Democrats say they're inheriting a financial mess

Posted on Wed, Dec. 13, 2006
Democrats say they're inheriting a financial mess
By James Rosen
McClatchy Newspapers

WASHINGTON - Democrats, who will shape fiscal policies in the new Congress, issued a scathing report Wednesday on the "financial mess" they'll inherit from their Republican counterparts next month.

The Democrats called the budget "the fiscal disaster the Republican Congress is leaving behind," and Republicans sharply rejected their claims - signals that post-election pledges of bipartisan cooperation by leaders of both parties might have been hollow talk.

"Unlike the Bush administration, which inherited historic budget surpluses when it took office in 2001, the Democratic 110th Congress will inherit a Republican budget legacy that will not be easy to reverse," said Rep. John Spratt, D-S.C., who'll chair the House Budget Committee.

"Over the last six years, Republicans have created historic budget deficits and a mountain of debt," he said.

Rep. David Obey, D-Wis., who will head the House Appropriations Committee, said there'll be no quick fix.

"Republicans have spent years handing out billions upon billions of dollars in tax cuts to millionaires while shortchanging our national policies," Obey said. "It is going to take us years to get back on track."

Republican Reps. Jerry Lewis of California, outgoing House appropriations chairman, and Jim Nussle of Iowa, exiting House budget chairman, declined to comment. But Rep. Paul Ryan of Wisconsin, who'll be the senior Republican member of the House Budget Committee, said the Democrats' charges ignored positive impacts of income tax reductions championed by President Bush and passed by Congress under GOP control.

"The tax cuts helped create more than 6 million new jobs and increased revenues flowing into the Treasury, reducing the deficit in the process," Ryan said. "I hope this isn't a signal that the Democrats plan on raising taxes."

"The real story is an economy that's come charging back since 2003," said White House spokesman Tony Fratto. "We've created 7 million new jobs. We've increased tax revenues. The deficit is coming down. There's low inflation, low interest rates, and now we're starting to see a return to wage growth."

Fratto said the economy that President Clinton passed on to President Bush was founded on phony prosperity.

"We were handed a bubble economy - an equity market that lost $7 trillion in value because of what (former Federal Reserve chairman Alan) Greenspan famously called `irrational exuberance.' The economy that was left to us is really nothing to be proud of."

The current budget deficit of $248 billion is less than last year's deficit of $319 billion, according to the White House budget office. The deficit is 1.9 percent of gross domestic product, Fratto said, below the last 40-year average of 2.3 percent of the total economy.

Spratt and Obey also accused Republicans of having "left our Army at its lowest state of readiness in decades."

Fratto countered: "We have the best trained and the best prepared and the best armed Army in the world, and they're meeting our national security challenges every day out there in the field."