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Inside the Beltway

How to Use a Surplus: Squeeze and Double

By Michael S. Lubell, APS Director of Public Affairs

It seems only yesterday that the federal budget was drowning in a sea of red ink. Less than two years ago the White House projected that the annual deficit would run $200 billion or more as far into the future as analysts could peer. As little as a year ago, forecasts of break-even for the current fiscal year seemed to be little more than wishful thinking. And last December, then Budget Director Raines vehemently denied rumors that his office was projecting a surplus for this year.

Yet within two months, the Office of Management and Budget reversed its public stance, and by the time President Clinton delivered his State of the Union Address, OMB was forecasting a small surplus - if you call $13 billion a small number. By April, the figure had grown to $39 billion, and as the sultry summer days enveloped the nation's capital, OMB once again moved its estimate upward, this time to $63 billion. Some analysts believe that by the close of the fiscal year on September 30, the surplus could reach $75 billion, driven by an incredibly vibrant economy that is fueled by technology.

With all this cash piling up in the Treasury, you might wonder why Congress is embroiled in appropriations arguments that seemingly could be solved by adding less than $10 billion to the current spending plans. The answer is simple: It's 25 percent ideology and 75 percent politics - as most things are in Washington. Here's the inside dope.

First the ideology. Conservatives, including a large majority of Republicans, and a band of about 20 Blue Dog Democrats, want to shrink the federal government in order to adhere to their populist credo. They regard the federal government, at worst, as the enemy of the people and, at best, as a well-meaning but inept legion of bureaucrats. For them, keeping the lid on the budget is the most effective way of downsizing government. That was House Budget Committee Chairman Kasich's (R-OH) contentious rationale for reducing five-year federal expenditures by $100 billion below the balanced budget caps agreed to just last year.

Now the politics. This is an election year in which the swing of 11 seats could return control of the House of Representatives to the Democrats. This simple fact, well-known to every Beltway denizen, establishes the backdrop for almost all current decision-making in Washington. To position the Democratic party for the November shoot-out, the White House last January decided to try to deprive the GOP of its ammunition of choice - tax cuts. In his State of the Union Address, the President fenced off any budget surplus until the Social Security "crisis" is solved. Whether there is a crisis, of course, is still a matter of debate.

But the President's call resonated well with deficit hawks, such as Senate Budget Committee Chairman Domenici (R-NM), who note that without the current surplus in Social Security revenues, the rest of the federal budget would actually still be in the red, even if a year-end $75 billion surplus number for the total budget turns out to be true. Unlike the anti-Washington ideologists, the deficit hawks do not want to cut taxes until the deficit excluding Social Security balances totally disappears. They simply want to hold the line on spending.

So for now, the budget squeeze remains. Given the constraints, it's amazing how well science did in Round 1 of the appropriations process. Sen. Domenici (R-NM) and Rep. Lewis (R-CA), chairmen of key appropiations committees, did remarkable work in securing increases for science. Senate and House spending bills exiting the appropriations committees would generally boost the federal investment in scientific research by five to nine percent. Having both the President and the Speaker of the House on our side didn't hurt.

Regular readers of this column already know that President Clinton delivered a blockbuster of a science budget in his request to Congress in February and that privately House Speaker Gingrich (R-GA) was advocating major increases, as well. In three June commencement speeches, the Speaker took his message public, calling for doubling funds for science over eight years. In a June 18 Washington Post interview, he said, "Investing in our future ought to be our second highest priority after winning the war on drugs, and we should shape our appropriations bills accordingly."

Even House Appropriations Committee Chairman Livingston (R-LA), who always protects his right flank, was cautiously optimistic. "[A]n emphasis on science, at the request of the Speaker, means that science is going up," he said.

But not everybody agrees with the President and the Speaker. As the appropriations process moves through Round 2 on the floors of the Senate and the House, advocates for other federal priorities will try to strip away funds from the science accounts.

The first such assault took place in the Senate when the Energy and Water Resources Appropriations Bill hit the floor in the middle of June. Dissatisfied with the allocation for solar and renewable technologies, Senators Jeffords (R-VT) and Roth (R-DE) offered an amendment to boost the funding for those programs by almost $60 million. To help offset the allocation, they cut the DOE science account by about 1.6 percent, perhaps unaware that by so doing they would cut some of the very science upon which the solar and renewable technologies rely. Their Senate colleagues responded by approving the amendment on a voice vote, reflecting the popularity of environmental programs with American voters.

But the real dirty work on the appropriations bills will take place in Round 3 behind closed doors when Senate and House conferees meet to iron out their differences. It is not unusual for the bills that finally emerge to be quite different from the ones that entered. During the August recess, members of Congress will listen closely to the voices of their constituents. And the budgets that emerge in September will mirror what they heard.

Fortunately, science has the potential of remaining on the legislative agenda throughout the summer, thanks to a new bill, the "Federal Research Investment Act." It was submitted on June 25 by Senators Frist (R-TN) and Rockefeller (D-WV), together with Senators Gramm (R-TX) Lieberman (D-CT), Domenici, and Bingaman (D-NM), the original co-sponsors of its S.1305 predecessor, and Senators Burns (R-MT) and Breaux (D-LA) (see Back Page article by Senator Bill Frist). The bill, S.2217, beefs up the call for doubling research by providing strong policy justifications, as well as recommendations for implementing the Government Performance and Results Act.

Although it stretches the time line out to 12 years, S.2217 has one big advantage over S.1305. It can move through committee, since Frist is the chairman of the Senate Commerce Subcommittee on Science, Transportation and Space, and Rockefeller is its Ranking Member. Of course as the senators noted in a packed Hill press conference at the end of June, their task will be made much easier if the science community pitches in. And friends, if you don't who that is, it's you!

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Editor: Barrett H. Ripin