Extra $135 Billion In Forecast Closes Gop-Demo Budget Gap

A new long-term economic and spending forecast issued by the Congressional Budget Office Monday shows that Republican leaders and the White House have $135 billion of additional funds to use to bridge their differences over a seven-year balanced budget plan.

But in a bit of good news-bad new analysis, CBO officials cautioned that the vast majority of those funds would be available during the next five years but that the benefit from projected economic growth would peter out by the seventh year, when it will be needed most to achieve the goal of a zero deficit.

“It just doesn’t give you the big bang in the sixth and seventh year that we thought we’d get,” Senate Budget Committee Chairman Pete V. Domenici, R-N.M., said.

House and Senate GOP leaders appeared upbeat about the new CBO figures over the weekend and predicted the windfall funds would be critical to forging a budget compromise and averting another partial government shutdown this weekend.

Spending authority for several federal agencies expires on Friday at midnight, and House Speaker Newt Gingrich, R-Ga., has said he won’t offer an extension of the existing short-term spending legislation unless there are serious negotiations with the White House on the broader issue of balancing the budget.

Domenici said the new long-term budget and economic forecasts would give negotiators increased flexibility, but warned of the pitfalls. “We’ve got new resources available, $135 billion, but we don’t have any of that in the seventh year,” Domenici said. “So if we’re going to devise policies to use some of that to bridge our differences, then obviously we have a difficult chore.”

Sen. James Exon, D-Neb., a budget leader, said “We’ve got a long, long way to go” and cautioned against believing that the CBO report was the economic equivalent of “sugar plums” at Christmas time.

Congressional GOP leaders, White House officials and Democratic leaders plan to resume budget talks today after being briefed on the new CBO numbers. Gingrich and Senate Majority Leader Robert J. Dole, R-Kan., are pushing for an agreement in principle with the administration on the broad outline of a budget deal before the weekend deadline.

House Majority Whip Tom DeLay, R-Texas, said Monday that some of the newfound money could be allocated to Medicare, agriculture, education and other high priorities of the administration to sweeten a revision of the GOP budget plan that was vetoed last week by President Clinton.

In addition, he said, Republicans would probably have to yield to Clinton’s demand for preserving his new national service program, as well as low-income energy assistance. These programs “might be areas where we have to spend,” he said, despite a yearlong GOP drive to terminate them.

DeLay also told reporters that House Republicans would attempt to work closely with a pivotal group of conservative Democrats to fashion a revised balanced budget plan. Gingrich and other House GOP leaders have threatened to push through a new plan without administration backing if the budget talks flounder. However, Dole has conceded that it would be virtually impossible to overcome a Democratic filibuster in the Senate if Republicans try to go it alone.

White House Chief of Staff Leon E. Panetta said Monday that he was pleased that the Republicans “are moving in the direction of the administration,” but that they still have not received specific recommendations from the Republicans on how to address the president’s concerns about Medicare, Medicaid, education, the environment and other priorities.

Panetta also said it was unlikely the president would take part in face-to-face meetings with Republicans this week, before he departs Wednesday night for the Bosnian peace accords signing in Paris.