House GOP Refuses To Continue Raising National Deficit

House budget splits defense, jobs



A year-end budget bill taking shape in the House on Monday night would meld $626 billion in new defense spending with a set of pared-back tax- and unemployment related provisions designed to get through the Senate without a prolonged fight.

At the same time, the leadership has opted to pursue a second, more robust job-creation package that will allow the House to speak on the issue but with no anticipation of Senate action before January.

What’s evolved then is a two-bill strategy with the primary focus this week on finalizing the budget package that will carry must-pass measures to extend the estate tax and authorize billions in extended jobless benefits.

“Our whole interest in life today is what can get through the Senate,” said House Majority Leader Steny Hoyer (D-Md.)

Over Pentagon protests, the defense chapter in the bill is expected provide an estimated $2.5 billion for the purchase of 10 more of Boeing’s C-17 transports, and $465 million is included for the continued development of a second engine for the F-35 Joint Strike Fighter. But elsewhere, Defense Secretary Robert Gates largely gets his way, including a full order of 30 F-35 fighters and the terminations he wanted of funding for the F-22 and VH-71 presidential helicopter programs.

Included in the package is $128 billion in contingency funds for on-going military operations in Iraq and Afghanistan. And the Pentagon is expected to seek at least $35 billion more next year to help cover the cost of President Barack Obama’s decision to add up to 33,000 more U.S. troops.

As seen in the bill now, the ripple effect of this buildup is already being felt.

There has been increased pressure to add funds for the purchase of more armored vehicles able to cope with the rough Afghan terrain. The final core defense budget is expected to include an additional $825 million for this purpose on top of the administration’s request. And as proposed by the Senate months ago, hundreds more vehicles would be purchased by trimming back on spending for the training of Afghan security forces.

Hoyer’s goal is to get the bill to the House floor by Wednesday, but it’s no longer certain that Democrats will use this measure to address the sensitive issue of expanding Treasury’s borrowing authority to finance the growing federal debt.

Just a week ago, the Maryland Democrat had hoped House and Senate leaders could join forces on the defense bill to raise the ceiling by as much as $1.8 billion — enough to carry the government through next year and the 2010 elections. But this proved nerve-racking for Senate moderates, who are insisting on the creation first of an independent commission to force Congress to do more to address deficit reduction.

Hoyer is still pursuing some resolution of the issue. Even as the House bill moves forward, he remains in negotiations with Senate Budget Committee Chairman Kent Conrad (D-N.D.) over such a task force, already championed by 33 senators including 14 Democrats.

“I haven’t given up on that,” Hoyer told POLITICO. And if agreement can be reached, a long-term increase in the debt could still be added by the Senate and sent back to the House together with a compromise on the Conrad-backed deficit commission.

The senator himself has said he is open to giving Treasury the authority to borrow what it needs for a short term period—perhaps two months. But where this goes is ticklish still.

Threading the Senate needle is complicated by the fact that some liberals oppose the defense funding itself because of their opposition to the wars overseas. So it could be that the debt debate shifts to what would be a third hastily assembled vehicle, a stop gap spending bill to keep agencies operating while the budget bills are resolved.

As these many scenarios suggest, the whole year-end exit strategy is still evolving and something of a roll of the dice.

With Christmas next week, House leaders are anxious to send their members home for the holidays — but it’s proven difficult to get a clear read from Senate Democrats, who are consumed by the ongoing health care reform debate.

To appease the Senate and hold down costs, House Democrats are prepared to pare back plans to authorize a full one-year extension of benefits for the long-term jobless. Instead, any extension will be close to six months, costing $40 billion, and this may have to be reduced further, Democrats said Monday night.

At the same time, liberals are desperate to preserve some job creation and infrastructure investments. Tempers are frayed, and the two-track approach on jobs is born of this frustration.

In a remarkable effort to force the Senate’s hand, House Appropriations Committee Chairman David Obey (D-Wis.) went so far last week as to actively pursue a strategy of providing only stop-gap funding for the Pentagon, thereby freezing out billions of dollars in home-state projects added by lawmakers in both chambers.

At one level, it was an anti-pork-barrel statement in the name of helping the unemployed. On the other, it would have put Democrats in the untenable posture of freezing defense funds in the midst of two wars.

A more peaceful approach, taken by tax writers, seeks to minimize their differences with the Senate by scaling back the scope of the bill. The House will insist on perhaps a one year extension of the current estate tax, which otherwise drops to zero in January. But tax writers have agreed that they can afford to wait before renewing billions of dollars in often popular tax breaks due to expire at year’s end.

Since many won’t affect tax filings until April 2011, there is a longer window for Congress to act. But the biodiesel industry is anxious, since transactions in January would be immediately impacted by the removal of the credit to encourage the blending of diesel with biofuels.

Watching from the sidelines, California Rep. Jerry Lewis, the ranking Republican on the House Appropriations Committee, complained that Democrats were creating a “hodgepodge” and should just let the defense agreement — finalized over the weekend — stand on its own.

“Let me make it easy for my Democrat colleagues,” Lewis said in a statement late Monday. “Put a clean Defense Appropriations bill on the floor, let members and senators cast a vote they can be proud of and send our troops and their families the resources they need and deserve.”


Sources: Politico