Canton Repository

February 8, 2004

Lawmakers struggle with federal deficit

By PAUL M. KRAWZAK
Copley Washington correspondent

WASHINGTON — Area lawmakers uneasy with the record half-trillion-dollar federal deficit expected this year also appear uneasy with the politically difficult steps needed to reduce budgetary imbalances.

Republican Reps. Ralph Regula of Bethlehem Township and Bob Ney of St. Clairsville have pledged to look for ways to hold down spending, which could help lower deficits in the next several years.

Area Democrats, including Reps. Sherrod Brown of Lorain, Ted Strickland of Lucasville and Tim Ryan of Warren, blame President Bush and the Republican-controlled Congress for raising the red ink by lowering taxes.

In the $2.4 trillion federal budget proposed by the administration last week, the White House projected a $521 billion deficit. That’s a record deficit in dollar terms, though less as a share of the nation’s economic output than deficits of the mid-1980s and early 1990s.

The federal government ran surpluses from 1998 to 2001.

The deficit returned in 2002 and has grown since then.

As a key member of the powerful House Appropriations Committee, Regula has a special opportunity to shape spending. He’s chairman of a subcommittee that writes legislation providing federal aid for education, medical research and job-training programs.

The size of the deficit, he said, is “going to cause me in managing my bill to see what programs we can cut back or eliminate, because I want to keep an emphasis on education.”

He’d actually like to increase spending slightly, he said, although he knows it might not be possible.

Ney is not a member of the Appropriations Committee, but as chairman of the House Administration Committee, he has the ear of party leaders.

“We’ll look at the president’s budget to see the good and bad points,” he said. We’ll “also continue to talk to our leaders ... to make sure these budgets are in balance.”

Area Democrats blame the deficit largely on the multibillion-dollar tax cuts championed by Bush and approved by the GOP-controlled Congress, as well as spending for the war in Iraq, which area Democrats opposed.

“They have pretended that we can finance a war, fight terror, have significant tax cuts and do nothing meaningfully to restrain spending, and so when you do that ... you’re going to have deficits,” Strickland said.

If it were up to them, Strickland, Brown and Ryan say, they would shift dollars from tax cuts and the war in Iraq to domestic programs, including education, unemployment benefits, community policing and homeland security.

Repealing tax cuts for the wealthy and eliminating “some of the extraneous, high-tech weapons systems that are not protecting America” would save billions of dollars and help reduce the deficit, Brown said.

“You don’t deficit spend, you don’t borrow money to give tax cuts to the top 1 percent,” Ryan added.

Republicans counter that the tax cuts spurred the economic growth that began last year, and will bolster tax revenues in coming months.

“If we didn’t pass it (the tax cuts), things would be far worse,” Ney said.

Deficit critics are especially concerned about what will happen when the baby boom generation begins to draw Social Security and Medicare benefits at the end of this decade.

“The demographic tidal wave is now in sight,” said Robert Bixby, executive director of the Concord Coalition, a longtime advocate of fiscal responsibility.

As more people retire, fewer workers are left to support them and medical costs continue to rise, the price of those entitlement programs will far outstrip the ability of government to pay for them, the White House, Congressional Budget Office and independent analysts agree.

But lawmakers have trouble reducing spending or raising taxes.

Ney ruled out cuts in government benefits, which he said, “I can tell you ... aren’t going to be in the works.”

“I think at some point the Congress will have to address these challenges,” Regula said. But, he added, “I’m not making the charge. My responsibility at this point is to manage the programs under my committee’s jurisdiction as effectively as possible.”

Would Regula support a cut in benefits or increase in taxes?

“I’m not in a position, until there’s some legislation proposed, to take a position on that,” he said.

Strickland said he would consider raising the cap on payroll taxes to increase Social Security revenues. But he doubts the situation is as dire as some warn.

“I think we can, if we act responsibly, continue these programs without raising the retirement age and without imposing significant new rates of taxation on people to support them,” he said.

Brown said the first step is to repeal tax cuts for the wealthy, freeing up funds to reduce government borrowing. He declined to pursue a solution beyond that point.

“You can say, ‘What else are you going to do?’ ” he said. “You’ve got to do that (repeal tax cuts) first. If you don’t do that, everything else is academic.”

Ryan said he is “very concerned” about a huge increase in entitlement costs.

He calls it “the perfect storm.”

But he said it’s a false choice to think that only tax increases or benefit cuts can solve the problem.

“I think there are ways to restructure the program,” he said. “We need a better public health system.”