Portman, Van Hollen agree Iraq could break budget

Two leading lawmakers on fiscal issues agreed that military action in Iraq could force Congress to break its current budget agreement at a National Press Club Newsmakers press conference on June 17.

Sen. Rob Portman, R-Ohio, a member of the Senate Finance and Budget committees and a former director of the Office of Management and Budget, and Rep. Chris Van Hollen, D-Md., ranking member of the House Budget Committee, both said the government is not likely to shutdown in August or September when the next debt ceiling is reached, thanks to the budget deal reached last year between Rep. Paul Ryan, R-Wisc., House Budget Committee chairman, and Sen. Patty Murray, D-Wash., Senate Budget Committee chairman.

But the unrest in Iraq caused by insurgents advancing toward Baghdad could change the budget calculus.

When asked if the Iraq situation could “bust the budget,” Portman said, “It certainly could as a real matter.”

Van Hollen said that the initial Bush administration decision to enter Iraq “took the lid off Pandora’s box” and that President Barack Obama has not yet resubmitted the reserve fund, which stands at $5 billion, to Congress for approval.

"Iraq could have impact on the number,” Van Hollen said. The Iraq war already has cost a trillion dollars before counting health and benefits to veterans, Van Hollen said.

Despite the need to cut the budget, Portman said that some programs are extremely effective and should be encouraged.

“Drug treatment in the criminal justice system is an example,” Portman said because it is “cost-effective.” But, he said, “it’s an example of how we are under increasing pressure if we do not do something.”

Mandatory spending is two-thirds of the budget and in 10 years will grow to three-quarters, Portman said.

“Entitlements are driving the debt,” Portman said, though he acknowledged that the Social Security Trust Fund keeps the program solvent through 2035 and then faces a 25 percent shortfall.

But Portman argued that the trust fund is not a viable way to fund future Social Security expenses and that it’s a “myth” to say the program is solvent.

Van Hollen countered that beneficiaries paid into the system and “the full faith and credit of the United States is real and should not be violated.” Improving jobs numbers could reduce any shortfall, he said.

Both Van Hollen and Portman called for tax reform and both were disappointed that a comprehensive proposal by House Ways and Means Chairman Dave Camp, R-Mich., has not been seriously considered.

They said that tax reform could increase federal revenue and save U.S. jobs, if the top 35% corporate rate is reduced and loopholes are closed.

They disagreed on which tax breaks to end. Portman supported "business and corporate reductions,” while Van Hollen criticized “special interest” givebacks for big business.

Van Hollen called for increased spending on transportation and infrastructure and science research as ways to create jobs. He also supports extending emergency unemployment insurance, increasing the minimum wage and implementing equal pay for equal work laws. He said an economic-growth agenda produced a balanced budget from 1998-2001.

Both Portman and Van Hollen remain hopeful for a budget grand bargain, though “not this year," Portman said. “Next year would be a good time.”

Obama’s grand bargain proposal actually requires less revenue than a proposal by a national debt commission that many in both parties tout, Van Hollen said.

But no overarching agreement has been moved in Congress. Van Hollen said he hopes that "moderates with reasonable voices keep us on track."