House Dem: Defense obligations will impede balanced budget

House Democrats are setting their sights on undoing the deficits of recent years. But their point man on budget issues acknowledged the path is difficult because of military operations in Iraq and Afghanistan.

"If it weren't for the defense supplemental it would be a lot easier, but nevertheless that's a known variable in the near future and it's no use wishing it away. It has to be dealt with," incoming House Budget Chairman John Spratt, D-S.C., said in a recent interview with CongressDaily.

Spratt said among the first orders of business will be reinstating as a House rule change the "pay/go" rules of the 1990s, which require offsets for new tax cuts or entitlement programs. Although a House rule could be waived, it "would at least have accountability" by forcing lawmakers to go on record opposing budget enforcement, he said.

In contrast to President Bush's recent budgets, overhauling entitlements such as Social Security and Medicare are likely to wait. "It's enough to try and put together a five-year budget that will come to balance in five or six years," Spratt said.

On the agenda is a plan to tackle interest payments on the national debt, which he called "the single biggest and most important entitlement that we confront in the near future."

Domestic discretionary spending would increase to account for current services costs, particularly in education, health, science and renewable fuels. Expectations are high for the Democrats' 100-hours agenda, which includes costly items such as cutting in half the student loan interest rate.

"There will be pay-fors in the package that we're proposing in the course of the first hundred hours," he said. "In addition to that, there will be prioritization and phasing in of many of these features. For example, we might not get from 6.8 percent to 3.4 percent [student loan interest rates] in one year."

Tax increases are off the table for now, Spratt said, noting major portions of Bush's tax cuts do not expire until 2011. Tax breaks Democrats support, such as the child tax credit, could be extended through allowances within the budget resolution and offsets for anything outside the budget, including efforts to close the "tax gap" between what is owed and what is paid to the Internal Revenue Service.

As for the roughly $850 billion, 10-year cost of "patching" the alternative minimum tax, Spratt said he would ask the administration to live up to its claim that a fix can be achieved "in the context of overall revenue-neutral tax reform," as White House Chief of Staff Joshua Bolten -- then Office of Management and Budget director -- said at a Feb. 8 hearing. "Well, let's see 'em. Let's see if the Republicans can raise taxes $850 billion in order to modify the AMT," Spratt said.

Spratt said balancing the budget is a "moving target," particularly in light of commitments, most notably war spending.

"It's tough to do," he said. "In the meantime, you sort of keep a lid on entitlement growth with the pay/go rule, which restricts the enhancement of entitlements. And without being as oppressive as the Republicans were, you keep some restraint on discretionary spending ... all I can say is, those are the ground rules we'll apply, and we may have to fudge on them, we may have to change them a bit to approach our goal. We've done it before, and we'll try to do it again."

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