January
18, 2002, 8:00 a.m. The
Battle Ahead
The
Bush budget arrives next month. Any winners?
n May 2001, the Congressional
Budget Office, Congress' official scorekeeper, announced that federal
surpluses would total $5.6 trillion over 10 years if no new policy changes
were adopted. This cornucopia of riches precipitated a raucous fiscal
struggle. Supply siders urged Bush to slash marginal tax rates and ignore
bean counters who said it would cost $2.3 trillion. Conservative Democrats
asked that complete retirement of the national debt be the priority. Defense
hawks saw a rare chance to rebuild a neglected military. Liberal Republicans,
and most Democrats, reminded Bush of his expensive pledges as a "compassionate
conservative"
to expand federal spending on education and prescription drugs for seniors.
The Jefford's coup
ended supply siders' dreams by elevating Tom Daschle to Senate majority
leader. Only a 10-year, $1.35 trillion tax cut squeaked into law. Meanwhile,
the recession — which started in March — finally caught up with
budget forecasters about the same time that bin Laden's henchmen slammed
their highjacked planes into America's heart. Today, the CBO predicts
that 10-year surpluses will amount to $1.9 trillion, one-third the amount
forecast eight short months ago.
On January 29, George
W. Bush will address a joint session of Congress. He will follow up one
week later with a detailed budget proposal that will state how the White
House wants to dispense resources among federal claimants and taxpayers.
With modest deficits predicted for the next two or three years, no faction
will go away truly happy by year end. Here's how the budget sizes up:
— Tax cutters
hope to resurrect the fiscal-stimulus debate that might permit taxpayers
to keep $100 billion of their funds over 10 years, about one-fourteenth
of what they accomplished in 2001. Divided partisan control of the House
and Senate offers national debt-reduction enthusiasts a cup of small beer;
the coming debate over how much to increase the national-debt ceiling
will force both parties to recognize an era of limits even as the national
debt goes up slightly.
— Defense
hawks had hoped to see an endless stream of Joint Strike Fighters, F-22s,
Aegis Destroyers, Nimitz Class Carriers, Updated M-1 Tanks, Ospreys, and
Comanche helicopters parade before them while development of a robust
national missile-defense system accelerated. Theirs is, at best, a dream
deferred. First priority will go to replenishing stocks of missiles and
munitions consumed in the Afghan campaign and hardening America against
terrorist attacks. True, the education lobby carted off their trophy as
the White House signing ceremony with Senator Kennedy (D., Mass.) made
clear earlier this month. So, educators can't expect to pocket more gains
this time.
— Seniors
may have the best chance to score in this election year. The debate over
prescription-drug benefits to Medicare beneficiaries will resume when
Bush includes a proposal in his February budget presentation. No doubt
it will have a lengthy phase-in, helping seniors most in the latter part
of the decade when the bulk of those $1.9 trillion in surpluses returns.
Then, such subsidies appear more affordable. Big pharma investors, watch
out.
— Stuart
J. Sweet is president of Capitol Analysts Network, a political risk-management
firm based in Chevy Chase, Md.
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n May 2001, the Congressional
Budget Office, Congress' official scorekeeper, announced that federal
surpluses would total $5.6 trillion over 10 years if no new policy changes
were adopted. This cornucopia of riches precipitated a raucous fiscal
struggle. Supply siders urged Bush to slash marginal tax rates and ignore
bean counters who said it would cost $2.3 trillion. Conservative Democrats
asked that complete retirement of the national debt be the priority. Defense
hawks saw a rare chance to rebuild a neglected military. Liberal Republicans,
and most Democrats, reminded Bush of his expensive pledges as a "compassionate
conservative"
