Politics

Worried About The Budget

By CBSNews.com staff CBSNews.com staff

September 11, 2001 / 8:27 AM EDT / CBS

With the government poised to drain some $12 billion from Social Security surpluses this year, Republicans in the House of Representatives Monday pushed a plan to cut next year's budget to make up for whatever was taken from the pension program this year.

The House Budget Committee was slated Tuesday to take up the bill that would impose across-the-board spending cuts in the next fiscal year starting Oct. 1 to compensate for whatever Social Security funds are used to get the government through the final days of this fiscal year.

"It's important to show some leadership and not just stand on the sidelines," Senate Republican Leader Trent Lott told reporters Monday as he suggested a tax cut aimed at easing the payroll tax. "We've got to be looking at ways to address the problem" of a sluggish economy.

Bush Sticks To
Education Focus
President Bush, traveling in Florida, is sticking to his designated theme of the week, urging changes in federal education programs to a Congress that is preoccupied with the slumping economy.

Mr. Bush was returning to a classroom in Sarasota Tuesday for the second half of a two-day swing through Florida to press for action on education legislation stalled in Congress.

He was reading to children in the morning and giving a speech on the importance of his educational programs before returning to Washington to face lawmakers' concerns at a White House barbecue for members of Congress. Many lawmakers worry that the economy could hurt their chances for re-election next year.

Mr. Bush waved way questions about the economy after a pre-dawn jog, leaving to his aides to talk about the growing GOP cries for further tax cuts to spur growth.

"He's going to lead this economy back into a growth rate that's an acceptable kind of growth rate," Commerce Secretary Donald Evans told CBS News. The first step, he said, is for Congress to pass the energy plan that Bush has proposed and to give the president broad authority to negotiate trade agreements. (AP)

While Lott and others call for tax cuts, House Republicans arranged for a budget committee session to approve conditional spending cuts. The reductions would take effect in the next fiscal year, soon after Oct. 1, if it turned out the government had dipped into the Social Security surplus in the current year.

In a campaign-season pledge issued in 1999, Republicans said they would not use excess Social Security tax receipts for any purpose other than paying down he debt.

"We will cut spending in order to achieve the full amount of debt reduction equal to the Social Security surplus," said Rep. Jim Nussle, the Republican chairman of the Budget Committee. He said agency heads would be given latitude in applying the cuts, and a few programs, such as those affecting veterans and low-income housing recipients, would be exempt. Benefit programs such as Medicare and Social Security would likewise be shielded.

Nussle said the White House "has been informed about it, but we have no signal one way or the other" what the president's position is on the legislation.

He also prodded the Democratic-controlled Senate to act, saying it would be a "a tragedy for the Senate not to keep the commitment to the Social Security surplus."

Initial Democratic reaction was negative, though.

"It's a gimmick. It's clearly an attempt to get around the fact that their budget director is bringing them really bad news, which is the tax cut has put them into spending the Social Security trust fund," said Kori Bernards, spokeswoman for House Democratic leader Dick Gephardt.

Whatever the fate of the proposal, the spending cut bill is the latest manifestation of concern among Republicans over the slowing economy and the potential political fallout in next year's midterm elections.

Mr. Bush has expressed concern publicly on numerous occasions, but thus far has resisted pressure from Republicans to support steps beyond the economic program he had previously outlined.

Ari Fleischer, Mr. Bush's press secretary, said the president was "open-minded" about suggestions coming from congressional Republicans. But, he added, "the president has faith and confidence that the economic recovery plan that is still going into effect, that is still being received, will get the job done."

Among the steps that administration officials cite is a continuing stream of tax rebate checks being mailed to taxpayers, as well as the increase in take-home pay that will result from an adjustment in tax withholding tables in January. Mr. Bush has also called for expanded trade authority and enactment of his energy legislation, with its call for expanded oil exploration and drilling.

Spending cut legislation aside, there is widespread agreement among Republicans in the House and Senate for a tax cut. While a cut in the capital gains tax is the reduction mentioned most frequently, Lott suggested a cut in the payroll tax, as well.

"There are people, at the entry level, who are hit very hard by the payroll tax," he told reporters. "If you're trying to get money into working people's pockets quickly, that's one option you could consider."

Rolling back a portion of the payroll tax that goes to Social Security and Medicare would give a tax cut to more than 30 million workers — most earning less than $44,000 a year — who were left out of this year's $40 billion in tax rebate checks because they didn't have enough taxable income to quaify.

Republicans have been pushing to cut the capital gains tax, which now tops out at 20 percent, to 15 percent for two years as an economic stimulant and to boost government revenue as people sell investments. Many Democrats criticize that proposal as tilted toward the wealthy and worry about the long-term costs.

Republican Sen. George Voinovich of Ohio and Democratic Sen. Zell Miller of Georgia are planning legislation to require across-the-board budget cuts in programs other than Social Security and Medicare if the budget encroaches on Social Security surpluses in fiscal 2002 and beyond.

"They want to make a long-term structural change to protect Social Security," said a Voinovich aide. He said Voinovich is working with the White House on a plan that Mr. Bush would back.