Politics

Bush Buoyed By Surplus News

By CBSNews.com staff CBSNews.com staff

January 31, 2001 / 12:31 PM EST / CBS

New projections for an enormous $3.12 trillion surplus over the coming decade are giving President Bush even more confidence that there will be plenty of money for everything on his agenda, especially his tax cut plan, reports CBS News White House Correspondent Mark Knoller.

"I think it helps further the case that there's enough money to pay down debt, to meet priorities and to give some of the money back to the people who pay the bills – that's the taxpayers," said Mr. Bush at a Cabinet Room meeting with leaders of the House and Senate tax committees.

The nonpartisan Congressional Budget Office formally presented its new projection, which excludes Social Security, to the Senate Budget Committee on Wednesday. Details of the huge estimates emerged Tuesday, giving added momentum to Mr. Bush's plan for a $1.6 trillion, 10-year tax cut.

Democrats, who mostly prefer a smaller tax reduction than Mr. Bush's, expressed reservations about the Bush tax plan.

They said the costs of Mr. Bush's tax cut and expected spending boosts for defense, prescription drugs, education and other programs could erase the surplus and push the budget back into deficit.

"It doesn't leave room for much of anything else," Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee, told reporters after a White House meeting with the president and other congressional leaders.

Even so, eager to cash in on the tax-cutting momentum, Senate Majority Leader Trent Lott, R-Miss., said he believes lawmakers can ship a final tax package to Mr. Bush by Congress' Independence Day recess.

Initially, the House is likely to break the tax cuts into several smaller bills, starting with an across-the-board reduction in income-tax rates, said House Majority Leader Dick Armey, R-Texas. A cut in income-tax rates has been the keystone of Bush's plan.

Eager to limit Democrats' opportunities to alter the legislation in the Senate, however, Lott said he would try to package all the tax cuts into a single bill in his chamber.

In another move that could help the president politically, the Federal Reserve announced a new 0.5 percentage point cut in interest rates on Wednesday. The rate cut is designed to prod the economy, which Mr. Bush has argued a tax reduction also would do.

CBO's $3.12 trillion surplus projection, which excludes added surpluses expected from Social Security, is for fiscal 2002 through 2011. It is this non-Social Security portion of the surplus that both parties feel is available to pay for tax cuts or higher spending.

The new CBO surplus projection is nearly $1 trillion bigger than the agency's last estimate in July, which covered 2001 to 2010. It is $670 billion larger than the projection President Clinton made for 2002 to 2011 before leaving office on Jan. 20.

Noting that the 1997 budget-balancing deal between Mr. Clinton and Congress was amed at balancing the budget by 2002, Senate Budget Committee Chairman Pete Domenici, R-N.M., said, "It's an understatement to say we've more than exceeded that goal."

The Congressional Budget Office also expects Social Security surpluses to total $2.49 trillion from 2002 to 2011. Both parties have long called for using all of that to reduce the national debt. During his presidential campaign, Mr. Bush proposed using some of that money also to help set up individual investment accounts.

Combined, the overall budget surplus would be an astronomical $5.61 trillion over the decade, CBO estimated. Actual surpluses could be smaller than the budget office estimates if the economy hits a prolonged slowdown.

The CBO figures are significant because Congress usually uses the agency's estimates when it does its budget work. The Bush administration, in office for less than two weeks, may not produce its own surplus and economic estimates until at least next month.