MINNEAPOLIS ST. PAUL (By Tim Penny, Star Tribune) November 29, 2006 — In 1992, presidential candidate Bill Clinton campaigned on promises to increase federal domestic spending, provide middle-class tax cuts, and still reduce the deficit by 50 percent in his first term.

He arrived in Washington only to discover that, even with a "peace dividend" made possible by the end of the Cold War, he could not keep his domestic spending promises and also reduce the deficit -- unless he reneged on his promise to cut taxes. The budget realities he faced once in office (huge and growing deficits) required a different approach from the rhetoric of his campaign.

Like Clinton in 1992, congressional Democrats today face a similar dilemma. In short, Democrats must feel like the dog that finally caught the tire. After sweeping to victory in nearly every closely fought congressional race, they now have a majority in both congressional chambers.

From the Iraq war to ethics, to deficits, the Democrats spent the election season criticizing Republican mismanagement of the people's business -- while seldom offering a coherent alternative of their own. Now they are in charge of Congress and must deliver. What will they do? What can Democrats agree upon? Thankfully, Democrats will be led by two experienced and respected Budget Committee chairmen, John Spratt (S.C.) in the House and Kent Conrad (N.D.) in the Senate, both of whom are serious about reducing deficits. Spratt has recently gone on record calling for a balanced budget within five years.

To reach that goal, they might start by looking to the Blue Dog caucus -- comprised of 44 moderate and fiscally conservative members (nine of whom were newly elected this fall). Their prescription for fixing the budget morass created in recent years by Republicans is worth a serious look.

Among other budget disciplines, the Blue Dogs have proposed restoring "pay as you go" budget rules, tighter restrictions on emergency spending, and limitations on appropriation earmarks (commonly called pork-barrel spending).

From the Blue Dog list, Democratic Party leaders have so far only embraced the reenactment of "pay as you go" budget rules. That would make eminent sense given the success of these rules in the '90s when budget surpluses reappeared for the first time since 1969. "Pay go" policies serve to hold the line on new entitlement spending and new tax cuts (requiring that any such measures be honestly offset with other cuts or revenue increases so as to result in no net increase in the deficit). Regrettably, Republicans allowed these "pay go" rules to lapse in 2002 -- and large deficits have returned in the ensuing years. Restoration of "pay go" would hamper any proposed expansion of entitlement spending -- and would make extension of tax cuts beyond their expiration date in 2010 more difficult to achieve.

Those outcomes are worthwhile. But more must be done because "pay go" alone simply preserves the entitlement status quo.

Sadly, not even the Blue Dogs have proposed taking a serious look at reducing entitlement spending. Yet, with the retirement of the babyboom generation just a few years away, the cost of Social Security, Medicare and Medicaid will soon skyrocket. Medicare is already in fiscal straits and Social Security will be in a cash flow crunch by 2017, according to the Government Accountability Office.

Whether through a "blue ribbon" entitlement commission or some other means, it would make sense for Democrats to deal with these issues now. Delaying action only makes the solutions more costly and painful. President Bush, through his new Treasury secretary, Hank Paulson, has been sending the message that he is willing to work with Democrats to create a truly bipartisan commission.

Democrats would be wise to accept his offer -- unless they want the next president (who they obviously hope will be a Democrat) to inherit an even greater budget challenge than Clinton faced in 1992.