Democrats assail Iraq spending plan

Congress OK likely, but critics want to scale back tax cuts

For Immediate Release:

September 10, 2003

Contact:William Neikirk and Bob Kemper

The Chicago Tribune

WASHINGTON -- President Bush's $87 billion request to stabilize and rebuild Iraq and Afghanistan appears headed for approval in Congress, but at the same time it is giving new impetus to Democratic efforts to scale back his tax cuts and reap political gains from the administration's large budget deficits.

Democrats served notice after Bush's Sunday night speech that they will go along with the request, but made it clear that getting there will be no garden party. Budget politics are likely to grow louder and harsher as Democrats seek to blame Bush for record deficits and suggest that rebuilding Iraq will cost much, much more.

"If there is war, and American lives are at stake, it's fair to ask: Are we going to share the sacrifice, or charge the cost to the national debt and pass it on to our children?" asked Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee.

"Surely, we can suspend the [tax] cuts for upper bracket taxpayers not yet implemented, and offset some of the enormous cost we now know the president's policies will entail," he added. The White House conceded Monday the request would push the deficit in fiscal year 2004 to more than half a trillion dollars.

The administration also provided some details of the $87 billion package, saying that $71 billion would be used to secure and rebuild Iraq. About $11 billion would be used in Afghanistan, most of it for military operations but also to build roads, hospitals and schools, as well as for training and creating jobs for "demobilized militiamen."

Senior administration officials conceded that prior to the war they had underestimated the cost of rebuilding Iraq, but they said that was only because they could not know exactly how badly basic services, from electricity to sewerage, had deteriorated under Saddam Hussein.

They also acknowledged they overestimated what Iraq's oil revenues would be after the war. Prior to the war, the administration figured the oil fields would yield $100 billion almost immediately to pay for reconstruction. Now, officials said they expect only $12 billion in 2004 and $20 billion in both 2005 and 2006.

Democrats said they would probe such miscalculations. House Democratic Leader Nancy Pelosi of California said while Congress will approve the request, there will be more scrutiny.

Democrats' complaint

"Already facing a nearly half-trillion deficit, American taxpayers deserve to know how this spending will affect our ability to address the unmet needs in our own country," she said.

House Democratic Whip Steny Hoyer of Maryland added that the tax cuts "drained our nation's bank account of every spare penny, leaving us ill-prepared to fight the war on terrorism and help rebuild the two countries that we have invaded in the last two years, let alone invest in domestic priorities and create jobs."

Hoyer said that Bush "must rearrange his priorities and put the safety, security and prosperity of working Americans ahead of tax breaks for the wealthy few."

Republicans said they also intend to give the Bush request close scrutiny, but that the funds are needed to fight the war on terrorism.

"Al Qaeda's recent threats to carry out a new wave of attacks on Americans throughout the world underscores the need for us to maintain our resolve and redouble our efforts to hunt these enemies down wherever they hide," said Senate Majority Leader Bill Frist (R-Tenn.).

Any changes in Bush's tax cuts are also considered unlikely given that the GOP controls both houses. But even if Democrats fail, they hope to make political headway on the deficit issue in the 2004 elections.

Bush agreed to make the speech partly as a result of Republican congressional pressure to be more forthright on the cost of Iraqi security and reconstruction. But the president did not provide any timetable for the withdrawal of American troops in his speech, nor offer an "exit strategy" that some lawmakers sought.

That left another opening for Democrats. Spratt said that Democrats want to know how long the deployment in Iraq will take, and how many more dollars will be required in 2005 and 2006.

"This could well be the first of many installments," he said, adding that he doubted that U.S. allies will come up with any significant amount of money to help pay for the Iraqi reconstruction.

By the administration's reckoning, the $87 billion request will add as much as $60 billion to the administration's already record-setting federal budget deficit in the 2004 fiscal year, administration officials said. That would put the deficit at $535 billion next year.

CBO: Blow less severe

But the Congressional Budget Office said the request would only marginally increase its more conservative $480 billion deficit estimate for fiscal year 2004. It turns out that the CBO included about $82 billion in Iraqi war costs in its projections for next fiscal year, which starts Oct. 1.

Congressional Budget Director Douglas Holtz-Eakin said his office assumed, as it is required to do under its mandate, that the government would spend roughly the same amount next year as this year. The assumption was that $79 billion provided in a fiscal 2003 emergency spending measure for Iraq would also be spent in 2004, plus $3 billion more for inflation.

White House spokesman Scott McClellan said the government could afford the additional war spending and the president's tax cuts, including making them permanent, if Congress holds the line on discretionary spending-- something past presidents have found difficult to enforce. He said the deficit can be cut in half within five years, although Democrats dispute this claim.

Another major debate will be over how much money U.S. taxpayers will be forced to put up and how much money can be obtained from allies, many of whom opposed the war. The U.S. is now negotiating for additional aid at the United Nations, but that effort will be a major challenge in view of the fact that Bush launched the war over the objections of many allies and without a formal UN endorsement.

$51 billion for security

Senior administration officials said about $51 billion is needed just to secure Iraq and to curb attacks on U.S. troops. Another $20 billion would provide a down payment on the cost of rebuilding the nation's infrastructure and establishing a new government there.

The administration said Bush wants other countries to provide $30 billion to $55 billion of the $50 billion to $75 billion the World Bank and the International Monetary Fund estimate is needed to reconstruct Iraq's infrastructure.

One piece of good news for service personnel who have been kept in Iraq longer than anticipated is a pledge from Bush to provide two weeks of rest and relaxation for each soldier each year. There was no estimate of the cost.
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