July 5, 2001Before the Senate recessed for the July Fourth holiday, Appropriations Committee ranking member Ted Stevens, R-Alaska, expressed deep misgivings about the control the fiscal 2002 budget resolution grants Budget Chairman Kent Conrad, D-N.D., over the defense budget--control the new chairman has indicated he will not shrink from exercising. Conrad has repeatedly warned that the surplus outside of the Medicare and Social Security trust funds is dwindling for fiscal 2002, and could turn into a deficit in fiscal 2003. Conrad fears these trends will only be made worse as economic forecasts grow increasingly pessimistic, and as Congress considers the Bush administration's fiscal 2002 defense amendment and a boost in education funding. Neither of the latter items were covered in the budget resolution. After the administration requested another $18.4 billion for fiscal 2002 defense spending, on top of its initial request of $310.5 billion, Conrad wrote to President Bush "that additional funding may not be available to meet real defense needs. Under current projections, there is some room available in [fiscal]'02 for increases in spending above the level assumed in the budget resolution, but economic growth that is slower than was anticipated several months ago could cause even this to evaporate." Conrad has said any spending or tax cuts beyond what was in the budget resolution must be paid for with offsets, and asked Bush "how the administration believes the additional defense spending can be paid for if the economic outlook deteriorates and the non-Social Security, non-Medicare surplus for [fiscal]'02 is wiped out." Just last week, White House National Economic Council Director Lawrence Lindsey said fiscal 2001 tax revenues could be about $56 billion less than the $2 trillion projected, while Office of Management and Budget Director Mitch Daniels told CNN's "Inside Politics" that he anticipates current year revenues to run $20 billion to $30 billion below expectations--although both still projected substantial surpluses overall, and Daniels said the money would be there to cover the fiscal 2002 defense hike. The budget resolution states that the Budget Committee chairman may increase the fiscal 2002 defense spending allocation by the amount of the administration's request--but it also adds that the increase "may not, when taken together with all previously enacted legislation except legislation [drawing on the Medicare reserve fund], reduce the on-budget surplus below the level of the Medicare Hospital Insurance Trust Fund surplus in any fiscal year covered by this resolution." Conrad fears the latter could happen under the CBO's mid-session review, which comes out in August. Stevens, who is also ranking member of the Defense Appropriations Subcommittee, said the provision "gives the Budget Committee chairman leverage over the Armed Services Committee and Appropriations Committee that is unwarranted." "It's unconscionable to me, putting the power in one person to make that kind of decision. It's contrary to the law [that gives the Appropriations Committee jurisdiction over all discretionary spending] and it should not have been put in there," said Stevens. Even if Conrad fought the increase, he could be overruled by a 60-vote majority.
July 5, 2001