:

    Senate Budget Chairman Don Nickles has been feeling similar pressures.

  • SEN. DON NICKLES:

    We're going to start picking up the pace — substantially. And that means we're going to have a lot more votes.

  • KWAME HOLMAN:

    Nickles already has his budget blueprint before the full Senate. But in this narrowly divided body, Nickles has spent the week fighting off dozens of colleagues' amendments that could upset his delicate balance of tax and spending guidelines. This was Nickles' reaction late last night to an idea from New Jersey Democrat Jon Corzine to eliminate tax breaks for millionaires and put the savings into a reserve for Social Security.

  • SEN. DON NICKLES:

    Madam President, I have great respect for my colleague from New Jersey, but this is one of the worst amendments I have seen. The essence was raise taxes $160 billion, presumably say we're going to put it into a fund, but frankly I will tell you with the deficit situation we have right now, it's going to be spent. It's absurd to think that it's not going to be spent. It's going to be spent.

  • KWAME HOLMAN:

    But Nickles could not dodge Wisconsin Democrat Russ Feingold. He resurrected an old budget rule known as "pay-go" that now threatens the future of the president's tax cuts.

  • SEN. RUSS FEINGOLD:

    Reinstating the pay-as-you-go rule makes it harder for this body to make the deficit worse. It does not prohibit these tax cuts. It does not make it impossible to have a tax cut. It just makes it a little harder. To have it as it should be.

  • KWAME HOLMAN:

    The Feingold amendment would require the cost of any new tax cuts or new spending on mandatory programs be offset with other revenues. A 60-vote super majority in the Senate would be needed to waive that offset requirement.

  • SPOKESMAN:

    If new tax cuts or new mandatory spending are not to be offset, then they ought to be only the most worthy of policies, not just anything that can get a majority vote. They ought to be policies that can achieve the 60 votes needed to waive a point of order.

  • KWAME HOLMAN:

    Budget Chairman Nickles argued that Feingold's amendment was too selective.

  • SEN. DON NICKLES:

    We don't have pay-go if you have a lot of spending bills that sunset. When those are reauthorized, you do not say, "oh, now you have to have pay-go." You have to raise taxes or cut spending to reauthorize the farm bill, for example. But we have a lot of tax cuts that are sunset, that when they're extended they would have to be paid for. Site really discriminates against taxes, makes it more difficult to keep tax levels where they are today.

  • KWAME HOLMAN:

    Nickles cited three tax cut provisions in particular that are set to expire next year: The expansion of the 10 percent income tax bracket; the $1,000-per-child tax credit; and marriage penalty relief. They all fall under the jurisdiction of the Finance Committee and its chairman, Chuck Grassley.

  • SEN. CHUCK GRASSLEY:

    If for some reason we could not agree on the necessary offsets that would be required under Senator Feingold's amendment, or if we could not get 60 votes, then current law would expire and taxes would automatically go up without even any consideration by any of us — 535 people just standing by and letting taxes go up. Some people may be willing to take that risk, but I do not believe that is the right approach.

  • KWAME HOLMAN:

    But Feingold argued those three tax cut provisions are too popular not to be restored.

  • SEN. RUSS FEINGOLD:

    Not only can all of these survive under pay-go, they will. They just need to get 60 votes. I predict in each case, they will probably get 35 to 40 extra votes on top of that, if anyone even raises the point of order. So it is simply false to say somehow this stops the tax cuts from being extended.

  • KWAME HOLMAN:

    While there was much discussion about extending those three tax provisions, which total $80 billion, members sidestepped debate on more than $1 trillion in tax cuts set to expire in the years ahead.

  • SPOKESPERSON:

    The ayes are 51, the nays are 48, the amendment is agreed to.

  • KWAME HOLMAN:

    Democrats pushed through the Feingold amendment with the help of four Republicans, a result that today caught the attention of John Spratt, the top Democrat on the House Budget Committee.

  • REP. JOHN SPRATT:

    In the Senate yesterday, Senator Feingold teamed up with someone, I believe, and passed a pay-go rule which is the restoration of the original rule. Is it your expectation that you'll have a pay-go rule that applied both to tax cuts and to entitlement increases?

  • SPOKESMAN:

    Well, I'm not ready … part of the reason that having the opportunity to think about this until Wednesday is that I can't quite answer that yet.

  • KWAME HOLMAN:

    But late today a spokesman for Nussle said the Budget chairman will offer a version of the pay as you go amendment next week, one that includes future tax cuts but exempts all those currently in effect.

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