Politics

Budget Battle Lines Drawn

By CBSNews.com staff CBSNews.com staff

February 28, 2001 / 12:13 PM EST / CBS

Even as President Bush's tax-blasting budget won approval from a House committee Thursday, Democrats unveiled their own spending plan and vowed to fight the president's proposal.

That as Mr. Bush continued a campaign-style tour aimed at bolstering support for his his budget and the 10-year, $1.6 trillion tax cut it contains.

In Arkansas and Georgia, the president delivered a carefully crafted message intended to rise above politics.

"The budget I submitted wasn't a Republican budget, wasn't a Democrat budget," Mr. Bush said. "It was the people's budget."

But the strategy behind the Bush message, reports CBS News Chief White House Correspondent John Roberts, is to divide and conquer — to peel off enough Democrats in Congress to pass his tax cut.

Democrats, meanwhile, are trying to marshal their forces. Rep. Richard Gephardt, D-Mo., the House minority leader, called the $1.96 trillion Bush budget "the most irresponsible legislative act that I have ever seen."

The Democratic alternative is $900 billion plan to slash only the lowest tax bracket from 15 to 12 percent (Mr. Bush's plan would shrink the five current brackets to four and reduce rates in all of them.)

Bush's Budget

Highlights of President Bush's proposed $1.96 trillion budget for the next fiscal year starting Oct 1:

Overall spending that must be approved annually by Congress and the president set at $660.7 billion, up $25.7 billion or 4 percent from fiscal 2001, but less than half the rate of spending growth the GOP Congress and President Clinton settled on for fiscal 2001.

About two-thirds of the proposed budget is devoted to interest payments on the national debt and on entitlement programs, such as Social Security and Medicare.

Outlines $1.6 trillion in tax cuts over 10 years.

Calls for paying $1 trillion of $3.2 trillion publicly held national debt in four years, $2 trillion in 10 years.

Calls for a $1.4 trillion reserve fund over 10 years, funded from projected $5.6 trillion surplus, for "additional needs such as defense spending, debt service, unforeseen disasters, and other contingencies."

Would set aside $5.6 billion in reserves.

Sets aide $153 billion over 10 years to modernize Medicare and provide a prescription drug benefit as part of it.

Boosts defense spending by $14.2 billion to $310.5 billion. That's the amount called for by Mr. Clinton, but the Bush White House says it could further raise Pentagon spending from a contingency fund.

Boosts education spending by $4.6 billion, or 11.5 percent, to $44.5 billion.

Calls for doubling funds for medical research by the National Institutes of Health by fiscal 2003, providing a $2.8 billion increase in fiscal 2002.

Cuts programs in transportation by $2.1 billion, agriculture by $1.6 billion, justice by $1 billion and energy by $700 million.

(Reuters)

The Democratic proposal would also expand the Earned Income Tax Credit for low-income families and reduce — but not eliminate — the marriage penalty and estate tax.

Democrats boasted more benefits for middle- and low-income earners than the Bush plan, and no special breaks for the rich.

"We can't give those families a $46,000 tax cut and still pay down the debt and pay for critical priorities like prescription drug coverage, education and defense," Sen. Thomas Daschle, D-S.D., the Senate minority leader, said of wealthy families.

Majority Republicans pushed the Bush tax cut through the House Ways and Means Committee on Thursday.

(Click here to see your cut under the president's plan.)color>

House approval was expected next week for the bill, which would cost $960 billion through 2011 while leaving work on the rest of the president's tax cuts for later.

But the tax cut faces rougher sledding in the Senate, which is equally divided 50-50 between the two parties and is home to several GOP moderates who say the proposed reduction is too expensive. New polls show voters leaning slightly in favor of the Democratic plan.

In a sign of how difficult the upcoming congressional battle will be, Democrats on the Senate Budget Committee bluntly told Treasury Secretary Paul O'Neill that Mr. Bush's prized tax cut is too large and too heavily weighted to the rich.

"I don't believe the Bush budget adds up. I don't believe the tax proposal is fair and I believe we can pay down more national debt" than the $2 trillion that the president has proposed paying down, said Sen. Kent Conrad, D-N.D.

(Click here to learn more about the history of taxes in the United States.)color>

O'Neill, however, told the committee that the budget program is "prudent and supportable" and "full of good news for the American people."

Republicans on the committee expressed strong support fr the Bush program, with chairman Sen. Pete Domenici, R-N.M., saying he was "disappointed in the class-warfare arguments coming from the Democratic leadership."

House Republican whip Rep. Tom Delay, R-Texas, meanwhile, said the Democratic plan was "nothing more than redistribution of wealth."

The Bush administration's argument that a tax cut is needed was buoyed Wednesday by more evidence that the economy needs a jump-start which lower taxes might provide.

The Commerce Department reported the economy grew at an annual rate of only 1.1 percent in the final three months of 2000, the weakest performance in more than five years. And Federal Reserve Chairman Alan Greenspan expressed new concerns about the economy, saying the sharp slowdown in growth that began last year "has yet to run its full course."

The one-volume Bush budget outline was formally submitted to Congress on Wednesday morning. It replaced the normal multi-volume budget documents presidents submit to Congress every February. A more detailed program-by-program breakdown of the spending proposals is expected in April.

For his part, the president Thursday highlighted his education proposals as he toured Arkansas, the home turf of former President Clinton, whose problems with last-minute pardons have stolen many recent headlines.

Education is the focus of an 11 percent spending increase under Mr. Bush's budget and one issue on which Democrats and Republicans were likely to find some common ground.