Congress's spending goes unchecked, with more likely

Before leaving town last week, Congress wrapped up a $162 billion war-funding bill and expanded America's entitlement system by giving veterans the biggest boost in college benefits since the World War II GI bill.

Lawmakers also added a 13-week extension to unemployment benefits and approved $2.7 billion in emergency relief for the storm-lashed Midwest.

Despite commitments to fiscal discipline on both sides of the aisle, none of it is paid for – at least not by today's taxpayers.

"There is absolutely no appetite to make hard choices," says Robert Bixby, executive director of the Concord Coalition, citing the war-funding bill. "There's never been any attempt to pay for the war, and now that's being used to expand a major entitlement program for veterans, which might be a good idea, but we ought to pay for it."

Since the 9/11 terrorist attacks, Congress has voted some $857 billion in war funding, according to the Congressional Research Service. That includes $656 billion for Iraq, $173 billion for Afghanistan, and $29 billion for enhanced security – all of it so-called emergency spending paid for with borrowed money.

The new GI Bill of Rights, estimated to cost $62 billion over 10 years, is a permanent entitlement that pays four years of college tuition for veterans who have served since the 9/11 attacks. At the urging of President Bush, this new benefit will also be transferable to spouses or children to help prevent a mass exodus from the military after the new benefit comes on line.

In the House, conservative Democrats won support for offsets for the new entitlement with a new tax on Americans making more than $500,000 a year, but that provision fell out of the final version of the bill after GOP protests in the Senate.

"We were very glad that the House passed a bill that did pay for it and were disappointed that the final bill did not. But in the scheme of things, we're talking about something that costs $0.6 billion a year against a war that's costing $150 billion to $170 billion a year – and we're not paying for that," says Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities in Washington.

The remaining weeks of the 110th Congress hold more budget-busting prospects, including a second emergency-spending bill for domestic priorities.

"I have consulted with the leadership, and next month the committee will consider a second supplemental to deal with the Midwest floods, hurricane Katrina, and to make critical investments in America," said Sen. Robert Byrd (D) of West Virginia, who chairs the Senate Appropriations Committee, in a floor speech Thursday.

Congress is also on track to consider a package of tax extenders, including a fix for the Alternative Minimum Tax that is expected to hit some 21 million taxpayers filing 2008 tax returns next year. On Wednesday, the House approved a $62 billion AMT fix, including tax increases for hedge-fund managers and the oil and gas industry to offset the cost of the bill. The bill passed 233 to 189 but faces strong opposition from Senate Republicans, who have the votes to hold up the legislation until the offsets are removed.

Last week, the House held a hearing on a bipartisan bill to establish a commission, along the lines of the Base Closure and Realignment Commission that dealt with military installations, to propose solutions to America's long-term fiscal challenge.

"It should be stated for the record that this hearing was an agreed compromise in return for Blue Dog votes for the budget," said Rep. Jim Cooper (D) of Tennessee, a member of the conservative Blue Dog caucus – a reference to Yellow Dog Democrats being "choked blue" by deficits – and a cosponsor with Rep. Frank Wolf (R) of Virginia of the commission bill.

"Whether this bargain was worth it remains to be seen, he added. "I feel a little bit like that T-shirt we see sold on the street that says, 'My parents got the vacation; all I got was this T-shirt.' "

The nation's future liabilities – including the national debt and unfunded liabilities in Social Security ($7 trillion) and Medicare ($35 trillion) – are $53 trillion, according to a report released last week by former US Comptroller General David Walker and the Peterson Foundation. Congress's fiscal 2009 budget resolution anticipates raising the statutory debt limit to $10.615 trillion – an increase of $800 billion from the current level.