Congress Struggles to Rewrite Budget Rules in Era of Surplus

President Clinton and Congress are not unlike a family trying to balance its household budget and climb out of debt.

After decades in the red, they've finally amassed a small surplus and are now debating what to do with it: Put it away for retirement (that is, save Social Security), repave the crumbling driveway (spend it on big transportation projects), or pay down the mortgage (also known as the national debt).

The trouble is, this family has more than 500 members - and a lot of them want to be the head of household. Now, as Congress struggles to set ground rules in the post-deficit era, the attitudes that produced last summer's balanced-budget agreement appear to be shifting.

As three key bills this week show, it's by no means certain that lawmakers who opt to cut taxes or spend more in one area will then offset that expenditure by trimming elsewhere. And even if they do, the offsetting cuts sometimes produce much unhappiness among colleagues with competing interests.

The three bills - on disaster relief, transportation spending, and next year's budget - illustrate how hard it is for Congress to make tough choices in this uncharted territory of surplus, especially in an election year.

Disaster-relief bill

The $2.9 billion spending bill for disaster assistance and military operations in Bosnia and the Gulf barely passed the House. The four-vote margin of victory reflected the concern of GOP moderates and most Democrats over cuts made in other programs to pay for the bill. On the chopping block were reserve funds for public-housing assistance, airport construction, Mr. Clinton's AmeriCorps program, and bilingual education.

"I don't think these are the trade-offs we should be considering...," says House minority leader Richard Gephardt (D) of Missouri.

The Senate version of the bill, which includes an additional $1.6 billion for the Federal Emergency Management Agency, includes no offsetting cuts, thus setting up a tug of war in the House-Senate conference. "It could be one of our most challenging legislative efforts in some time," says Senate minority leader Tom Daschle (D) of South Dakota. The White House threatens a veto if the House bill prevails.

Transportation bill

A similar House-Senate clash is brewing over the massive highway and transit bill. The House version, passed Wednesday, spends $218 billion over six years, $4 billion more than the Senate. Both bills exceed the balanced-budget agreement, which calls for $183 billion over the same period.

To pay for its extra transportation spending, the Senate reduced spending for veterans' benefits for smoking-related illness, social-service block grants, and administrative costs for Medicaid and food stamps - the same reductions the president had proposed to pay for his education initiatives. The House provided no offsets for its extra spending; GOP leaders decided to hash them out with the Senate in conference.

Some liberals, deficit hawks, and the White House are aghast at the amount of spending in the transportation bill, which they say will seriously limit Congress's ability to spend more on education, health care, and other social programs.

"If we do have a surplus, it should go for Social Security or deficit reductions," says Rep. Christopher Shays (R) of Connecticut. "I am just hard-pressed to know how this $33 billion budget-buster fits in with this Republican majority and what I've been about for the last 11 years...."

But proponents say it's time Congress spent highway taxes on the nation's crumbling roads and bridges instead of other programs. "There is nothing more outrageous to the American people than taxing them for a certain purpose and this Congress absconds with the money," says Rep. Gerald Solomon (R) of New York.

Budget bill

Meanwhile, the Senate was trying to finish work last night on a Republican budget that diverges greatly from the president's proposal. While it reserves any surplus for Social Security, as Clinton requested, the bill allocates any receipts from a tobacco agreement to Medicare. The White House wants to spend that money on education and social programs.

The Senate provides for a $30 billion tax cut and funds teen-smoking prevention programs. But it refused to take up the president's proposal to expand Medicare to 55- to- 64-year-olds.

The White House sounded warnings about budget gridlock and Senate Democrats decried the Republican measure. "If this budget passes, we will be precluded from major investments in education," Senator Daschle says. "We will be precluded from passing a tobacco bill .... We will be precluded from passing a good health-care package."

But some conservatives are upset that the Senate bill doesn't contain a bigger tax cut, meaning the final vote would be close. "Federal revenues are rolling in from a robust economy," complains Sen. John Ashcroft (R) of Missouri. "If Washington won't cut taxes now, then when will Washington cut taxes?"

The House is set to take up its budget resolution in late April.