Rising debt could derail Congress on just about everything

McClatchy NewspapersNovember 30, 2009 

WASHINGTON — The Senate began a debate Monday over the future of health care in America that's likely to go on for weeks, but behind the scenes, lawmakers are struggling to resolve an even more explosive issue: how to pay for all their ideas.

Federal budget deficits remain at record highs. The national debt is $12.1 trillion and Congress must vote soon to let it go higher or else the Treasury won't be able to issue new debt. President Barack Obama is expected to announce Tuesday a plan to send an additional 30,000 to 35,000 American troops to Afghanistan, which will require more spending.

Despite the Obama administration's promise of a new era of fiscal responsibility, seven of the 12 major appropriations bills that set federal spending — including those that govern the budgets of the Departments of Defense, Health and Human Services and Transportation — still haven't passed Congress.

Those agencies have been operating since Oct. 1 on stopgap resolutions; the next one expires Dec. 18.

Add to this the $848 billion 10-year cost of the Senate health care proposal, and it appears that "it's all starting to come crashing down in one big piece," said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, a Washington watchdog group.

Moderates and conservatives are urging the creation of a commission to study and recommend deficit-cutting strategies, and public support is strong. A survey Nov. 16-18 of 700 registered voters commissioned by the Peter G. Peterson Foundation, a fiscal watchdog group, found that 66 percent said Washington officials weren't paying enough attention to budget issues, up 10 percentage points from February, and 70 percent favored a bipartisan commission to tackle the deficit and debt problems.

"The bottom line is that the American electorate is way ahead of Washington policymakers," said David Walker, the foundation's president and chief executive officer.

A bipartisan group of a dozen senators wants to attach an amendment that would create such a commission to the bill to raise the federal debt ceiling above $12.1 trillion, expected in mid-to late December.

Separately, Senate Budget Committee Chairman Kent Conrad, D-N.D., and Sen. Judd Gregg of New Hampshire, the panel's top Republican, have proposed creating a deficit reduction task force that includes congressional and administration officials. Congress could be required to vote quickly on its proposals, amendments probably wouldn't be allowed and it would take a three-fifths majority to win approval, virtually requiring bipartisan support.

Reid is talking to colleagues about the idea, but it has a formidable opponent: House Speaker Nancy Pelosi, D-Calif., who thinks that the existing process is adequate to address such issues.

There are few politically viable fiscal alternatives left, said Isabel Sawhill, a senior fellow in economic studies at Washington's Brookings Institution, a center-left research center.

"We're not going to be able to raise taxes; the president has all but taken that off the table," she said. "Social Security would be very tough to take on, and defense spending is going up, not down."

Unless some sort of new budget process is created, Sawhill said, legislation to raise the federal limit could be imperiled, Obama could find a rough fight over Afghanistan funding and the already shaky status of health care legislation could get even more wobbly.

The health care legislation is designed to pay for itself. The Senate bill would impose a 40 percent excise tax on high-cost health insurance policies and increase the Medicare payroll tax, now 1.45 percent, by 0.5 percentage point on single people with wages of more than $200,000 annually and joint filers who earn more than $250,000.

The health bill that the House of Representatives passed would impose a 5.4 percent income tax surcharge on adjusted gross incomes of more than $500,000 for singles and $1 million for joint filers.

The money from those initiatives is supposed to go toward making health care more affordable, however, not reducing the budget deficit. The nonpartisan Congressional Budget Office estimates that the fiscal 2010 deficit should be nearly the same as last year's record $1.4 trillion.

Senate Majority Leader Harry Reid, D-Nev., told colleagues Monday that they're in for a long, hard fight on health care as debate formally opened. "Let's discuss the specifics of this bill, not the whispers and wild rumors," he urged. "While we will disagree at times, let us at least agree doing nothing is not an option."

"This has to be done in a way that's fiscally responsible," Sen. Byron Dorgan, D-N.D., said of the health care bill. "It has to be done in a way that is effective.

"If not, there ought not to be legislation passed, in my judgment."

ON THE WEB

Congressional Budget Office analysis of impact on insurance premiums

Congressional Budget Office federal budget analysis

Status of 2010 federal spending bills

Congressional Budget Office analysis of Senate Democrats' health care bill

Text of Senate Democratic health care bill

Congressional Budget Office analysis of House health bill

2009 Medicare/Social Security trustees' report

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For more McClatchy politics coverage visit Planet Washington

McClatchy Newspapers 2009

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