House budget sees $348 billion deficit

By Richard Cowan

WASHINGTON (Reuters) – The U.S. House of Representatives on
Thursday narrowly passed a fiscal 2007 wartime budget that
would continue a string of large deficits and trigger an
increase in government borrowing authority.

By a vote of 218-210, the House passed the $2.7 trillion
budget blueprint more than a month after Congress was supposed
to have finished its work on the nonbinding measure.

No Democrats voted for the Republican budget, which sets
broad outlines for spending throughout the government.

House Majority Leader John Boehner, an Ohio Republican,
addressed conservatives’ concerns about deficits saying, “With
revenues rising and holding the line on spending we can in fact
balance the budget in the next four or five years.”

But the House budget forecasts a $348 billion deficit next
year and it could be higher since the measure sets aside only
$50 billion for the wars in Iraq and Afghanistan, which have
been running at about double that cost annually.

With U.S. government debt rapidly escalating, the budget
authorizes a $653 billion increase in borrowing authority next
year to total $9.62 trillion.

“Over the last five years we will have experienced … with
this budget, the five largest deficits in nominal terms in the
history of the United States,” said Rep. John Spratt of South
Carolina, the senior Democrat on the House Budget Committee.

Earlier in the day, President George W. Bush signed into
law a $70-billion tax-cut bill that includes an extension of
tax breaks for the wealthy. Republicans defended the tax cuts
as a necessary ingredient to keeping the U.S. economy humming,
while Democrats have called them a giveaway to the rich at a
time of severe fiscal problems.

The late-night House vote came after Republican leaders
toiled to win enough support from their own moderate members,
who sought additional election-year funding for health,
education and other domestic social programs.

This budget may end up being little more than a political
document because there are doubts the House and Senate will
take the final step of resolving their differences to craft a
unified budget plan.

“I’m confident there will not be” a final budget this year,
Rep. Michael Castle, a Delaware Republican who was closely
involved in the House negotiations, told reporters.

But Wednesday’s vote was important to Republicans, who did
not want to be tarred in an election year with failing to pass
a budget in the House for the first time since 1975.

Castle and several other moderate Republicans fought for
$7.1 billion more in funds for health and education programs
next year. Those programs have suffered in previous budgets.

Details on these funds would be worked out later in the
year. But some of the money, about $1 billion, might be
transferred from a fund intended to rebuild Iraq.

Of the $2.7 trillion in the budget, most of the money is
for programs operating on automatic pilot, such as Social
Security retirement benefits and government-run health-care
programs for the poor and elderly.

As part of the $2.7 trillion, the House-passed budget would
provide $873 billion for programs Congress must renew each
year, about $9 billion less than the Senate version.

Like the Senate’s budget, the House plan calls for granting
Bush’s request for a 7 percent increase in defense spending.
But that already is dated, as the House Appropriations
Committee recently took $4 billion from Bush’s request and
shifted it to social programs.

All 435 House seats are up for reelection in November and
given Republicans’ low standings in public opinion polls, House
and Senate leaders decided to ignore Bush’s request for a
second round of cuts to government-run health programs.

Unlike the Senate’s budget, the House plan does not call
for opening Alaska’s Arctic National Wildlife Refuge to oil and
gas drilling. That would have doomed the budget in the House.