Elections put new focus on government spending

 

With Republicans poised to gain seats in Congress on Election Day, the issue of government spending is set to rocket to the top of the agenda in Washington - along with fresh promises to rein in the nation's record budget deficit.

Across the country, polls show Republican candidates leading in contested races by campaigning against the Bush administration's bank bailout, Democrats' massive economic stimulus package, President Obama's health-care overhaul and other examples of what the GOP terms "runaway spending." If Republicans take control of the House, as many analysts predict, speaker-in-waiting John A. Boehner (R-Ohio) has pledged to roll back agency spending to 2008 levels and stage weekly votes to eliminate unpopular federal programs.

Those moves may appeal to conservative voters clamoring for smaller government, but they would barely dent the trillion-dollar deficits projected over the next decade by Congressional budget analysts - much less fulfill the party's vow in their "Pledge to America" to chart "a path to a balanced budget."

GOP leaders concede that point, and say they are open to broader bipartisan approaches to tackling the nation's budget problems. Boehner, for instance, has embraced the possibility of higher taxes, suggesting in a speech in Cleveland this summer that lawmakers should look at clearing out the "undergrowth of deductions, credits, and special carve-outs" in the tax code that are little more than "poorly disguised spending programs."

And many Republicans would like to stabilize Social Security's finances, a White House priority. This summer, Boehner joined House Majority Leader Steny H. Hoyer (D-Md.) in urging policymakers to consider reducing benefits by raising the retirement age.

Obama, in turn, has said he plans to focus on deficit reduction during the remainder of his first term, viewing it as one of the few areas of potential compromise with Republicans. The president has already taken steps to cut spending, proposing a three-year freeze for most agencies in his latest budget request. And he is considering an additional 5-percent cut in the request that will go to Congress in February.

Need for compromise

In interviews, however, Republicans and Democrats both say progress on the deficit depends heavily on the other side's willingness to compromise - and there are strong countervailing winds against that. On Tuesday, Democrats are expected to lose many of their most conservative members, leaving a more liberal bloc likely to oppose reductions in Social Security benefits and other spending. Republicans, meanwhile, are likely to find their ranks fortified by tea-party conservatives strongly averse to taxes and deals with Democrats.

"You get Republicans being pushed more and more by the base not to compromise on taxes, while Democrats have been going back to the old scare tactics on entitlement reform, that Republicans plan to privatize Social Security and Medicare," said Robert Bixby, executive director of the nonprofit Concord Coalition, which advocates balanced budgets. "Even though there's a mandate from the public to deal with the deficit, there isn't a mandate coming out of this election to compromise or make hard choices."

As lawmakers return to Washington next month for a post-election legislative session dedicated to taxes and spending, attention will be focused on the bipartisan commission Obama appointed earlier this year to develop a plan for cutting the deficit. Comprised of six GOP lawmakers, six Democratic lawmakers and six presidential appointees from both parties, the commission's report, due Dec. 1, will provide an early test.

The commission has delayed its decisions until after the election to avoid politicizing its efforts. Ideas under discussion include paring back tax breaks that drain away more than $1 trillion in revenue each year, such as the deduction for mortgage interest claimed by many homeowners. The commission also is looking to cut discretionary spending, particularly defense.

Over the longer term, the commission is looking at adjustments to Social Security, such as raising the retirement age beyond 67 - where it is now scheduled to settle for people born after 1960 - and reducing benefits for wealthier retirees. Meanwhile, Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, and Rep. Dave Camp (R-Mich.), the senior Republican on the tax-writing House Ways and Means Committee, are talking about a broader rewrite of the tax code.

Erskine Bowles, a Democrat and commission co-chairman, has suggested balancing revenues and spending at 21 percent of the nation's annual economic output, an idea that has won support from some Republicans. But Bowles has not broached the idea with commission members, and Conrad and Camp have struggled to reach agreement on the appropriate level of taxation.

 

'A very clear message'

Sen. Judd Gregg (R-N.H.), a member of the deficit commission, is pressing for agreements that can be presented to Congress before the end of the year, when he plans to retire. Gregg he expects the election to boost the chances that the commission's proposals will get a serious hearing.

"This is an election that's going to have a very clear message: Do something about the deficit and debt," said Gregg, who leads a working group on Social Security. "I think the American people are going to send a very clear message, and that should give this commission even more credibility."

Privately, some Democrats say Republican control of one or both chambers of Congress could improve the odds of serious negotiations over the commission's report - and the deficit in general - because Republicans would have some ownership of the issue, and therefore a greater incentive to make progress. And Republicans say they are willing to engage.

"When you have two back-to-back years of the largest deficit spending in the history of the country in absolute numbers, people get it. We can't just be nibbling at the margins," said Rep. Tom Price (R-Ga.) , chairman of the conservative Republican Study Committee. "The American people know that the current Social Security program will not survive based upon current rules. The current Medicare program will not survive based upon current rules."

But to strike a deal with Democrats on Social Security or Medicare would almost certainly require fresh revenues. Grover Norquist, an influential Republican activist and president of the anti-tax Americans for Tax Reform, said that's a bridge Republicans will not cross.