Budget:
Republicans, hung up on PAYGO rules, may fail to pass a budget.
1) A handful of Senate GOP moderates continue to withhold support for the budget unless pay-as-you-go (PAYGO) rules are revived that require offsets for mandatory spending and tax cuts. PAYGO rules would endanger the 2001 Bush tax cuts, by subjecting any efforts to make them permanent to a 60-vote rule of order.
2) Compromises extending PAYGO for only one year or exempting efforts to make permanent the current tax rates have not satisfied the moderates. A recent proposal by Majority Leader Sen. Bill Frist (R.-Tenn.) to sunset PAYGO after three years appealed to moderates, but turned off Senate conservatives.
3) Budget resolutions have become mostly symbolic, and, because they never go to the President's desk for a signature, do not have the force of law. But failure to pass a resolution this year could have real consequences.
4) Some Democratic leaders are attempting to make the 2004 elections be a referendum on the past two years of Republican dominance of the government. Specifically, Republicans have controlled Congress for 10 years. If an all-Republican government cannot pass a budget resolution at all, it does not reflect well on their ability to govern.
5) Also, any hope of spending restraint-a weak point for the Republican government so far-may be lost without a budget. Technically, congressional appropriators would be working under last year's limits, but in reality, they would consider themselves working without limits.
6) Finally, the big loser would be Frist, whose performance so far as Majority Leader has been criticized.
7) Frist's desperation to get a budget resolution increases chances that some sort of budgeting framework will likely be approved.
Drug Reimportation:
Supporters claim enough votes in the Senate to pass legislation allowing U.S. pharmacies to import prescription drugs from Canada. The progress of this issue could have serious ramifications for Bush's reelection.
1) A drug reimportation bill passed the House and has a majority in the Senate, but the opposition of the Senate GOP leadership and the President has prevented a vote. Bill backers, however, now claim 60 votes needed to invoke cloture and force a vote.
2) Some conservatives see the ban on reimportation as antithetical to free trade, while on the other side, lawmakers raise safety concerns and object to "importing price controls." Democratic backers attack the "greed" of the drug companies.
3) Republicans in electoral trouble, such as Sen. Lisa Murkowski (R.-Alaska) and Rep. Rick Renzi (R.-Ariz.) favor reimportation, as do those seeking higher office such as Rep. David Vitter (R.-La.) and candidates in tough races.
4) Still, it appears the GOP leadership can block the bill. First, the count of 60 votes is an aggregate of backers for two different bills, and it may be impossible to get that many votes behind a single measure. Secondly, even if a bill passed both chambers, reimportation foes-Frist and House Majority Leader Tom DeLay (R.-Tex.)-would control the conferees.
5) Forcing Bush to either sign the bill-thus flip-flopping and upsetting the pharmaceuticals-or vetoing popular legislation could be harmful, thus increasing pressure on Frist to kill it.
Europe-U.S. Business:
Despite Europe's continued admiration of U.S. business conditions and entrepreneurial spirit, growing resentment of American policy, coupled with hints of an equalization in the economic circumstances may be working to further divide the two powers.
1) European opposition to the Iraq war is not new, but it appears to be growing. The photographs and reports from the Abu Ghraib prison in Iraq and from Guantanamo Bay, Cuba (where al Qaeda captives from the Afghanistan war are kept) get constant media attention in Europe. The Administration's reaction-that the Geneva Convention does not apply to these prisoners-has been met with a furious reaction in Europe, where international law is given much more gravity.
2) At the same time, economic conditions in Europe are showing their first positive signs in years. The latest manufacturing data from the nations using the Euro shows more robust growth than was expected.
3) European investment in the U.S. continues to drag. Much of that slowdown stems from the Iraq war-either anger or expectation the war would cause an economic downturn.
4) In the past year, only one new non-U.S. corporation has listed itself on the New York Stock Exchange. This is largely due to Washington's reaction to the corporate scandals of 2002.
5) The Sarbanes-Oxley law and the complex regulations it prescribes have proven to be such a burden to corporations, who also find it does little good for investors, that Wall Street's costs have exceeded its expected benefits for companies overseas.
