Summer of unknowns ahead for appropriations, expert says

Q. Sen. Robert Byrd, the new chairman of the Appropriations Committee, said he thinks that the funding levels for the fiscal 2002 budget resolution, which call for only a 4 percent boost in the discretionary spending, are inadequate. What do you think will be the outcome of any attempt Byrd makes to increase the caps?

A. I don't know whether he'll increase the caps or evade the caps, but the effects will be the same. And he'll have a number of co-conspirators, including Republicans. In other words, this is not just going to be a Democratic thing. The early evidence from appropriations in the House--and I know it's very early--is that there is a huge buildup of pressure to exceed the caps.

Q. What kind of programs do Byrd and the others want to spend money on?

A. Well, it's really across-the-board. Let me divide it into three areas. One is defense, where the President himself is promoting significant increases. The others are the domestic areas like energy conservation, agriculture, etc., where the President was going to pay for the defense increases and keep within the 4 percent. In other words, there are parts of the budget which have significant cutbacks, and those are not going to happen. And third, you have areas like education, where there is broad support, and the President indeed has gone along with it, for significant increases. The question on education is: Should it be within the caps or outside the caps? The easiest thing to do is take it outside the caps and don't count that money but spend it anyway.

Q.You mentioned defense spending. Defense Secretary Donald Rumsfeld right now is doing a strategic review of the military. Because they want to hold off on appropriations until he's completed his review, action on defense spending isn't scheduled until September. Do you think that is going to throw a wrench in the whole process?

A. I think that will actually make things harder for the President. Because... in September, the other appropriations bills will move forward, taking their piece of the caps, and the President is faced with the following dilemma: Either give defense what remains, or spend more on defense but exceed the caps. In other words, the delay on defense actually hurts the President's cause.

Q. As for education reform, which Democrats and--as you said--the President are both for, where do you think the money is going to come from?

A. It will just be a technicality. You can say it's within the caps or raising the caps. You can say it's outside the caps and we're not counting it. But either way, they're going to spend it, so they're going to de facto raise the caps even if they don't do it de jure.

Q. Do you think that Republicans, especially House Republicans, who want to keep spending down, will attack Robert Byrd and the other Democrats who now control the Appropriations Committee as wasting money on pork barrel projects?

A. Yes, they will, but there are two aspects. One is that they also have to attack fellow Republicans because the members of the House Appropriations Committee, and certainly Republicans on House Appropriations and Republicans on Senate Appropriations, are going to be among the spenders. They're not going to be people who are holding the line on that 4 percent. Keep in mind that for the appropriators, the 4 percent was not their number, it was the Budget Committee's number. They never subscribed to that number.

On the pork, the President's going to have to take a stand. Does he want to challenge Congress on that? You may recall that one of the ways he himself kept it within the 4 percent was by saying, "We're going to subtract billions of dollars of pork from the base." And he did that. But, you don't have Democratic pork, you don't have Republican pork, you just have political pork. And Presidents generally get bloodied when they take on Congress on this.

Q. More money is going to be spent than was planned for, because of defense, education, Bush trying to get rid of the pork, which looks like it's not going to happen...

A. The volume of pork, the number of projects, which I recall about 6,000 of them last year--there will be fewer this year. I'm pretty sure of that. It's not an election year, Congress doesn't want to pick a fight where the President gets bloodied, but it looks bad. So, I think there will be less pork. The main reason for the caps being a problem is not the pork, but it's the pressure on defense and education and restoring the cuts.

Q. The Congressional Budget Office recently reduced its budget surplus estimates and said that the $12 billion reserve fund is probably actually closer to $1 billion. How do you think the new numbers are going to affect the appropriations process?

A. Well, they create a tremendous problem because it's not simply the size of the surplus. It gets involved in the issue to protect Social Security. And the Republicans are very vulnerable, especially after the tax cut, [on the idea] that they'll be eating into the non-Social Security surplus. That is, the surplus after you've taken out the Social Security money.... That's tight in 2002, but it turns out it's even tighter for 2003 and 2004. And if you spend more in 2002, you're definitely generating additional pressure to spend in the next several years involved.

