Elections, slowing economy aim federal spending upward

Sunday, May 5, 2002

WASHINGTON -- President Bush and Congress are poised for a burst of new federal spending as pressures build on lawmakers from the approaching elections, the war on terror and the slowing economic recovery.

Underscoring the bipartisan push, Bush seems unlikely to object to a $30 billion defense and counterterrorism package that House Republicans and Democrats were writing that is $3 billion larger than he wanted. The House Appropriations Committee probably will vote this week on the bill, which is for the last five months of the fiscal year that ends Sept. 30.

Further highlighting the broad support for spending, an expensive new farm bill is on the verge of overwhelming congressional approval; both parties have made expensive proposals for new prescription drug benefits; and lawmakers are working together to restore billions of dollars that the president proposed cutting in federal highway aid to states.

"There is almost no sign of current or prospective restraint on federal spending," John Youngdahl, a budget analyst for the investment bank Goldman, Sachs & Co., wrote Friday in a newsletter to clients.

Federal spending for everything except automatic benefits such as Social Security is on track to grow this year by an extraordinary 11 percent, to $739 billion. That assumes the unlikely scenario that the anti-terrorism bill will not rise above Bush's proposed $27 billion.

One-time costs

Much of this year's increase is for one-time costs, including the rebuilding of lower Manhattan from the Sept. 11 attacks.

Even so, lawmakers writing next year's spending bills this summer will face severe pressure to ignore Bush's latest budget, which called for $759 billion for those programs for 2003, a 2.7 percent increase.

With the White House worried about electoral fallout as once-projected surpluses become ever deepening deficits, the White House has begun threatening vetoes in an attempt to limit new spending to programs they consider essential.

"You know what the president can do, and he's perfectly willing to do it if need be," White House budget chief Mitchell Daniels said Friday.

Democrats are still willing to take shots at Bush's budget priorities, such as tax cuts.

"If we're going to be serious about fighting the war on terrorism, we need to stop talking about enacting more tax breaks for the wealthy and start talking about putting resources into our most pressing homeland security needs," said David Sirota, spokesman for Democrats on the House Appropriations panel.

Both parties share the political goal of wanting to shower funds on programs aimed at combating terrorism and strengthening the economy. One possible brake on that -- the strong public focus on federal deficits that characterized the 1990s -- has waned.

Spending without savings

Also absent for the first time in a dozen years, thanks to an expired budget law, are procedures that made it harder for lawmakers to increase spending without finding savings to pay for it.

Then there are the November elections, which find both the Democratic-controlled Senate and Republican-led House up for grabs. With the 2004 presidential race getting closer, both parties are eager to provide money for key states or groups.

For example:

The Senate planned to give final congressional approval this week to a $180 billion, 10-year agriculture bill that would fatten payments to farmers by $73.5 billion over current programs. Bush is expected to sign the legislation, which would be a boon for Iowa, site of the first presidential caucuses, and Midwestern and Southern swing states.

House Republicans released a $350 billion, 10-year plan for creating new prescription drug benefits for the elderly, nearly double what Bush has proposed. Not to be outdone, Senate Democrats proposed a more generous version that would cost $400 billion to $500 billion. The bill probably will not be enacted this year, but neither side seems shy about proposing an enormous new program whose costs would only grow.

Lawmakers were taking steps to restore at least some of the $9 billion Bush proposed cutting from highway aid to the states, which totaled $32 billion this year.

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