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House budget sees $348 billion deficit

Posted on: Thursday, 18 May 2006, 05:42 CDT

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.

Source: REUTERS

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