Senate Budget ranking member Pete Domenici, R-N.M., and Deputy Defense Secretary Paul Wolfowitz Wednesday both suggested that if offsets are needed to pay for the administration's $18.4 billion fiscal 2002 defense amendment, the money should come out of non-defense discretionary accounts. Wolfowitz appeared before the Senate Budget Committee to make the case for the $18.4 billion--which, taken together with President Bush's initial fiscal 2002 defense request, would put the Pentagon's 2002 budget at $328.9 billion. Budget Chairman Kent Conrad, D-N.D., repeatedly pushed Wolfowitz on how the Bush administration would pay for the additional $18.4 billion it requested last month, noting that the fiscal 2002 budget resolution prohibits him from releasing the extra money--the initial $310.5 billion is already provided for in the budget--if doing so would mean tapping into the surplus in the Medicare Hospital Insurance trust fund. Fearing that recent, lower revenue estimates indicate the Medicare trust fund would be tapped, Conrad said he will not release the money. In his strongest words yet, Conrad said: "I think the administration has done a disservice to defense, and a disservice to [the cause of] fiscal discipline ... because we've got a package up here that just does not add up ... I think the administration has handed us [a] live hand grenade, if you will." Asked directly how the administration would pay for the $18.4 billion, Wolfowitz at first deferred that question to OMB Director Mitch Daniels who said Tuesday the administration did not plan to propose offsets. But Wolfowitz later told Conrad, "If you ask me where to look for the money, I would say don't look first at defense," and, along with Minority Whip Don Nickles, R-Okla., cited the healthy annual increases that non-defense spending has enjoyed. Domenici, who also serves as ranking member on the Energy and Water Appropriations Subcommittee, earlier said if Conrad believes the money is not there to pay for the full fiscal 2002 defense request without tapping into the Medicare trust fund: "I would recommend that every appropriations bill be put up for reduction ... Cut everyone so [the budget] can accommodate this $18 [billion]." Domenici, who as former chairman authored the current budget resolution, said that "for today, and until the budget resolution is changed in an official way" when CBO's mid-session review comes out next month--presumably with a smaller projected surplus--there is "no reason why the chairman shouldn't make available" the money. Across the Capitol, House Minority Leader Dick Gephardt, D-Mo., shared Conrad's concern about the Medicare surplus. Signaling a line of attack Democrats are likely to pursue with increasing vigor as the fiscal year draws to a close, Gephardt told reporters, "The issue is, do you want to find an offset to pay for these desirable things, or do you invade the Medicare trust fund?" He was referring to the so-called charitable choice bill on the House floor later today, as well as to authorized increases for education and the Medicare prescription drug proposal.