Bush pushes balanced budget on cautious Democrats

Wednesday, January 3rd 2007, 6:14 am

By: News On 6

WASHINGTON (AP) _ President Bush on Wednesday challenged Democrats taking over Congress to join him in balancing the budget within five years and urged them to cut thousands of pet projects from future spending bills.

Top Democrats reacted cautiously _ or not at all _ to Bush's plan, which assumes Congress will renew tax rate cuts passed in 2001 and maintain tax cuts on investments, inheritances and many other items.

``We welcome the president's newfound commitment to a balanced budget, but his comments make us wary,'' said incoming House Budget committee Chairman John Spratt, D-S.C. ``They suggest that his budget will still embody the policies that led to the largest deficits in history.''

Democrats have attacked Bush's tax agenda as being tilted in favor of upper-income taxpayers and say at least some of the cuts need to be rolled back to be able to reach a broader agreement on the budget.

But White House and lawmakers such as Spratt say there is at least a chance for Bush and his longtime Democratic rivals to come together on the budget. For starters, upcoming projections of tax revenues will show continued improvement, which could make it easier to bring the budget to balance by 2012, Bush's target year.

``We face a spending problem, not a revenue problem,'' said White House Budget chief Rob Portman. ``We're not undertaxed right now.''

Incoming Senate Majority Leader Harry Reid, D-Nev., said, ``Democrats are ready to work with the President to address our record deficits and restore fiscal discipline,'' but said Bush would have to cede ground when submitting his budget Feb. 5. Speaker-to-be Nancy Pelosi, D-Calif., did not respond to Bush's remarks.

Meanwhile, House Democrats are poised to pass some modest reforms to the much-maligned practice of ``earmarking'' home district projects in spending bills _ but will fall short of several steps proposed by Bush on Wednesday.

The Democratic reforms will extend a GOP-passed rule requiring the names of lawmakers sponsoring earmarks to be listed in reports accompanying spending bills, and Democrats have announced a one-year moratorium on lawmaker's pet projects as they clean up $463 billion worth of unfinished spending bills for the current 2007 budget year.

Bush went further, saying Democrats should adopt earmark reforms requiring ``full disclosure of the sponsors, the costs, the recipients and the justifications for every earmark'' and that after the current moratorium, the cost of earmarks should be cut in half from 2006 levels of more than $16 billion.

And in a victory for deficit hawks, Democrats will reimpose a rule requiring tax cuts or new spending on benefit programs such as Medicare to be accompanied by revenue increases or tax cuts elsewhere in the budget. The rule could be easily waived, however.

While the initial work of the Democratic Congress will focus on ethics reform and a variety of Democratic priorities such as raising the minimum wage, a flurry of difficult but must-do budget work looms, including:

_A $100 billion-plus request to fund military operations in Iraq and Afghanistan, to be submitted along with Bush's Feb. 5 budget. While Democrats promise greater scrutiny of Bush's request, it's expected to pass largely as submitted since lawmakers are loath to interfere with money to protect overseas troops.

_A massive $463 billion or so catchall spending bill wrapping together nine unfinished appropriations for the budget year that began Oct. 1. They would fund the budgets for every Cabinet agency and in many cases will be frozen at last year's levels, though difficult work remains in figuring out which accounts _ such as veterans medical programs _ should receive increases to avoid shortfalls and layoffs of federal workers.

_A congressional budget measure setting targets for tax revenues, spending on so-called entitlements such as Social Security and Medicare and caps on the annual appropriations bills. If Bush and his Democratic rivals in fact make a good-faith effort to work together to balance the budget, this measure would serve as a blueprint for compromise.

That still seems like a long shot, given the rancorous history between Bush and Democrats, who say the president has to show flexibility on taxes if they are going to take on tough issues such as spiraling Medicare and Social Security costs.

``Everything has to be on the table and he's got to be serious about compromise,'' said incoming Senate Budget Committee Chairman Kent Conrad, D-N.D.

``We would expect (Bush) to do some ... kind of ante to get the game going,'' Spratt said.