President Bush And Democrats Wind Up For Budget Battle

by Mike Godfrey, Tax-News.com, New York

22 August 2001

Ignoring Democrat calls for prudence, President Bush yesterday insisted to a crowd in Independence, Missouri, (President Truman's home town) that the federal budget has enough money for his tax cut, for the military, for Social Security and for Medicare.

'There are some who say tax relief is going to make it hard to meet the budget,' said the President, 'But the reality is it will boost the economy. I trust you. I would rather you spend your money than the federal government spend your money.'

Aware that the indicative budget bill passed by Congress is often torn to shreds when appropriations actually start getting passed, Bush said Congress must be frugal, avoiding temptations to leave education and defense bills until last. 'There is a temptation not to listen to the budget in the first place,'' he said, 'We don't want the budget to be a hollow noise. We want the budget to be real.'

Democrats picked the Independence visit to put out a television advertising campaign saying the budget 'violates one of Harry Truman's basic principles -- protecting our seniors. The Bush budget raids the Medicare trust fund. Now he's using gimmicks to hide a raid on Social Security.'

All these words follow Monday's trailing of budget office announcements this week which are expected to show that a combination of the tax cut and the slowing economy has shaved roughly $120 billion from the surplus for the fiscal year that ends Sept. 30. That would leave the surplus for the year at about $160 billion, all or nearly all of which would be accounted for by Social Security receipts.

Bush's speech was aimed at putting pressure on Congress not to overspend. He also took the opportunity to call for partial privatisation of Social Security. 'Soon, there are not going to be enough people paying into the system,' he said, 'One of the reasons I am standing here is because I had the courage to tell that message. We must give younger workers the option to manage their money in the private sector if that's what they choose to do.''

Yesterday, White House officials said the tax cut would ultimately restore the economy's health and drive the surplus up again. In linking the declining surplus to Social Security and Medicare, the officials said, Democrats were engaging in scare tactics. But they said they were resigned to a political battle throughout the fall over who lost the surplus and what to do about it.

Representative Richard A. Gephardt of Missouri, the Democratic leader in the House, said on the NBC program "Meet the Press" on Sunday that the administration should propose a new budget that would detail the spending cuts necessary to keep the budget from dipping into Social Security money. But he suggested that Democrats, in the end, might feel compelled to go along with restrictive spending bills, precisely the response White House officials have said all along that they wanted the tax cut to demand of both parties in Congress.

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