'Enronizing' Capitol Hill

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The "Enronization" of budget politics has begun. To wit: Senate Budget Committee Chairman Kent Conrad says he was driving to work Monday morning and the thought occurred to him that "the biggest problem with Enron was that they were hiding debt — hiding it from their shareholders, hiding it from creditors, hiding it from themselves. I think that's exactly what the federal government is doing. The federal government is now engaged in hiding and understating debt."

That same thought, coincidentally, is coming to a lot of other Democrats on their way to work. Last month Senate Majority Leader Tom Daschle, a key player in shaping the Democrats' messages, accused George Bush of "Enronizing the budget." Daschle didn't use the "Enron" word earlier this week when he issued his statement on the Bush budget. But he made it clear that Democrats planned to pounce on the baby-boom fears that their government retirement savings could vanish like Enron's 401K did. "The biggest victims" of the Bush budget, Daschle charged, "are people who depend on the government for their retirement security."

On Monday, Bush sent a $2.13 trillion budget to Congress for Fiscal Year 2003, which projects a budget deficit of $106 billion for this year, a deficit of $80 billion for 2003, and $14 billion in the red for 2004. The Pentagon gets big bucks: a $48 billion increase to fight the war on terrorism, and homeland defense would double to about $38 billion. Bush also wants $675 billion in additional tax cuts over the next ten years. To offset the spending, Bush wants to cut nearly two dozen job training programs. The Justice Department Budget would be cut and the budgets at the Agriculture, Commerce and Interior departments would be frozen. Spending increases in education and environment would be slowed.

Before 9/11, Democrats were never able to draw much blood over the $1.35 trillion tax cut that Congress enacted last year. Their cries that government revenues were shrinking and huge tax cuts would drain the Social Security and Medicare surpluses were only beginning to be heard by voters when the terrorists struck. After 9/11, Americans accepted that the country had to move to a wartime footing and that budget deficits would have to return to fight both Osama bin Laden and the recession. Republican strategists on Capitol Hill tell me their polls still show that the deficits Bush is proposing the next two years are barely raising a blip on the public radar screen.

But retirement and financial security remain major concerns among voters. A Los Angeles Times poll this week revealed that an overwhelming majority of Americans would rather cancel tax cuts in the future than raid Social Security to pay for them. Democrats think that reciting dry budget forecasts won't stir up the voters, but framing the debate around the Enron scandal will. Republicans disagree, arguing the public still perceives Democrats as the big spenders and the GOP as the party of fiscal responsibility. "Enronization" won't have legs, GOP operatives assure me. "It's kind of a cute tactic," says a senior House Republican aide. "But it will be viewed more as a politicization of Enron and as taking advantage of their employees who have been victimized." Perhaps. But Enron has been an unnerving reminder to many of how economic gratification in the present can be risky for financial security in the future.