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Conrad open to energy taxes for healthcare

by Walter Alarkon | Posted: 03/29/09 1:29 PM [ET] - 03/29/09 1:33 PM ET

The Senate’s lead Democrat on the budget signaled Sunday he’s open to imposing new energy taxes to pay for healthcare reform, a priority for President Obama and House Speaker Nancy Pelosi (D-Calif.).

Sen. Kent Conrad (D-N.D.), the chairman of the Senate Budget Committee said energy taxes is an “option” for funding healthcare reform. He also suggested the money could be found from other sources in an interview on CNN.

{mosads}Conrad stressed that he and House Budget Committee Chairman John Spratt (D-S.C.) have put forth budgets that address the Democrats’ top agenda items of healthcare, energy independence, education and deficit reduction but also leave room for other lawmakers to fill in the details later.

“We’ve given maximum opportunity for the committees of jurisdiction, maximum flexibility to write major healthcare reform and to pay for it,” Conrad said.

He did not offer any details on what energy taxes might be increased to pay for healthcare reform.

Obama included a new cap-and-trade climate change system in his budget that he expects to generate more than $600 billion in revenue that would pay for clean energy development programs and middle-class tax cuts. Obama would not use this revenue for healthcare reform.

Obama sought to pay for the healthcare fund with revenue obtained by limiting itemized tax deductions for taxpayers with incomes over $250,000 a year. Conrad and lawmakers from both parties have criticized this plan, arguing that the new limits would hurt charitable donations.

“Well, we didn’t put it in our budget resolution, so we think it’s an open debate and a lot of people are not prepared to go that far,” Spratt said.

Conrad and Spratt’s proposed budgets include deficit-neutral reserve funds for healthcare, energy and education. But unlike President Obama’s budget, the congressional plans do not explain how they would be funded.

Spratt and Conrad said they’re working with the president on his priorities, especially to pare down big deficits that they blamed on President Bush.

Conrad said the new government inherited debt that is growing and an “economy in shambles.”

“And so when that happens, obviously, deficits and debt go up dramatically in the short term,” Conrad said. “The great challenge here is to put us on a more sustainable path.”

Conrad and Spratt have made changes to Obama’s budget plan so that the $1.8 trillion deficit projected for 2009 will be reduced by two-thirds over the next five years.

“So you ask initially, have we compromised with the president and have we compromised our principles being concerned about debt? Absolutely not,” Conrad said.

But budget chairmen faced questions Sunday on how they plan to pay for the deficit reductions. While their plans include smaller increases for non-defense discretionary spending, they also leave out money set aside for federal bailouts and for disasters that are expected in the future.

Spratt said Sunday that it wasn’t clear whether more bailout money would be needed.

“If it’s needed, we will be there to support it,” he said. “But let’s not create a presumption it is needed and see if we can’t make the most of what’s in circulation already.”

Conrad said he left out estimates for disaster funding because the Congressional Budget Office, which provides Congress with official projections, wasn’t able to determine whether they were valid.

Both congressional plans include budget projections for only five years, unlike Obama’s, which outlined spending for 10 years. Some have criticized the five-year plans as a trick to make deficits look smaler. Conrad defended the plan this week, arguing economic uncertainties made it hard to predict what the fiscal situation would look like years ahead.

While their budgets would reduce the deficit to less than $600 billion, they understand that a deficit of that size is “not an acceptable number,” Spratt said.

“I want to see the glide path of deficit reduction continue onward for the second five years, but that is a pretty ambitious target and one we think we can hit partly because what is swelling the deficit now are non-recurring items such as the TARP, such as the cost of taking over Fannie Mae and Freddie Mac,” he said, referring to the government bailout for banks and the federal seizure of mortage firms.

“These things, we hope, won’t occur — recur in 2009 and 2010,” Spratt added. “And that gives us an opportunity to drive this budget down to an acceptable, for the time being, debt level.”