March proved to be as uncertain a month for federal budgeteers as it was for weather forecasters and basketball fans. House Budget Committee Chairman Jim Nussle (R-Iowa) successfully moved federal-budget resolution H. Con. Res. 95 through the House just before 3:00 a.m. on March 21 by a close vote of 215-212. The budgetary framework kept President George W. Bush's spending levels mostly as requested for fiscal 2004. But the companion bill didn't fare as well in the Senate. Republican Sens. Olympia J. Snowe of Maine, George Voinovich of Ohio and Lincoln Chafee of Rhode Island joined their unanimously partisan Democratic colleagues to pare the administration's $726 billion tax cut down to $350 billion by a vote of 51-48. Days earlier, a similar attempt in the Senate to slash the tax-cut proposal had failed.
The surprise vote to cut the budget resolution came late in the afternoon after Bush had begun the day presenting Congress with a $74.7 billion request for a wartime supplemental appropriation. The president said the funding request for military operations in Iraq and homeland security represented less than 1 percent of the gross domestic product (GDP). White House spokesman Ari Fleischer reminded critics who charged the administration with waiting for clearance of its tax-cut proposal before offering the secondary request that Congress was well aware the supplemental was coming.
Democrats, though determined to prove Congress could pass a budget resolution quickly, were equally determined to attack the tax-cut component of the president's budget. They insisted that two major items were missing from the proposed budget: reorganization funding for the Department of Homeland Security and the costs of the war in Iraq. Added to a fiscal 2003 baseline deficit of more than $246 billion, the administration's critics charged, the costs of international initiatives would cause too much "shock and awe" to an already shaky U.S. economy.
The president's request, if passed, would be supplemental to the fiscal 2003 omnibus appropriations (spending) bill that was approved in February, rather than scored against the currently pending budget-framework resolution for the fiscal period of Oct. 1, 2003, through Sept. 30, 2004. The two budget-framework resolutions now are headed to a joint House and Senate conference, where they can be addressed anonymously. Budget resolutions are not signed into law, but they are binding on the House and Senate to govern the spending agenda for the year's appropriation schedule.
Noting the budget deficit for 2003, Brian Riedl, a federal-budget analyst at the Heritage Foundation, estimates that, "This may bring it closer to $380 billion for the year. It [eventually] could reach $400 billion for FY 2003," he adds. For fiscal 2004, Riedl predicted a $300 billion deficit as well.
The president is said to be requesting $9.4 trillion for fiscal 2004, but one government source advised that by comparison the deficit is only one small factor. As this official explained, it is more important to look at that amount as a percentage of the economy. "Back in the 1980s, when we had deficits as far as the eye could see, we had a much smaller economy," the source noted. "Our economy now is four times bigger, so a $200 billion [deficit now] is the equivalent of what $800 billion would have been then--in terms of its impact on the economy. It's just important to keep that in perspective."
Anything that Congress spends this year eventually would be built into the permanent, overall economic baseline. But since funding for military action in Iraq and components of homeland security are being considered as a separate part of a supplemental bill, it only would add to the deficit for fiscal 2003, the government source explains. "It doesn't do anything to next year"
As the president posited, said an official, $74.7 billion is not a very large percentage of a $4 trillion economy. …