House GOP budget would balance in seven years, says chairman

WASHINGTON -- House Republicans have written a budget they say will be balanced within seven years and that leaves the door open for most if not all of President Bush's proposed tax cuts, the chairman of the House Budget Committee said Tuesday.

Chairman Jim Nussle, R-Iowa, said that to eliminate deficits, his $2.2 trillion budget for 2004 will seek savings over the next seven years from a broad range of federal programs, exempting only the military, domestic security, Social Security and unemployment insurance.

He provided no figures and few examples of the savings he will propose, but said Medicare and Medicaid -- the government's health insurance programs for the elderly and poor -- could be affected. Even so, Nussle's plan would provide Medicare with the extra $400 billion over the next decade that Bush has proposed to provide prescription drug coverage.

Nussle's blueprint, which will come to a committee vote today, is a departure from Bush's. The president's budget says that national security and reviving the weak economy should take precedence over eliminating the red ink and would produce 10 straight years of annual deficits, the nonpartisan Congressional Budget Office has said.

"It would be very easy at this moment to hide behind the president's budget," Nussle told reporters.

Nussle said his budget's three goals would be defending the nation, sparking the economy and "ensuring fiscal responsibility."

"We have to get back on track to a balanced budget," he said.

Nussle said his plan would include "all or almost all" of the $1.57 trillion in new tax cuts over 10 years that Bush has proposed. But he and his Senate counterpart, budget panel chairman Don Nickles, R-Okla., have already decided to give top priority only to the $726 billion portion of Bush's tax cut that is designed to invigorate the economy -- meaning the rest of it is unlikely to be enacted this year.

Nickles -- who is having trouble crafting a budget that will balance -- is contemplating including only about $1.3 trillion of Bush's tax-cutting plan, Senate GOP officials said. But he so far has been unable to find enough savings to eliminate deficits by 2013, the 10th year of his budget, when his red ink is still in the tens of billions of dollars, aides said.

Nickles' proposal on taxes underlines the soft support in the Republican-led Senate for the president's entire tax-cutting package. It also accentuates some of the changes Nickles is having to make in his attempt to end a projected string of annual deficits within the next decade.

Balancing the budget by 2013 is a challenge because it will be expensive to extend the 2001 tax cuts beyond 2010. In addition, that is when the enormous baby boom generation begins retiring, driving up the government's costs for Social Security and Medicare.

Nickles' committee will start debating his $2.2 trillion budget on Wednesday.

Bush's $726 billion economic plan is already expected to shrink because some moderate senators of both parties say they prefer a package of about $350 billion. Senate Republicans have a slim 51-48 majority, with the Senate's one independent leaning Democratic, and will need moderates' support to prevail.

"Obviously, it won't be as high" as $726 billion, said moderate GOP Sen. Olympia Snowe of Maine. She said $350 billion was the "middle range ... and that's what we're discussing now."

Bush's economic growth plan would eliminate taxes on corporate dividends and accelerate some already scheduled personal income tax reductions.

Both House and Senate budgets will include in their tax cuts Bush's $624 billion, 10-year plan to make permanent the income tax reductions enacted in 2001 that will otherwise expire after 2010, officials said.

The bipartisan moderates plan to send Senate leaders a letter later this week defining the tax cut they prefer. Hoping to allow flexibility for a higher number when Congress finishes its budget, Nickles has been urging the moderates not to state that the final House-Senate compromise must meet their demands.

The budget committees begin their work days after the nonpartisan Congressional Budget Office projected that Bush's budget would produce an accumulated $1.82 trillion in deficits over the next decade. Not included are costs of a possible war against Iraq could cost more than $100 billion, including the expenses of a U.S. occupation and other postwar activities.