- The Washington Times - Friday, June 25, 2004

House Republican leaders and the White House lost a major battle yesterday when all Democrats and a third of Republicans voted against imposing new controls on spending.

The Spending Control Act, defeated in a 268-146 vote, would have required increases in discretionary spending be offset with cuts in other programs or tax increases and would have capped mandatory spending. One-third of the spending controlled by Congress is discretionary and is used to fund federal departments and agencies; the other two-thirds goes toward mandatory spending programs such as Social Security and Medicare.

Republicans and Democrats squabbled over how to deal with tax cuts — whether to subject them to offsets, known as pay-as-you-go rules (PayGo), or leave them out. House Republican leaders have fought against any efforts to affect the tax cuts and continue to do so.

Some Republican senators have demanded that the tax cuts be included and have yet to pass budget. The House since has deemed their budget as binding for their appropriators.

With the vote last night, it is clear that the House and Senate will never reach an agreement, said Rep. Patrick J. Toomey, Pennsylvania Republican.

“I don’t think we’re going to get a budget. There were no Republicans who wanted to include tax measures under the PayGo provisions, and I argued strongly against adopting that approach,” Mr. Toomey said.

He said budget reform was also dead.

“We had our debates. We had our votes, and the budget process and pending restraints were rejected. So, I think we’re done for the year,” he said.

But some Republicans were encouraged by the debates. Indiana Rep. Mike Pence, a Republican, called the all-night session a “successful failure.”

“The budget mess here in Congress has been going on for 30 years, and we will not be able to fix it overnight,” he said, adding that it was “an important first step in changing the way Washington spends the people’s money.”

Mr. Toomey said he still had no illusions that the bill would pass.

So now, with budget reform deemed dead this year by some lawmakers, nothing in place to curb spending and the record multibillion-dollar deficits, the tax cuts have been placed in jeopardy, said Paul Gessing, director of government affairs for the National Taxpayers Union.

“The empirical economic evidence is the tax cuts will, in the long run, reduce the deficit by helping the economy grow, but the middle-of-the-road folks in Congress are going to be spooked when they see the deficits go higher and higher; so eventually, tax cuts will be on the table and in jeopardy,” Mr. Gessing said.

The union supported the PayGo bill, as did the White House.

President Bush has called on Congress to set binding limits on spending for the past three years. This year, however, the White House didn’t adhere to its own request, as increases could not be avoided with funds needed to sustain the war on terrorism in Iraq and Afghanistan.

Mr. Gessing said the war and September 11 are part of the problem, giving congressmen as excuse to spend on just about anything.

“So not only is the war costing a significant sum of tax payer dollars, but you have a war mentality toward government programs,” he said.

It remains to be seen how the White House will continue to pay for the war and protect its tax cuts without stop-gaps to keep Democrats from increasing spending on domestic programs.

“I think the White House will manifest its concerns in the appropriations process,” Mr. Toomey said.

Mr. Gessing said that may be easier said than done, as House appropriators have routinely caved on increases.

“So basically, from a political point of view, the Democrats carried the day and spending will go unchecked,” he said.

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