Democrats plan breaking deficit discipline promise again

Democrats are finding more excuses to ignore the promise they made when they took over Congress that they wouldn't pass laws increasing the budget deficit.

Now they're willing to do it again for a $16 billion extension of unemployment aid and a doubling of education benefits for veterans returning from Iraq and Afghanistan. They've already swelled the deficit by $200 billion since December with tax relief for the middle class and rebates for nearly everyone.

In a federal budget exceeding $3 trillion — and with President Bush requesting almost $200 billion this year for the two wars — their latest transgressions may seem modest. Democrats say a six-month extension of jobless benefits will stimulate the moribund economy and they characterize the new college aid for veterans as a war-related cost.

But they come on the heels of tossing out their fiscal responsibility rules for a $168 billion economic rescue package of tax rebates for most Americans three months ago and a $50 billion measure two months earlier rescuing some 20 million middle-class taxpayers from an average $2,000 in higher taxes.

Deficit hawks in both parties worry that the stimulus bill opened the door to further deficit-swelling legislation. They view the rule — dubbed "PAYGO" in inside-the-Beltway slang for pay-as-you-go — as a key bulwark against Congress' propensity to spend outside its means.

"If they start calling everything 'stimulus' or 'war-related' certainly PAYGO will be very weak," said Robert Bixby of the Concord Coalition, a budget watchdog group. "I'm very worried."

Even some of the top supporters of that budget approach are good at overcoming it by finding the required 60-vote majority in the 100-member Senate. Senate Budget Committee Chairman Kent Conrad, D-N.D., one of Congress' most ardent advocates of the rule, was a driving force behind a recently passed proposal for $25 billion over the next three years in tax cuts for homebuilders and other money-losing businesses and $6 billion in tax breaks for renewable energy companies. Neither is in compliance with budget rules.

"The only things that shouldn't be paid for, in my view, are those things that are part of a stimulus package," said Conrad. "You could argue that extension of unemployment is part of a stimulus package."

In the House, the Blue Dog Coalition, a group of 47 fiscally conservative Democrats who have been fighting for the "pay-as-you-go" approach, has persuaded Conrad to promise to be more vigilant in enforcing the rule. It requires 60 votes to waive objections lodged under "pay as you go," rules, but the rule isn't always invoked.

That 60-vote threshold — the same number required to defeat a filibuster — is usually difficult to overcome. But in the case of the alternative minimum tax, Senate Republicans have made it clear they would block any AMT fix that is financed by tax increases elsewhere in the budget.

The AMT was created in 1969 to make sure that more than 150 very rich people did not totally avoid paying taxes. It provides alternative rules for calculating income tax allowing for fewer deductions. It never was adjusted for inflation. So every year, more people become subject to the AMT. Congress in recent years has resorted to one-year fixes to protect upper-middle-class taxpayers, many in the $75,000 to $200,000 income level range, from bigger tax burdens.

The GOP approach on an AMT fix has forced House Democrats to abandon paying as you go or else face the ire of taxpayers who would otherwise be hit by the AMT's average $2,000 tax increase. "You have two priorities. One is to provide middle-class tax relief and the other priority is to do it in a fiscally responsible way," said Rep. Chris Van Hollen, D-Md.

At the same time, there's a feeling among many Democrats that it's unfair to write huge checks for the war while forcing those supporting investments at home to scrounge for spending cuts.

"We think that if we're going to send troops overseas and spend $120 billion a year on that or more and not do that by PAYGO, we shouldn't make the veterans pay when they get home," said Van Hollen, whom party leaders put in charge of raising campaign money to increase the Democrats' 235-199 House majority in November election.

The new GI Bill would on average double college aid for veterans to about $12,000 per year at a cost of up to $4 billion a year. It's just the type of legislation the "pay-as-you-go" approach was designed to slow down — a new, expensive benefit program.

Mindful of potential criticism, Democrats in their latest plan would limit the new GI benefit to the coming year to reduce its cost. Critics say the idea is simply a gimmick aimed at getting around objections of those who want to pay up front. Lawmakers would undoubtedly feel irresistible pressure to renew the programs.

"They set up these rules. They, with great fanfare, declared that these rules were going to be used to discipline the budget," said Sen. Judd Gregg of New Hampshire, the Senate Budget Committee's top Republican. "And then on almost anything of any significance that meets their political agenda, they ignore the rules."