Now the hard part: living within budget

The budget pact that finally emerged from Congress this week is a blueprint that could well be significantly altered before lawmakers vote on final tax and spending bills later this year.

In some ways the pact does represent a real victory for President Bush. The administration will win a tax cut of at least $1.35 trillion over 11 years under the deal - the biggest such reduction in two decades.

But the budget's 4.9 percent increase in most federal spending for next year will surely come under continued upward pressure, as members hammer-gun together appropriations bills in the months ahead. The tax cut could grow, as well.

"All this means is that this budget has made it past the first hurdle and the lowest hurdle," says Marshall Wittman, senior fellow at the Hudson Institute. "In reality this is full of sound and fury, signifying little."

Well, maybe not little. The budget resolution figures are targets that Congress has now, in essence, promised to try really, really hard to meet.

But if they break that promise, federal marshals won't march into the Senate chamber and slap cuffs on Majority Leader Trent Lott.

Consider what happened last year. The Republican-dominated Congress passed a similar budget resolution that called for $600 billion in so-called "discretionary" government spending.

By the time they fled for their districts in the fall, that figure had grown to $634 billion.

"Congress feels completely free to ignore budget resolutions when they think it's in their interest... My assumption is it's going to be tougher to keep it under control this year than last," says Stan Collender, managing director of the Federal Budget Consulting Group at Fleishman-Hillard.

The tax-cut story, for instance, was changing even as a House-Senate conference made the final tweaks on the budget resolution deal on May 2.

On the same day, the full House voted by an overwhelming margin to increase the amount of money Americans can save annually in tax-favored investments such as Individual Retirement Accounts (IRAs) and 401(k) employer-sponsored savings plans.

The number of tax dollars the Treasury would lose if such a plan became law is relatively small. But Congress already faces a monumental task in trying to cram the president's proposed income tax rate reductions and estate tax and marriage penalty repeal in under the budget resolution's $1.35 billion tax limit.

And there are other proposed tax cuts in line behind the IRA and 401(k) legislation, clamoring for their own day on the floor. It's still possible that this year Congress will consider reducing the number of Americans subject to the Alternative Minimum Tax, as well as repeal of the telephone excise tax and other business-oriented breaks.

The White House trimmed its original $1.6 billion tax cut request to $1.35 billion under pressure from a bipartisan group of Senate moderates. Some conservatives say that when the door slams shut on this year's session, that figure will have ballooned back to $1.6 billion, and perhaps even beyond.

President Bush "didn't draw the line. He didn't say he would veto anything over $1.6 trillion," says majority whip Rep. Tom DeLay (R) of Texas.

The president might be more likely to veto spending bills that would break the 4.9 percent spending increase cap. His original budget proposal called for only a 4 percent hike, after all.

The Senate, where a 50-50 partisan balance means power is more finely split than in the House, endorsed an eight percent increase earlier this year.

Ironically, the presence of a Republican in the White House might make GOP lawmakers more, not less, likely to break budget caps, according to some experts.

When Bill Clinton was in the White House, Republican congressional leaders were loath to be seen as giving him spending "victories." Under President Bush, they might be more likely to listen to constituent spending calls.

"It would be easier to have spending control if it were a Democratic president," says Mr. Wittman. "Ironically, the great Republican harmonic convergence means spending control is out the window."

The real question, say other analysts, is what happens beyond next year.

Any congressional increase for fiscal 2002 would be on the margins. But in years to come, an array of ambitious initiatives, from Bush's proposed national missile defense to partial privatization of Social Security, could cost billions that currently aren't written in long-term plans.

"It's a bit of a fantasy world beyond this year," says Thomas Mann, a senior fellow at the Brookings Institution.

Staff writers Dante Chinni and Gail Russell Chaddock contributed to this report.

(c) Copyright 2001. The Christian Science Monitor