Q. Do you think that the Appropriations Committee will dip into the Medicare or Social Security portions of the surplus?

A. They'll try to avoid Social Security because that's a minefield. They'll try to finesse it on Medicare; saying they're not doing it and the Democrats will say they are doing it. We've already had round one or two of that fight over Medicare. And I think that the White House will be in a difficult situation if the Democrats pin the label that they're raiding it.

Q. If there are problems agreeing on the appropriations bills, do you think that the Senate Appropriations Committee is likely to drag out negotiations into the end of the year?

A. Everybody's saying they don't want to drag them out, but keep in mind how many years they are dragged out. And they're dragged out not simply because of advantage in going to the wire, although there's some of that. They're dragged out because it's hard to resolve conflicts until the very last minute, because people dig in their heels and stand their ground until the very last minute. That's why things drag out. Now, a big variable is not simply what Senate Appropriations does, but what House Appropriations does. In other words, if the House appropriations bills are closer to the Senate numbers, rather than the President's numbers, then you have a three-ring circus where Senate appropriators can cut a deal with the House appropriators, but they also have to cut a deal with the President.

Q. How do you think the close relationship that Sen. Byrd has with Sen. Ted Stevens, the ranking Republican on the committee, will affect the process?

A. They're both spenders, although they don't always spend on the same thing. The traditional appropriations process has been one of harmony between the two parties. Spenders have more in common than they don't. It's only the last several years when the party leaders got involved that the process got overwhelmingly politicized. So if the appropriations committees are left to their own, Stevens and Byrd, I don't think they'll have difficulty cutting the deals.

Q. You mentioned the House Appropriations Committee. Byrd and Stevens also have pretty good relations with Rep. Bill Young [chairman of the House Appropriations Committee]. Do you think it's going to be the House and the Senate appropriations committees against the President?

A. And maybe against the Republican leadership in the House, like [Reps.] Tom DeLay and Dick Armey. And maybe against rank-and-file conservative Republicans in the House. In other words, we've been concentrating on what Byrd will do, what the Democratic majority will do, which is true enough, but the Republicans in the Senate and Republicans in the House are very different institutions. There's a huge contingent of conservative Republicans in the House who are convinced that they've got to hold the line on spending, and that may cause a collision with their own colleagues. There will be three fights: between Democrats and Republicans, between Congress and the President and between the House and Senate on this.

Q. So when spending needs and the limited funds collide, what's going to happen?

A. My own sense is that the caps will give. But they won't give to the 8 percent that the Democrats have been clamoring for. I think that's going to be too rich for the President, and he's not going to take it. My own sense is to expect the numbers to come out in the vicinity of 6 percent. The budget resolution provided for a 4 percent increase.... Each 1 percent in 2002 appropriations will amount to about $7 billion, so if my hunch is right--that we're talking about a 6 percent increase--we're talking about $14 billion or so above the President's preference.

Q. With the tax cut that was just passed, where is this money going to come from?

A. It comes out of the surplus and then the risk is whether it touches the Social Security surplus. And that's a real risk downstream, a very, very real risk for Republicans. Especially if CBO further reduces the surplus estimate.

Q. Politically, who do you think are going to be winners and who are going to be losers when the process is over?

A. I think the Democrats will definitely be the winners. The question is whether Republicans are the losers. The art of politics is that nobody loses too badly, and the question is whether that will play out this year. But the Democrats are definitely riding high. There is sentiment in the country to spend more money. Whether it's legitimate or not is not the question. That's the sentiment. And the sentiment is due to the surplus, due to do the good times, due to a whole bunch of things. Congress is going to respond by spending more money, particularly on education. So the Democrats will be winners. Will the Republicans be losers? That depends on whether they pick a fight. I think if the President were to signal--I know it's premature for him to do so--but if he were to signal and say during the summer or September that he would take the 6 percent, then there don't have to be any losers. The Democrats can take credit for spending more on social needs, the Republicans can take credit for holding the line on the budget.

Q. Anything else you want to add?

A. It's going to be an interesting summer on the appropriations front. This is not going to be a business as usual year, and we have a lot of unknowns. Because the biggest unknown is: What will George Bush do? What will he do if an appropriations bill comes to him above his target? What will he do if it has 300 earmarks in it, the pork? He's not been tested in this area yet so I think until we see what role the President takes in the appropriations bills, we can only speculate on the kind of season its going to be.